What is excluded from the calculation of 'Net Sales' for a Cream franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
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- "Net Sales" means all revenue that you derive from operating your Shop whether from cash, check, vouchers, tickets, 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 the Shops. 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 6 — OTHER FEES (FDD pages 13–17)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, "Net Sales" for the purpose of calculating royalties and other fees, includes all revenue derived from operating the shop, whether it's from cash, checks, credit cards, or other forms of payment. This also includes payments received from online group deals, gift certificates, and insurance proceeds for loss of business.
However, the calculation of Net Sales for a Cream franchise specifically excludes certain items. These exclusions are (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 the Shops.
For a prospective Cream franchisee, this definition is important because it directly impacts the amount of royalties and other fees owed to the franchisor. By excluding sales taxes and employee tips from the Net Sales calculation, Cream ensures that franchisees are not paying royalties on these amounts, which are pass-through funds and not actual revenue for the business. This is a fairly standard practice in franchising, as it ensures that franchisees are only paying royalties on their actual sales revenue.