For Cream franchises, how is Gross Profit expressed?

According to Cream's 2025 Franchise Disclosure Document, gross profit is defined as annual net sales less the annual cost of goods sold (COGS). The FDD specifies that this gross profit is expressed both as a dollar amount and as a percentage of the annual net sales. This dual expression provides a comprehensive view of Cream's profitability, allowing potential franchisees to understand both the absolute monetary value and the relative efficiency of sales in generating profit.

For a prospective Cream franchisee, understanding how gross profit is calculated and expressed is crucial for evaluating the financial performance representations provided in Item 19 of the FDD. By seeing gross profit both in dollar terms and as a percentage of sales, franchisees can better assess the potential profitability of a Cream franchise and compare it against other opportunities or industry benchmarks. The cost of goods sold (COGS) includes the landed cost of ice cream products, food, merchandise, beverage products, and ingredients.

Furthermore, the FDD provides median annual gross profit figures for different quartiles of Item 19 Shops. For example, the median annual gross profit for the top 25% quartile was $1,022,355. This detailed breakdown allows potential franchisees to gauge the range of gross profit outcomes and understand the factors that may contribute to higher or lower performance. It is important to note that these figures are based on corporate-owned shops, as Cream had no franchised outlets operating as of the end of the most recent fiscal year. Therefore, prospective franchisees should consider these figures as benchmarks and conduct their own due diligence to assess the potential financial performance of a franchised Cream location.