When are the redemption values of gift certificates included in Ella Cafe's Gross Sales?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
Gross Sales also does not include proceeds from the sale of gift certificates or stored value cards (all proceeds from the sale of gift certificates and stored value cards belong to us), but it does include the redemption value of gift certificates and stored value cards at the time purchases are made. You are responsible for the accurate reporting of gift certificate and stored value card sales and the corresponding impact on Gross Sales. You have until 30 days after the end of our fiscal year to notify us of any errors you made in calculating Gross Sales as those errors relate to the reporting of gift certificate and stored value card sales.
Source: Item 6 — OTHER FEES (FDD pages 10–15)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the redemption value of gift certificates and stored value cards are included in Gross Sales at the time purchases are made. However, the initial proceeds from the sale of these gift certificates or stored value cards are not included in Gross Sales, as those proceeds belong to Ella Cafe.
This means that when a customer uses a gift certificate at an Ella Cafe location, the amount of that purchase counts towards the location's Gross Sales. The franchisee is responsible for accurately reporting both the sales of gift certificates and their subsequent redemption values, as these figures impact the calculation of royalties and other fees owed to Ella Cafe.
Ella Cafe provides a 30-day window after the end of their fiscal year for franchisees to notify them of any errors made in calculating Gross Sales related to gift certificate and stored value card reporting. This suggests that accurate tracking and reporting of these transactions are important for both the franchisee and Ella Cafe to ensure correct financial reporting and avoid discrepancies.