Does the Gross Revenue definition for a 1-800-GOT-JUNK? franchise include the sale of services?
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.
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 explicitly includes the sale of services. The Franchise Agreement defines Gross Revenue as the total sales price from the operation of the franchised business, encompassing all sales, whether in cash, credit, or other forms of payment, including the sale of any services or products. This definition is important because several fees payable to 1-800-GOT-JUNK? are calculated as a percentage of Gross Revenue.
The FDD specifies a few deductions that are allowed from Gross Revenue. These include sales taxes collected for governmental authorities, refunds or credits given to customers according to 1-800-GOT-JUNK?'s policies, uncollected credit accounts deemed uncollectible per company policy, and amounts uncollected due to approved discount coupons. Additionally, any sales assumed to have been lost due to business interruption and compensated by insurance are also included in the Gross Revenue calculation.
For a prospective 1-800-GOT-JUNK? franchisee, understanding what constitutes Gross Revenue is crucial for accurately calculating royalty fees, sales, marketing, and technology fees, and potential branding cooperative contributions. These fees are calculated as percentages of Gross Revenue, with royalties and sales, marketing, and technology fees each set at 8% of Gross Revenue. The branding cooperative fee can be up to 5% of Gross Revenue, if applicable. Therefore, accurately tracking and reporting all sales, including services, is essential for compliance with the Franchise Agreement and financial planning.