Are unauthorized sales included in the Gross Revenues calculation for an Apricot Lane franchise?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
to authorize anything other than over-the-counter sales by the Franchised Business, but if other types of sales are made, even if unauthorized, revenue from those sales is included in Gross Revenues. 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, even if a franchisee makes sales that are not explicitly authorized, the revenue from those sales is included in the calculation of Gross Revenues. This means that all revenue streams, regardless of whether Apricot Lane has specifically approved them, contribute to the Gross Revenues figure used for royalty and other fee calculations.
However, certain deductions are allowed from Gross Revenues. These include sales tax receipts or similar tax receipts that are chargeable to customers, provided these taxes are separately stated when the customer is charged and paid to the appropriate taxing authority. Additionally, documented refunds, chargebacks, credits, and allowances given in good faith to customers can also be deducted from Gross Revenues.
For calculating Gross Revenues, money received from the sale of gift cards is not recognized as Gross Revenue until the gift cards are redeemed. At the point of redemption, the amount redeemed is included in Gross Revenue. Furthermore, all barter or exchange transactions, where the franchisee provides services or products in exchange for goods or services, are valued at the full retail value of the goods or services provided to the franchisee when determining Gross Revenues.