How are barter and exchange transactions valued when calculating Gross Sales for an Aplus franchise?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
Note 1: "Gross Sales" means total amount of your sales and any merchandise inventory variation including the total amount of consideration, valued in U.S. currency, received by you for sales from or in the APLUS Store from: (a) merchandise, (b) services, (c) equipment rentals, and (d) merchandise inventory variation, if any, as further described in the Systems Manual, without deduction on account of any of the following: (a) the cost of goods sold, including taxes paid by you in procuring goods for resale; (b) the cost of material used, labor or service cost, interest paid or any other expense; or (c) the cost of transportation of the goods. Gross Sales include all barter and exchange transactions for which you furnish services or products in exchange for goods or services to be provided by the vendor, supplier or customer will be valued at the full retail value of the goods and services bartered in exchange for the good or services provided to you. Gross Sales also includes the proceeds of any business interruption insurance paid to you. Gross Sales also includes any payments you receive from vendors. Chargebacks are not deducted from Gross Sales.
Source: Item 6 — OTHER FEES (FDD pages 16–28)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, gross sales include all barter and exchange transactions. These transactions, where Aplus franchisees furnish services or products in exchange for goods or services from a vendor, supplier, or customer, are valued at the full retail value of the goods and services that are bartered in exchange for the goods or services provided to the franchisee.
This means that when calculating the gross sales figure upon which royalties are based, Aplus franchisees must account for the full retail value of any goods or services they receive through barter or exchange. This valuation method ensures that Aplus receives its royalty fees based on the fair market value of the transactions, regardless of whether cash changes hands.
For a prospective Aplus franchisee, this policy highlights the importance of accurately tracking and valuing all barter and exchange transactions. Failure to do so could result in underreporting of gross sales and potential disputes with Aplus. Franchisees should maintain detailed records of all such transactions, including the retail value of the goods or services received, to ensure compliance with the franchise agreement. This is a fairly standard practice in franchising, as franchisors typically want to capture the full economic benefit derived from the franchise operation when calculating royalties.