When is revenue from the sale of gift cards recognized as 'Net Sales' for a Marble Slab Creamery?
Marble_Slab_Creamery Franchise · 2025 FDDAnswer from 2025 FDD Document
Revenue from the sale of gift cards is not recognized as "Net Sales" until redeemed at your Restaurant, but "Net Sales" does not include the amount of bona fide refunds paid to customers, the amount of any state or local sales or use tax actually paid by you and sales of fixtures or other capital items sold by you after use of them in the operation of your Restaurant.
Source: Item 6 — OTHER FEES (FDD pages 23–32)
What This Means (2025 FDD)
According to Marble Slab Creamery's 2025 Franchise Disclosure Document, revenue from the sale of gift cards is not immediately recognized as 'Net Sales.' Instead, the revenue is recognized when the gift cards are redeemed at a Marble Slab Creamery restaurant. This means that when a customer purchases a gift card, the amount is not included in the store's net sales figures until that gift card is used to make a purchase.
This policy has implications for franchisees because 'Net Sales' is a key figure used to calculate royalty fees and advertising fund contributions. By deferring the recognition of gift card revenue until redemption, Marble Slab Creamery ensures that franchisees are only paying royalties on actual sales of products and services, rather than on unredeemed gift card balances. This can affect the timing of revenue recognition and potentially delay the payment of associated fees until the gift cards are used.
It is important for prospective franchisees to understand how 'Net Sales' is defined, as this figure directly impacts their financial obligations to Marble Slab Creamery. Franchisees should track gift card sales and redemptions carefully to accurately report their 'Net Sales' and calculate their royalty and advertising fund payments. This policy is fairly standard in the franchise industry, as it aligns revenue recognition with actual product or service sales, providing a more accurate reflection of a franchisee's business performance.