Are car wash and automotive repair revenues included in Gross Sales for an Aplus franchise?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
The following are not included in Gross Sales: (a) gasoline, diesel, and other fuel sales (if applicable, when operating a fueling station), (b) the amount of tax imposed by the United States or any city, county, state, or other governmental entity or agency or instrumentality thereof upon or with respect to retail sales of tangible personal property measured by a stated percentage of sales price or gross receipts, whether imposed upon you as a seller or upon the customer as a purchaser; (c) any deposits refunded to customers; (d) the sale price of returned merchandise by customers when the full sale price is refunded either in cash or credit, but this exclusion shall not apply in any instance when the customer, in order to obtain the refund, is required to purchase other property at a price equal to or greater than the amount charged for the property which is returned. For purposes of calculating Gross Sales, refund or credit of the entire amount shall be deemed to be given when the purchase price, less re-handling and restocking costs, is refunded or credited to the customer; (e) lottery and other commissions; (f) money orders (face value); (g) ATM income from fees, commissions, and rentals; (h) money order fees; (i) prepaid product sales and commissions on products from designated supplier; (j) federal, state and local excise taxes on cigarettes. For purposes of this excise tax exclusion, the calculation and deduction of the above taxes shall be calculated based on the tax rate that is in effect on the first day of the month, and is only applicable to cigarette products that are authorized as a part of the APLUS cigarette planograms; (k) car wash and automotive repairs; and (l) proprietary SUNOCO food service businesses and convenience store product offerings from which no royalty is collected in accordance with the terms of the applicable participation agreement.
Source: Item 6 — OTHER FEES (FDD pages 16–28)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, revenues from car wash and automotive repairs are explicitly excluded from the calculation of Gross Sales for royalty fee purposes. This means that Aplus franchisees do not pay a percentage-based royalty fee on any revenue generated from these specific services.
This exclusion can be a significant benefit for franchisees who operate locations with car wash or automotive repair services, as it lowers the overall royalty burden. The FDD specifies that Gross Sales include total sales from merchandise, services, equipment rentals, and merchandise inventory variation. However, it also lists several exclusions, including fuel sales, taxes, customer refunds, lottery commissions, money order values and fees, ATM income, prepaid product sales, excise taxes on cigarettes, and, notably, car wash and automotive repairs.
For a prospective Aplus franchisee, understanding what constitutes Gross Sales is crucial for accurately projecting revenue and calculating royalty payments. By excluding car wash and automotive repair revenues from Gross Sales, Aplus creates an incentive for franchisees to offer these services, potentially increasing overall customer traffic and profitability without increasing royalty obligations. This is a notable advantage compared to franchise systems where all revenue streams are subject to royalty fees.