Under what circumstances might Cream debit 110% of the average Net Sales from a Cream franchisee's account?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
If you fail to report Net Sales, if we cease to have access to your Computer System, or if your Shop is closed without our authorization for any period of time, then for any fees under the Franchise Agreement which are calculated based on Net Sales, we may debit your account for 110% of the average Net Sales for the last three months of operations of your Shop. If the amounts that we debit from your account on the basis of any understatement are less than the amounts you actually owe us once we have determined the true and correct Net Sales, we will debit your account for the balance on the day we specify. If the amounts that we debit from your account on the basis of any understatement are greater than the amounts you actually owe us, we will credit the excess against the amounts we otherwise would debit from your account during the following period.
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Cream can debit a franchisee's account for 110% of the average Net Sales under specific circumstances related to reporting and operation. This action is taken if a franchisee fails to report Net Sales, if Cream loses access to the franchisee's Computer System, or if the Cream shop is closed without authorization for any period of time. This applies to fees under the Franchise Agreement that are calculated based on Net Sales. The calculation is based on the average Net Sales for the last three months of operation.
Furthermore, if Cream determines that a franchisee has understated Net Sales, Cream will debit the account for the balance owed. Conversely, if the debit based on the understatement is greater than what is actually owed, Cream will credit the excess amount to the franchisee's account during the following period. This ensures that Cream can accurately collect fees based on Net Sales, even if there are reporting discrepancies or operational issues.
This policy is designed to protect Cream's revenue stream and ensure accurate financial reporting from its franchisees. It also incentivizes franchisees to maintain accurate records, report sales promptly, and keep their shops operational. Prospective franchisees should be aware of these conditions and ensure they have systems in place to comply with Cream's reporting and operational requirements to avoid such debits.