How is 'Gross Revenue' defined for the purpose of calculating the Royalty Fee for an All States M.E.D. franchise?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee1 | 8% of Gross Revenues | Due monthly by the 10th of the month for the previous month | "Gross Revenue" means all of your revenue from operating the franchise, but excluding taxes collected from customers and paid to taxing authority, and reduced by the amount of any documented refunds, credits, allowances, and chargebacks the Business in good faith gives to customers. FA 3.2. |
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, the royalty fee is 8% of Gross Revenues. For royalty fee calculation purposes, Gross Revenue is defined as all revenue from operating the franchise. However, this excludes taxes collected from customers that are then paid to a taxing authority. Gross Revenue is also reduced by the amount of any documented refunds, credits, allowances, and chargebacks that the All States M.E.D. business in good faith gives to customers.
This definition of Gross Revenue is important for prospective All States M.E.D. franchisees because it directly impacts the amount of royalty fees they will owe. By excluding taxes collected and customer refunds/credits from the Gross Revenue calculation, the franchisee only pays a percentage of the actual revenue retained by the business.
Franchisees should keep accurate records of all sales, taxes collected, and customer refunds/credits to ensure accurate royalty fee reporting. Understanding this definition is crucial for managing the financial obligations of an All States M.E.D. franchise and maintaining a transparent relationship with the franchisor.