Can sales taxes be deducted from Gross Revenue for a 1-800-GOT-JUNK? franchise?
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, franchisees can deduct sales taxes from their gross revenue under specific conditions. Gross revenue is defined as the total sale price from the operation of the franchised business. However, deductions are allowed for sums collected on behalf of a governmental authority for sales taxes, goods and services taxes, or other taxes imposed directly upon the sale of goods or services.
For a 1-800-GOT-JUNK? franchisee to deduct these taxes, they must have actually paid or accounted for the tax to the appropriate governmental authority. This means that franchisees need to maintain accurate records of all sales taxes collected and remitted. This provision ensures that franchisees are not paying royalties or other fees on money that is simply being passed through to the government.
In addition to sales taxes, 1-800-GOT-JUNK? franchisees can also deduct refunds or credits given to customers, uncollected credit accounts (as long as they are deemed uncollectible according to the franchisor's policies), and amounts uncollected due to discount coupons approved in advance by the franchisor. Furthermore, any sales assumed to have been lost due to an interruption of the franchised business, which an insurer has paid business interruption insurance on, must be included in the calculation of Gross Revenue.