What is included and excluded from the definition 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
Source: Item 6 — OTHER FEES (FDD pages 13–17)
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. This includes revenue from various payment methods such as cash, checks, vouchers, credit and debit cards, barter exchange, trade credit, and other credit transactions. This figure is calculated after subtracting authorized discounts like employee discounts, free birthday scoops, good neighbor discounts, and loyalty rewards.
However, the definition 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, understanding this definition is crucial because many fees payable to Cream are calculated based on Net Sales. Accurately tracking and reporting Net Sales is essential for compliance with the franchise agreement and to avoid potential penalties or disputes with the franchisor. Franchisees should ensure their accounting systems properly capture all revenue sources and accurately deduct authorized discounts and excluded taxes and gratuities to determine the correct Net Sales figure.