How are 'Gross Revenues' defined for an All States M.E.D. franchise?

According to All States M.E.D.'s 2024 Franchise Disclosure Document, "Gross Revenues" are defined as all business revenue a franchisee accrues during the operation of their franchise. However, this definition excludes taxes collected from customers that are then paid to any taxing authority. Additionally, the gross revenue figure is reduced by the amount of any documented refunds, credits, allowances, and chargebacks given in good faith to customers.

For a prospective All States M.E.D. franchisee, this definition is important because royalties and other fees owed to the franchisor are typically calculated as a percentage of gross revenues. Understanding exactly what constitutes gross revenue ensures accurate reporting and payment of these fees. Franchisees should keep detailed records of all sales, taxes collected, refunds, credits, and allowances to accurately calculate their gross revenues.

The exclusion of taxes collected and the deduction of refunds and allowances are standard practices in franchise agreements. This ensures that franchisees are not paying royalties on money that is simply being passed through to taxing authorities or returned to customers. The requirement that refunds and allowances be "documented" and given "in good faith" is also typical, preventing franchisees from artificially reducing their gross revenues to lower their royalty payments.

It is important for potential All States M.E.D. franchisees to fully understand this definition and maintain accurate financial records. Any discrepancies in reported gross revenues could lead to disputes with the franchisor and potential penalties.