Are sales taxes collected from customers included in the Gross Sales calculation 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.
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
Source: Item 6 — OTHER FEES (FDD pages 16–28)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, gross sales do not include the amount of tax imposed by a governmental entity on retail sales, whether imposed on the franchisee as a seller or on the customer as a purchaser. Gross Sales for an Aplus store are defined as the total amount of 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. This is before any deductions for the cost of goods sold, taxes paid by you in procuring goods for resale, the cost of materials, labor, service costs, interest paid, or any other expenses, including transportation costs. Gross Sales also include all barter and exchange transactions, business interruption insurance proceeds, and payments received from vendors. Chargebacks are not deducted from Gross Sales.
For an Aplus franchisee, this means that when calculating the sales figures on which royalties are based, you will not include sales taxes collected from customers. This can reduce the royalty fees owed to Aplus, as the percentage is applied to a smaller, net sales figure. However, franchisees should be aware that this exclusion is specifically for sales taxes imposed on retail sales and does not extend to other types of taxes or fees. Franchisees must accurately track and report their gross sales, ensuring that all applicable inclusions and exclusions are properly accounted for.
It is important to note that while sales taxes are excluded from gross sales, other taxes paid by the franchisee in procuring goods for resale are not deductible. This distinction highlights the importance of understanding the specific inclusions and exclusions in the gross sales definition to ensure accurate royalty reporting and compliance with the Aplus franchise agreement. Additionally, the definition of gross sales includes various forms of revenue, such as barter transactions and vendor payments, which franchisees must also consider when calculating their gross sales figures.