What deductions are allowed from Gross Revenues when calculating the Royalty fee for an Apricot Lane franchise?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) You must pay a Royalty on a semi-monthly basis of 5.5% of Gross Revenues. "Gross Revenues" means and includes all revenue and income of any nature earned or derived in connection with the operation of the Franchised Business or the use of the Marks and the System, including but not limited to revenue from the sale at retail (through any distribution channel) or at wholesale of merchandise and services to your customers whether received in the form of cash, check, redemption of a gift card or gift certificate, services in kind, from barter and/or exchange, on credit (whether or not payment is received) or otherwise. There will be deducted from Gross Revenues the amount of all sales tax receipts or similar tax receipts which, by law, are chargeable to customers, if such taxes are separately stated when the customer is charged and if such taxes are paid to the appropriate taxing authority. The amount of any documented refunds, charge backs, credits and allowances given in good faith to customers by you will also be deducted from Gross Revenues. For purposes of calculating Gross Revenues, amounts received in payment for gift cards will not be recognized as Gross Revenue upon the sale of the gift cards, but upon the redemption of the gift cards in the amount redeemed. All barter and/or exchange transactions pursuant to which you furnish services and/or products in exchange for goods or services to be provided to you by a vendor, supplier or customer will, for the purpose of determining Gross Revenues, be valued at the full retail value of the goods and/or services so provided to you.
Source: Item 6 — OTHER FEES (FDD pages 11–14)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, the royalty fee is 5.5% of Gross Revenues, payable semi-monthly. Gross Revenues are defined as all revenue and income earned from the operation of the franchised business, including sales of merchandise and services through any distribution channel. This includes revenue received in cash, check, gift card redemption, services in kind, barter, exchange, or credit, regardless of whether payment has been received.
When calculating the royalty fee for Apricot Lane, franchisees can deduct certain items from Gross Revenues. These deductions include the amount of all sales tax receipts or similar tax receipts which, by law, are chargeable to customers, if such taxes are separately stated when the customer is charged and if such taxes are paid to the appropriate taxing authority. Additionally, franchisees can deduct the amount of any documented refunds, charge backs, credits, and allowances given in good faith to customers.
It is important to note that amounts received in payment for gift cards are not recognized as Gross Revenue upon the sale of the gift cards. Instead, they are recognized as Gross Revenue upon the redemption of the gift cards, in the amount redeemed. All barter and/or exchange transactions are valued at the full retail value of the goods and/or services provided by the franchisee.
Apricot Lane franchisees should maintain accurate records of all sales, taxes, refunds, charge backs, credits, and allowances to ensure accurate calculation and reporting of Gross Revenues and royalty fees. Failure to accurately report Gross Revenues could result in audits and additional costs.