For a B Bops franchise, what is excluded from the definition of 'Gross sales'?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
"Gross sales" means the aggregate amount of sales of food, beverage and promotional items generated by the Franchise and includes all sales, receipts and revenues in any form and from any and all sources whatsoever, directly or indirectly, received through operation of the Franchise, whether for cash or credit and regardless of collection in the case of credit. "Gross sales" does not include the amount of any sales or other taxes imposed by any governmental authority directly on sales and collected from customers, provided that the amount of such tax is added to the selling price or otherwise absorbed therein and actually paid to such governmental authority.
Source: Item 6 — OTHER FEES (FDD pages 14–18)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, gross sales are defined as the total revenue from food, beverage, and promotional items. However, the definition of gross sales for a B Bops franchise specifically excludes sales or other taxes imposed by a governmental authority that are directly on sales and collected from customers.
For a prospective B Bops franchisee, this means that when calculating royalties and other fees based on gross sales, you do not include the amount of sales tax you collect from customers and remit to the government. This exclusion only applies if the tax amount is added to the selling price or absorbed within it and is actually paid to the relevant governmental authority.
This is a fairly standard practice in franchising, as franchisees are essentially acting as collection agents for sales taxes. Excluding these taxes from gross sales ensures that franchisees are not paying royalties on money that is simply being passed through to the government.