Are sales taxes included in the calculation of Alloy's Gross Sales?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
B. "Gross Sales" means the total gross revenue from the provision of all products and services sold or performed in, at, from or away from the Facility, or through or by means of the Business, whether from cash, check, credit card, debit card, barter or exchange, or other credit transactions, and regardless of collection, and including (a) class fees, membership fees, initiation fees, enrollment fees, processing fees, paid-in-full dues, renewal fees, corporate/third party payer fees, monthly dues and any fees or revenue generated and derived during any pre-sales; (b) fees and charges for optional services such as personal training, small group training and other optional programs we design; (c) fees charged to non-members using the Facility's services; and (d) revenue derived from merchandise and product sales. Sales taxes, use taxes, and other similar taxes added to the sales price and collected from the customer and paid to the appropriate taxing authority are deducted from Gross Sales.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, sales taxes are deducted from gross sales. Gross Sales for an Alloy franchise are defined as the total gross revenue from all products and services sold, whether paid via cash, check, credit card, or other forms of payment, regardless of collection status. This includes various fees such as class fees, membership fees, initiation fees, enrollment fees, processing fees, renewal fees, corporate/third party payer fees, monthly dues, and any revenue generated during pre-sales. It also encompasses fees for optional services like personal training and revenue from merchandise sales.
However, the definition explicitly states that "Sales taxes, use taxes, and other similar taxes added to the sales price and collected from the customer and paid to the appropriate taxing authority are deducted from Gross Sales." This means that franchisees do not have to pay royalties on the portion of revenue collected to cover sales tax obligations.
For a prospective Alloy franchisee, this is a positive aspect as it reduces the base upon which royalties are calculated. It aligns with standard franchising practices where sales taxes are typically excluded from gross sales to ensure franchisees are not paying a percentage on funds they are simply collecting and remitting to government entities.