What revenue is specifically excluded from the "Gross Sales" calculation for Annex Brands franchises?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
- "Gross Sales" include all revenue for products and services sold to customers, including products and services with higher margins such as shipping services (including ground, next day, freight and custom packaging), faxes, copies and metered postage, and products and services with lower margins such as postage stamps, but exclude: (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; and (ix) the cost of ancillary fees paid to the appropriate government agencies to process fingerprinting, LiveScan and passports.
Our franchisees pay royalty fees and marketing fees based on Gross Receipts (defined in Item 6), which are calculated by excluding the cost of metered postage and postage stamps from Gross Sales.
Both Gross Sales and Gross Receipts include fees and commissions generated from electronic funds transfers, money order sales, utility collections, lottery ticket sales, phone card sales, 3rd party truck rental sales, fingerprinting, LiveScan, passport services, and eBay sales.
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 19 — Financial Performance Representations (FDD pages 74–78)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, "Gross Sales" include all revenue for products and services sold to customers. However, there are several specific exclusions from this calculation. These exclusions include sales, use, or service taxes collected and paid to the appropriate taxing authorities, as well as customer refunds and adjustments.
Additionally, the cost of electronic funds transfers for resale, the cost of money orders for resale, and utility funds collected are excluded from the "Gross Sales" calculation. The cost of lottery tickets for resale, phone cards for resale, 3rd party truck rental sales, eBay sales, and ancillary fees paid to government agencies for processing fingerprinting, LiveScan, and passports are also excluded.
It is important to note that Annex Brands reserves the right to add additional exclusions to this list as new programs, products, or services are established or changed. Franchisees should be aware of these exclusions as they calculate their gross sales, as this figure is used to determine royalty and marketing fees. Understanding what is included and excluded from gross sales is crucial for accurate financial reporting and compliance with the franchise agreement.