What is the relationship between the Franchise Agreement and the calculation of Net Sales for Cream shops?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
Net Sales is calculated in the same manner as Net Sales under the Franchise Agreement, and includes all revenue derived from operating the Item 19 Shops, 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.
Payments from online group-bought deals, gift certificate or gift card programs, or other similar programs were included in Net Sales upon redemption.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 51–57)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, the calculation of Net Sales used in Item 19 (Financial Performance Representations) is the same as the calculation of Net Sales defined in the Franchise Agreement. This means that the financial performance data presented by Cream is based on a consistent definition of revenue across all shops.
Net Sales for Cream includes all revenue derived from operating the shops, regardless of the form of payment. This encompasses cash, checks, vouchers, credit and debit cards, and other forms of credit transactions. Authorized discounts, such as employee discounts, free birthday scoops, good neighbor discounts, and loyalty rewards, are deducted from the gross revenue to arrive at Net Sales.
However, certain items are excluded from the Net Sales calculation. These exclusions include all federal, state, or municipal sales, use, or service taxes collected from customers and remitted to the appropriate taxing authority. Additionally, tips and gratuities collected for shop employees are also excluded from Net Sales. Payments from online group-bought deals, gift certificates, or gift card programs are included in Net Sales upon redemption.
This consistent application of the Net Sales definition ensures that the financial performance data presented in Item 19 is standardized and comparable across all Cream locations. Prospective franchisees can rely on this consistent methodology when evaluating the potential financial performance of a Cream franchise.