Are chargebacks deducted from Gross Sales when calculating fees 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, chargebacks are not deducted from Gross Sales when calculating fees. The FDD defines "Gross Sales" as the total amount of sales and any merchandise inventory variation, including all consideration received for sales from the Aplus store. This includes sales from merchandise, services, equipment rentals, and merchandise inventory variation.
The definition of Gross Sales for Aplus specifically states that there are no deductions for the cost of goods sold, material used, labor, interest, or transportation costs. Gross Sales also include barter and exchange transactions, business interruption insurance proceeds, and payments received from vendors.
This means that Aplus franchisees will pay royalty fees based on their total sales revenue without any reduction for chargebacks. This could potentially increase the royalty fees paid by the franchisee, as the fees are calculated on a higher Gross Sales figure. Franchisees should factor this into their financial projections and business planning.