Are there any deductions allowed 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. 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, the Franchise Agreement defines Gross Revenue as the total sale price from the operation of the Franchised Business, whether it's cash, credit, or other forms of payment. However, 1-800-GOT-JUNK? does allow for certain deductions from Gross Revenue under specific conditions. These deductions directly impact the royalty and other fees franchisees pay, as these are often calculated as a percentage of Gross Revenue. Therefore, understanding these deductions is crucial for accurately forecasting potential earnings and expenses.
The allowable deductions from Gross Revenue for a 1-800-GOT-JUNK? franchise include sums collected for governmental authorities on account of sales taxes, goods and services taxes, or other similar taxes, provided these amounts have been properly paid or accounted for. Additionally, franchisees can deduct the amount of any refund or credit given to a customer for services or products, as long as the refund or credit aligns with 1-800-GOT-JUNK?'s policies and procedures outlined in the Operations Manual. This ensures that franchisees are not penalized for legitimate customer service actions.
Further deductions are permitted for uncollected or uncollectable credit accounts, provided they are deemed so according to 1-800-GOT-JUNK?'s policies in the Operations Manual. Also deductible are amounts uncollected from customers due to discount coupons that 1-800-GOT-JUNK? has pre-approved. Finally, the FDD specifies that if the Franchised Business's operation is interrupted, any sales assumed to have been lost due to the interruption, which forms the basis for business interruption insurance payments, must still be included in the Gross Revenue calculation. This comprehensive definition ensures clarity and consistency in calculating Gross Revenue, which directly affects the royalties and fees paid to 1-800-GOT-JUNK?.