What sales taxes are excluded from 'Gross Sales' when calculating revenue for an Annex Brands franchise?
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.
Source: Item 19 — Financial Performance Representations (FDD pages 74–78)
What This Means (2025 FDD)
According to Annex Brands's 2025 Franchise Disclosure Document, 'Gross Sales' for the purpose of calculating revenue excludes sales, use, or service taxes collected and paid to the appropriate taxing authorities. This means that when an Annex Brands franchisee calculates their total revenue, they do not include the amount of sales tax they have collected from customers and remitted to government entities. This exclusion applies to all Annex Brands franchises.
This is a standard practice in franchising and business accounting. Franchisees are only responsible for paying royalties on the actual revenue they retain, not on taxes they collect on behalf of the government. Excluding sales tax from gross sales provides a clearer picture of the franchisee's actual earnings and ensures that royalty fees are calculated fairly.
In addition to sales taxes, Annex Brands also excludes other items from 'Gross Sales' such as customer refunds and adjustments, the cost of electronic funds transfers for resale, the cost of money orders for resale, utility funds collected, the cost of lottery tickets for resale and phone cards for resale, the cost of 3rd party truck rental sales, the cost of eBay sales, and the cost of ancillary fees paid to the appropriate government agencies to process fingerprinting, LiveScan and passports. These exclusions provide a more accurate representation of the revenue that is subject to royalty and other fee calculations.