What is the definition of 'Net Profit' as it pertains to the Cream financial data presented in Item 19?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
a franchisee would be required to pay us. These amounts were not paid by the reporting corporate-owned locations.
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- Net Profit means annual Gross Profit, less Total Operating Expenses and Royalty and Brand Fund Contributions and is expressed as a dollar amount and as a percentage of Gross Profit. In the top 25% quartile, 8 Item 19 Shops (38%) had annual Net Profit that met or exceeded the average annual Net Profit and $298,015 was the median annual Net Profit. In the upper mid 25% quartile, 11 Item 19 Shops (52%) had annual Net Profit that met or exceeded the average annual Net Profit and $162,380 was the median annual Net Profit. In the lower mid 25% quartile, 13 Item 19 Shops (62%) had annual Net Profit that met or exceeded the average annual Net Profit and $72,346 was the median annual Net Profit. In the bottom 25% quartile, 12 Item 19 Shops (60%) had annual Net Profit that met or exceeded the average annual Net Profit and $(33,327) was the median annual Net Profit. Out of all Item 19 Shops, 38 (46%
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 51–57)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, 'Net Profit' is defined as annual Gross Profit less Total Operating Expenses, Royalty, and Brand Fund Contributions. This figure is expressed both as a dollar amount and as a percentage of Gross Profit.
For a prospective Cream franchisee, understanding this definition is crucial because it represents the actual profit a Cream shop generates after accounting for all major costs and fees. The FDD provides net profit figures for corporate-owned locations, dividing them into quartiles based on performance. For example, the median annual Net Profit for all Item 19 Shops was $116,193. The top 25% quartile had a median annual Net Profit of $298,015, while the bottom 25% quartile had a median annual Net Profit of $(33,327).
It's important to note that these figures are based on corporate-owned shops and do not guarantee similar results for a franchised location. Additionally, the FDD explicitly states, "Some outlets have earned this amount. Your individual results may differ. There is no assurance that you'll earn as much." Prospective franchisees should carefully consider all factors, including location, market conditions, and their own management skills, when evaluating the potential profitability of a Cream franchise. Reviewing the complete Item 19 and consulting with existing franchisees can provide further insights.