What documented items can be further deducted from Gross Revenues for an Apricot Lane franchise?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
There will be deducted from Gross Revenues for purposes of said computation (but only to the extent they have been included) 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. There will be further deducted from Gross Revenues the amount of any documented refunds, charge backs, credits and allowances given in good faith to customers by FRANCHISEE. 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 FRANCHISEE furnishes services and/or products in exchange for goods or services to be provided to FRANCHISEE 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 FRANCHISEE.
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, franchisees can deduct specific items from their gross revenues when calculating royalties and other fees. These deductions are limited to amounts that were initially included in the gross revenues. Specifically, franchisees can deduct the amount of all sales tax receipts or similar tax receipts which, by law, are chargeable to customers, provided these taxes are separately stated when the customer is charged and are paid to the appropriate taxing authority.
Additionally, Apricot Lane franchisees can deduct the amount of any documented refunds, chargebacks, credits, and allowances given in good faith to customers. This means that if a customer returns an item and receives a refund, or if a customer is given a credit due to a defect or issue with their purchase, the amount of that refund or credit can be deducted from the gross revenues, as long as it is properly documented.
Furthermore, the FDD clarifies how gift cards are treated in the calculation of gross revenues. Amounts received from the sale of gift cards are not recognized as gross revenue at the time of sale. Instead, gross revenue is recognized when the gift cards are redeemed, and only in the amount redeemed. This approach ensures that franchisees are not paying royalties on unredeemed gift card balances. All barter and/or exchange transactions pursuant to which FRANCHISEE furnishes services and/or products in exchange for goods or services to be provided to FRANCHISEE 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 FRANCHISEE.