What is the definition of 'Gross Revenue' according to Section 3.3 of the 1-800-GOT-JUNK? Franchise Agreement?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
3.3 Definition of “Gross Revenue”. The term “Gross Revenue” as used in this Agreement means 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 accordance with Franchisor’s policies and procedures in relation to refunds set out in the Operations Manual;
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
According to the 2025 1-800-GOT-JUNK? Franchise Disclosure Document, Gross Revenue is defined in Section 3.3 of the Franchise Agreement as the total sales price from the Franchised Business's operations, encompassing cash, credit, or payment in kind (valued at fair market value). This includes all sales of services or products connected to the Franchised Business.
However, 1-800-GOT-JUNK? does allow for some deductions from Gross Revenue. These deductions include sums collected for sales taxes, goods and services taxes, or other taxes imposed directly on the sale of goods or services, provided that these taxes have been paid to the appropriate governmental authority. Additionally, the amount of any refund or credit given to a customer for services or products is deductible, as long as the refund or credit aligns with 1-800-GOT-JUNK?'s policies and procedures outlined in the Operations Manual.
Understanding the definition of Gross Revenue is crucial for a prospective 1-800-GOT-JUNK? franchisee because the royalty fees owed to 1-800-GOT-JUNK? are calculated as a percentage of Gross Revenue. Knowing what constitutes Gross Revenue and what deductions are permitted ensures accurate royalty payments and financial reporting. Franchisees should carefully review Section 3.3 of the Franchise Agreement and the Operations Manual to fully understand these stipulations.