What items are excluded from the Gross Sales calculation for a 360 Painting franchise?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
Moreover, Gross Sales shall include all commissions, finder's fees, referral fees, construction management fees or other compensation received by Franchisee arising in any way from the operations of the Business. (For purposes of this paragraph, the term "Franchisee" includes its owners and officers as well as any business entity through which the Business is operated.) Gross Sales does not include (i) promotional allowances or rebates paid to Franchisee in connection with its purchase of products or supplies; (ii) sales, use, merchants' or other taxes measured on the basis of the gross revenues of the Business imposed by governmental authorities directly on sales or use and collected from customers, provided that the taxes are added to the selling price of Franchisee's goods and services and are in fact paid by Franchisee to the appropriate governmental authorities; or (iii) the value of any coupons duly issued and approved by Franchisor, or any bona fide discounts or customer refunds approved by Franchisor.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 FDD, 360 Painting's definition of Gross Sales excludes specific items from the calculation. These exclusions provide clarity for franchisees when reporting their earnings and calculating royalty payments.
Specifically, Gross Sales for a 360 Painting franchise does not include: (i) promotional allowances or rebates paid to the franchisee in connection with their purchase of products or supplies; (ii) sales, use, merchants' or other taxes measured on the basis of the gross revenues of the business imposed by governmental authorities directly on sales or use and collected from customers, provided that the taxes are added to the selling price of the franchisee's goods and services and are in fact paid by the franchisee to the appropriate governmental authorities; or (iii) the value of any coupons duly issued and approved by 360 Painting, or any bona fide discounts or customer refunds approved by 360 Painting.
This definition ensures that franchisees are not paying royalties on revenues that are passed through to other entities (such as taxes) or represent savings to the customer (such as discounts and rebates). It is common practice in franchising to exclude these types of items from gross sales calculations, as they do not represent actual revenue retained by the franchisee. Franchisees should ensure they properly document and report these exclusions in accordance with 360 Painting's guidelines to avoid any discrepancies or issues with royalty payments.