What is the definition of 'Gross Receipts' for the purpose of calculating the Royalty fee for Annex Brands?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 2: "Gross Receipts" means the total of all sales of products and services to your customers, whether or not sold or performed at or from the franchised business, excluding: (i) sales, use or service taxes
collected and paid to appropriate taxing authorities; (ii) customer refunds and adjustments; (iii) the cost of electronic funds transfers for resale; (iv) the cost of money orders for resale; (v) utility funds collected; (vi) the cost of lottery tickets for resale and phone cards for resale; (vii) the cost of 3rd party truck rental sales; (viii) the cost of eBay sales; (ix) the cost of metered postage and postage stamps for resale; and (x) the cost of ancillary fees paid to the appropriate government agencies to process fingerprinting, LiveScan and passports. We reserve the right periodically, in our sole discretion, to add additional exclusions to the list above as new programs, products or services are established, or as changes to existing programs, products or services are established, as specified by us in our Manuals, in writing or otherwise.
Source: Item 6 — OTHER FEES (FDD pages 24–32)
What This Means (2025 FDD)
According to Annex Brands's 2025 Franchise Disclosure Document, "Gross Receipts" are defined as the total income from all sales of products and services to customers, regardless of whether the sales or services are conducted at or from the franchised business. This is the figure used to calculate the royalty fee, which is 5% of Gross Receipts. This means that Annex Brands franchisees must include all revenue sources when calculating their royalty payments.
However, the definition of Gross Receipts also includes several exclusions. These exclusions include sales, use, or service taxes collected and paid to taxing authorities, customer refunds and adjustments, the cost of electronic funds transfers, money orders, utility funds, lottery tickets, phone cards, 3rd party truck rental sales, eBay sales, metered postage and postage stamps for resale, and ancillary fees paid to government agencies for processing fingerprinting, LiveScan, and passports. These exclusions reduce the amount of revenue subject to the royalty fee, potentially lowering the franchisee's costs.
Annex Brands retains the right to modify these exclusions periodically at its discretion as new programs, products, or services are introduced or as changes are made to existing ones. These changes will be communicated in the Annex Brands's manuals or in writing. Franchisees should stay informed about any updates to the definition of Gross Receipts to ensure accurate royalty payments. This flexibility allows Annex Brands to adapt the royalty calculation to changing business conditions and new revenue streams, but it also introduces a degree of uncertainty for franchisees.