Are sales taxes collected directly from customers by the Aerus franchisee included in gross sales?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
The term "Gross Sales" as used in the above-referenced tables means the total selling price of all services and products and all income of every other kind and nature related to the Franchised Business (including, without limitation and to the extent applicable, the total selling price of the Consigned Products and income related to repair services, accessories and spare parts), whether for cash or credit and regardless of collection in the case of credit. Under no circumstances will Franchisee's expenses, including third party delivery expenses, be deducted from Gross Sales. If a cash shortage occurs, the amount of Gross Sales will be determined based on the records of the electronic cash register system or point-of-sale system and any cash shortage will not be considered in the determination of Gross Sales. Gross Sales will, however, expressly exclude the following:
- (1) Sums representing sales taxes collected directly from customers by Franchisee in the operation of the Franchised Business, and any sales, value added or other tax, excise or duty charged to customers which is levied or assessed against Franchisee by any Federal, state, municipal or local authority, based on sales of specific merchandise sold at or from the Franchised Business, provided that such taxes are actually transmitted to the appropriate taxing authority;
- (2) The exchange of merchandise among Approved Locations, if more than one Approved Location is operated by Franchisee, where such exchanges are made solely for the convenient operation of the Franchised Business;
- (3) Company-approved discounts and trade-ins for the purchase of Consigned Products only;
- (4) Returns to shippers or manufacturers of any products returned to Franchisee by a retail customer, where the sale of such product by Franchisee was previously included in Gross Sales; and
- (5) Proceeds from isolated sales of trade fixtures not constituting any part of the Products nor having any material effect upon the ongoing operation of the Franchised Business required under the Franchise Agreement.
Source: Item 6 — Other Fees (FDD pages 20–27)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, gross sales do not include sales taxes collected directly from customers. Gross sales are defined as the total selling price of all services and products, and all income related to the franchised business. This includes the total selling price of consigned products and income related to repair services, accessories, and spare parts, whether for cash or credit, and regardless of collection in the case of credit.
However, the definition of Gross Sales expressly excludes sums representing sales taxes collected directly from customers, provided these taxes are actually transmitted to the appropriate taxing authority. This exclusion also applies to any sales, value-added, or other tax, excise, or duty charged to customers which is levied or assessed against the franchisee by any Federal, state, municipal, or local authority, based on sales of specific merchandise sold at or from the franchised business, provided that such taxes are actually transmitted to the appropriate taxing authority.
For a prospective Aerus franchisee, this means that the royalty fees and other fees calculated as a percentage of gross sales will not include the amount of sales taxes collected from customers and remitted to the government. This is a common practice in franchising, as including sales tax in gross sales would unfairly increase the franchisee's financial obligations to the franchisor. Franchisees should ensure they accurately track and remit sales taxes to maintain compliance and avoid any potential disputes with Aerus regarding gross sales calculations.