What is included in the definition of 'Gross Revenues' for an Apricot Lane franchise?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
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, "Gross Revenues" is comprehensively defined for the purpose of calculating royalty payments. It encompasses all revenue and income, irrespective of its nature, that is earned or derived from the operation of the franchised business, the use of trademarks, or the Apricot Lane system. This includes revenue from retail sales through any distribution channel and wholesale sales of merchandise and services to customers. The form of payment is irrelevant, covering cash, checks, gift card redemptions, services in kind, barter, exchange, and credit transactions, regardless of whether payment has been received.
However, there are specific deductions allowed from Gross Revenues. These include sales tax receipts or similar tax receipts that are chargeable to customers by law, provided these taxes are separately stated when the customer is charged and are paid to the appropriate taxing authority. Additionally, documented refunds, chargebacks, credits, and allowances given in good faith to customers can be deducted. For gift cards, the amount received upon the sale of gift cards is not recognized as Gross Revenue. Instead, Gross Revenue is recognized upon the redemption of the gift cards, in the amount redeemed.
Barter and exchange transactions are also addressed in the definition of Gross Revenues. If an Apricot Lane franchisee furnishes services or products in exchange for goods or services from a vendor, supplier, or customer, these transactions are valued at the full retail value of the goods or services provided by the franchisee for the purpose of calculating Gross Revenues. This comprehensive definition ensures that all forms of income are included in the royalty calculation, while also accounting for necessary deductions and specific transaction types.