Are insurance proceeds received for loss of business included in Cream's definition of Net Sales?

According to Cream's 2025 Franchise Disclosure Document, insurance proceeds received for loss of business are included in the calculation of Net Sales. Specifically, Net Sales include all insurance proceeds a franchisee receives for loss of business and loss of revenue due to a casualty or similar event at their Cream shop. This definition is important because Cream calculates royalties and other fees based on a percentage of Net Sales.

This inclusion means that if a Cream shop experiences a covered event that causes a loss of business, the insurance proceeds received to compensate for that loss will be factored into the revenue upon which royalties are calculated. While this may seem counterintuitive, it aligns with Cream's broader definition of Net Sales, which aims to capture all revenue streams associated with the operation of the franchise.

For a prospective Cream franchisee, this means that even during periods when the physical shop is not generating revenue due to unforeseen circumstances, insurance payouts intended to offset those losses will still be subject to royalty fees. Franchisees should factor this into their financial planning and insurance coverage considerations, ensuring they understand the implications of this policy on their overall profitability. It is important to note that this applies specifically to insurance proceeds related to loss of business and revenue, and not necessarily other types of insurance payouts.