What is the definition of 'Gross Profit' for a Cream franchise, as used in Item 19?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
m 19 Shops, 47 (57%) had equal or lower COGS than the average annual COGS and $252,854 was the median annual COGS.
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- Gross Profit means annual Net Sales less annual COGS and is expressed as a dollar amount and as a percentage of annual Net Sales. In the top 25% quartile, 10 Item 19 Shops (48%) had annual Gross Profit that met or exceeded the average annual Gross Profit and $1,022,355 was the median annual Gross Profit. In the upper mid 25% quartile, 7 Item 19 Shops (33%) had annual Gross Profit that met or exceeded the average annual Gross Profit and $703,993 was the median annual Gross Profit. In the lower mid 25% quartile, 9 Item 19 Shops (43%) had
annual Gross Profit that met or exceeded the average annual Gross Profit and $525,365 was the median annual Gross Profit. In the bottom 25% quartile, 10 Item 19 Shops (50%) had annual Gross Profit that met or exceeded the average annual Gross Profit and $599,078 was the median annual Gross Profit. Out of all Item 19 Shops, 35 (42%) had a
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 51–57)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Item 19 defines 'Gross Profit' as annual Net Sales less annual COGS (Cost of Goods Sold). This figure is expressed both as a dollar amount and as a percentage of annual Net Sales. This definition is crucial for understanding the financial performance representations provided in Item 19, as it serves as a key component in calculating a Cream store's profitability.
Item 19 of the FDD provides additional context by presenting median annual Gross Profit figures for different quartiles of Cream stores. For example, the median annual Gross Profit for stores in the top 25% quartile was $1,022,355. In contrast, the median annual Gross Profit for stores in the bottom 25% quartile was $599,078. These figures give prospective franchisees an idea of the range of gross profits achieved by existing Cream locations.
Understanding how Cream defines Gross Profit, and reviewing the provided financial performance data, is an important step in evaluating the potential profitability of a Cream franchise. Prospective franchisees should carefully consider these figures in conjunction with other costs and expenses to develop a comprehensive financial model for their potential business.