How is 'gross sales' defined for the purpose of calculating the B Bops royalty and service fee?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
D. Definition of Gross Sales. For purposes of this Agreement, the term "gross sales" shall be defined to mean the aggregate amount of all sales of food, beverage and promotional items generated by the Franchise and shall include all sales, receipts and revenues in any form and from any and all sources whatsoever, directly or indirectly received by Franchisee as a result of the Franchise, whether for cash or credit and regardless of collection in the case of credit. The term "gross sales" shall also include all revenues derived from the sale of any product or service not included in the Licensed System, but for which Company has given its consent. The term "gross sales" shall not include the amount of any sales or other tax imposed by any federal, state, municipal or other governmental authority directly on sales and collected from patrons, provided that the amount of such tax is added to the selling price or otherwise absorbed therein and actually paid by Franchisee to such governmental authority.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, gross sales are defined as the total amount of revenue from all sales of food, beverages, and promotional items. This includes all sales, receipts, and revenues, whether in cash or credit, directly or indirectly received by the franchisee. It also encompasses revenues from the sale of any product or service not typically included in the B Bops system, but for which B Bops has given consent.
However, the definition of gross sales for B Bops specifically excludes sales or other taxes imposed by governmental authorities that are directly on sales and collected from patrons, provided that the tax amount is added to the selling price and actually paid to the governmental authority.
For a prospective B Bops franchisee, this definition is important because the monthly royalty and service fee, which is 5% of gross sales, and the advertising fee, which is 3% of gross sales, are directly calculated from this amount. Understanding what constitutes gross sales ensures accurate reporting and payment of these fees. Additionally, franchisees should be aware that B Bops has the right to audit their books and records, including direct electronic access to the cash register system, to verify gross sales figures.