Does the Net Sales definition for Auntie Annes include delivery fees?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
that are paid to you by a customer or by a third-party delivery or catering service (e.g., Uber Eats, Postmates, Grubhub, ezCater, or DoorDash) (a "TPS") in connection with delivery or catering services related to your Franchised Business (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 the 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 Franchised Business, or (g) tips.
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Anne's 2024 Franchise Disclosure Document, net sales include amounts paid by a customer or third-party delivery service like Uber Eats, Postmates, Grubhub, ezCater, or DoorDash in connection with delivery or catering services. The net sales will not be reduced by any commissions, fees, discounts, credits, or coupons applied to the order by the third-party delivery service.
This means that Auntie Anne's franchisees must include the full amount charged to the customer for delivery and catering orders in their reported net sales, even if the franchisee receives a smaller amount from the delivery service after deductions. This is important because royalties and advertising fees are calculated as a percentage of net sales.
However, net sales will not include items such as the initial sales or reloading of gift cards, discounts, refunds made in good faith to customers, discounted employee meals, sales, meals, use or excise tax imposed by a governmental authority directly on sales and collected from customers, the sale of equipment used in the operation of the Franchised Business, or tips.