When are payments received for online group-bought deals included in Cream's 'Net Sales'?
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, payments franchisees receive for online group-bought deals are included in Net Sales upon redemption. Net Sales is defined as all revenue derived from operating the Cream shop, using various forms of payment, net of authorized discounts.
This means that while the initial payment for a group-bought deal might not be immediately counted as revenue, it will be included in Net Sales when the customer actually uses the deal at the Cream location. This is a common practice, as it aligns revenue recognition with the actual provision of goods or services.
For a prospective Cream franchisee, this definition of Net Sales is important because it directly impacts the calculation of royalties, brand fund contributions, and technology fees owed to Cream. Franchisees should keep accurate records of when these deals are redeemed to ensure proper reporting of Net Sales and avoid potential discrepancies or audits. Additionally, understanding what constitutes Net Sales helps in accurately forecasting revenue and managing the financial performance of the franchise.