What is the definition of 'Net Sales' in relation to the Cream Brand Fund contribution?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
As used in this Agreement, the term "Net Sales" means all revenue that you derive from operating your Shop, whether from cash, check, vouchers, or other comparable forms of payment, credit and debit card, barter exchange, trade credit, or other credit transactions, net of authorized discounts (i.e., employee discounts, free birthday scoops, and good neighbor discounts and loyalty rewards). Net Sales excludes: (i) all federal, state, or municipal sales, use, or service taxes collected from customers and paid to the appropriate taxing authority, and (ii) tips and gratuities collected for employees of your Shop. If we authorize or require participation in online group-bought deals, gift certificate or gift card programs, or other similar programs, the payments you receive for those online group-bought deals, gift certificates, or gift cards will be included in Net Sales upon redemption. Net Sales also include all insurance proceeds you receive for loss of business and loss of revenue, due to a casualty to or similar event at your Shop.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, "Net Sales" is defined as all revenue derived from operating the shop, encompassing various forms of payment such as cash, checks, vouchers, credit and debit cards, barter exchanges, trade credits, and other credit transactions. This revenue is calculated after deducting authorized discounts like employee discounts, free birthday scoops, good neighbor discounts, and loyalty rewards.
However, the definition of Net Sales excludes certain items. Specifically, it does not include federal, state, or municipal sales, use, or service taxes collected from customers and remitted to the appropriate taxing authority. Additionally, tips and gratuities collected for the shop's employees are excluded from the calculation of Net Sales.
Furthermore, the FDD clarifies the treatment of specific payment types. If Cream authorizes or requires participation in online group-bought deals, gift certificate programs, or gift card programs, the payments received for these items are included in Net Sales upon redemption. Net Sales also encompass all insurance proceeds received for loss of business and loss of revenue resulting from a casualty or similar event at the shop. This comprehensive definition ensures that the Brand Fund contribution, calculated as a percentage of Net Sales, accurately reflects the shop's revenue while accounting for standard deductions and specific revenue streams.