Are amounts uncollected for a customer of the 1-800-GOT-JUNK? Franchised Business due to discount coupons included in Gross Revenue?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
Gross Revenue is defined in the Franchise Agreement to mean “the entire amount of the sale price, whether for cash, credit, payment in kind (valued at fair market value) or otherwise, of all sales from or in connection with the operation of the Franchised Business (including, but not limited to, the sale of any Services or products from or in connection with the operation of the Franchised Business). No deductions shall be allowed from Gross Revenue except for the following: (a) sums collected by or on behalf of Franchisee for any duly constituted governmental authority on account of sales taxes, good and services taxes or other taxes imposed directly upon the sale of goods or services (or both) from the Franchised Business, provided that the amount of any such tax has in fact been paid or otherwise accounted for by Franchisee to the appropriate governmental authority; (b) the amount of any refund or credit given in respect of any services or products provided to a customer of the Franchised Business for which a refund of the whole or part of the purchase price is made or for which a credit is given as long as such refund or credit is given in 4899-8658-3815.1
accordance with Franchisor’s policies and procedures in relation to refunds set out in the Operations Manual; (c) amounts for uncollected or uncollectable credit accounts as long as such credit accounts are deemed uncollected or uncollectable in accordance with Franchisor’s policies and procedures in relation to uncollected or uncollectable credit accounts set out in the Operations Manual; and (d) amounts uncollected for a customer of the Franchised Business due to discount coupons that were approved for use in advance by Franchisor. Where the operation of the Franchised Business has been interrupted, all sales assumed to have been lost by Franchisee by virtue of such interruption, being the basis upon which an insurer has paid business interruption insurance, shall also be included in the calculation of Gross Revenue.”
Source: Item 6 — Other Fees (FDD pages 11–17)
What This Means (2025 FDD)
According to 1-800-GOT-JUNK?'s 2025 Franchise Disclosure Document, gross revenue does not include amounts uncollected from customers due to discount coupons, provided the franchisor approved the coupons in advance. Gross Revenue for 1-800-GOT-JUNK? franchisees is defined as the total sales price, encompassing cash, credit, or payment in kind, derived from the operation of the franchised business.
However, the FDD specifies allowable deductions from Gross Revenue. These deductions include sales taxes paid to governmental authorities, refunds or credits given to customers according to 1-800-GOT-JUNK?'s policies, and amounts deemed uncollectible according to 1-800-GOT-JUNK?'s procedures. Critically, amounts uncollected due to discount coupons approved in advance by 1-800-GOT-JUNK? are also excluded from Gross Revenue.
This definition of Gross Revenue is important because several fees payable to 1-800-GOT-JUNK? are calculated as a percentage of Gross Revenue. These include the royalty fee of 8% of Gross Revenue and the Sales, Marketing and Technology Fee, also at 8% of Gross Revenue. By excluding approved discount coupon amounts from Gross Revenue, 1-800-GOT-JUNK? reduces the base upon which these fees are calculated, potentially lowering the franchisee's financial obligations to the franchisor.