Are gift card reloads included in the calculation of Auntie Annes 'Net Sales'?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
o your Shop (recognizing that though the TPS may pay you an amount equal to the purchase price charged to the customer less a commission, other fees, and any discounts, credits, or coupons applied to that order, such commission, fees, discounts, credits, and coupons will not be deducted from your Net Sales). Net Sales will not include (a) the initial sales or reloading of gift cards, (b) discounts, (c) the sale of food or merchandise for which refunds have been made in good faith to customers, (d) the discounted portion of employee meals, (e) sales, meals, use or excise tax imposed by a governmental authority directly on sales and collected from customers, provided that the amount for the tax is added to the selling price or absorbed therein and is actually paid by you to a governmental authority, (f) the sale of equipment used in the operation of the Shop, or (g) tips. Net Sales includes sales made from an SRU.
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- "Streetside Locations" include freestanding, inline, and endcap locations on city streets or in shopping centers (including power centers, lifestyle centers, and strip centers, but excluding malls (enclosed and open air) and outlet malls and centers).
Source: Item 6 — OTHER FEES (FDD pages 30–44)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, the initial sales or reloading of gift cards are specifically excluded from the calculation of Net Sales. However, the redemption of gift cards is included in the calculation of Net Sales.
This means that while Auntie Annes franchisees do not pay royalties on the money received when a customer initially buys or reloads a gift card, they do pay royalties when a customer uses a gift card to purchase products. This distinction is important for franchisees to understand, as it affects how their royalty fees are calculated.
For a prospective Auntie Annes franchisee, this information is crucial for accurately forecasting revenue and royalty payments. It highlights the importance of tracking gift card sales and redemptions separately to ensure accurate financial reporting and royalty calculations. Understanding this aspect of Net Sales helps in managing the financial aspects of the franchise effectively.