What is included in the definition of "Net Sales" for an Auntie Annes shop?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
"Net Sales" includes all revenues generated by a Shop or conducted from or with respect to a Shop, whether the sales are evidenced by cash, check, credit, charge, account, barter or exchange, but does 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. See Note 2 of Item 6 for a complete definition of "Net Sales." In this Item 19, we have not included sales for SRUs that are related to any of the Shops.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 92–95)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, "Net Sales" encompasses all revenues generated by a shop, including sales evidenced by cash, check, credit, charge, account, barter, or exchange. This broad definition ensures that all forms of income directly resulting from the shop's operations are included in the calculation of net sales. However, certain items are specifically excluded from the "Net Sales" calculation.
Specifically, the following items are not included in "Net Sales": (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.
Understanding what constitutes "Net Sales" is crucial for prospective Auntie Annes franchisees because it directly impacts the financial performance representations provided in Item 19 of the FDD. These figures are used to calculate average net sales by quartiles for various franchise types, such as Enclosed Mall Franchises, Outlet Center Franchises, Airport Franchises, and Cinnabon Co-Branded Franchises. By understanding the inclusions and exclusions, franchisees can better assess their potential earnings and compare their performance against the averages presented in the FDD. Note 2 of Item 6 contains a complete definition of "Net Sales."