When are revenues from gift cards included in Gross Sales for a Crisp & Green franchise?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
"Gross Sales" means all revenue derived from operating the Franchised Restaurant, including the aggregate of all sales amounts from food, beverages and other products sold and services rendered at the premises or otherwise rendered in connection with the Franchised Restaurant, and all monies derived from sales at or away from the Franchised Restaurant (including without limitation through a Crisp & Go Location), whether from cash, check, credit or debit card, barter exchange, trade credit, or other credit transactions, but: (1) excluding all federal, state or municipal sales, use or service taxes collected from customers and paid to the appropriate taxing authority; and (2) reduced by the amount of any documented refunds, credits, allowances, adjustments, promotional discounts (including pursuant to the loyalty program), and charge-backs the Franchised Restaurant provides to customers in good faith. We treat each charge or sale upon credit as a sale for the full price on the day during which that charge or sale is made, irrespective of when you receive payment (whether full or partial, or at all) on that sale. Generally, at the time and to the extent that transactions relating to coupons, gift certificates, gift cards, or vouchers (including pursuant to the loyalty program) result in the recognition of revenue under applicable accounting standards and the rules of our gift card or loyalty program, that revenue will be included in Gross Sales for the month in which such revenue is recognized.
Source: Item 6 — OTHER FEES (FDD pages 15–22)
What This Means (2024 FDD)
According to Crisp & Green's 2024 Franchise Disclosure Document, revenues from gift cards are included in gross sales when they result in recognized revenue under applicable accounting standards and the rules of Crisp & Green's gift card or loyalty program. This revenue is included in gross sales for the month in which it is recognized. Gross sales include all revenue from operating the franchised restaurant, including sales of food, beverages, and other products and services, whether from cash, credit card, or other credit transactions. It also includes monies derived from sales at or away from the restaurant, including through a Crisp & Go location.
However, gross sales exclude sales, use, or service taxes collected from customers and paid to the appropriate taxing authority. They are also reduced by documented refunds, credits, allowances, adjustments, promotional discounts, and charge-backs provided to customers in good faith. Crisp & Green treats each credit charge or sale as a sale for the full price on the day the charge or sale is made, regardless of when payment is received.
For a prospective Crisp & Green franchisee, this means that while the initial sale of a gift card does not immediately count towards gross sales, the revenue is recognized when the gift card is redeemed for goods or services. This is a common practice in the franchise industry, as it aligns revenue recognition with the actual provision of goods or services to the customer. Franchisees should familiarize themselves with the specific accounting standards and the rules of Crisp & Green's gift card and loyalty programs to accurately track and report gross sales.