Does the B Bops 'gross sales' definition include cash and credit sales?
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, the definition of gross sales includes both cash and credit sales. Specifically, gross sales encompass the aggregate amount of all sales of food, beverage, and promotional items generated by the franchise. This includes all sales, receipts, and revenues received by the franchisee, whether in the form of cash or credit. The inclusion of credit sales applies regardless of whether the franchisee has actually collected the payment for those sales.
This definition is important for prospective franchisees because it directly impacts the calculation of royalty and advertising fees. B Bops franchisees must pay a monthly royalty and service fee equal to 5% of gross sales, as well as an advertising fee equal to 3% of gross sales. Since gross sales include both cash and credit transactions, franchisees are obligated to pay these fees on all sales, irrespective of whether they have received immediate payment.
Furthermore, the definition of gross sales also extends to revenues derived from the sale of any product or service not included in the Licensed System, provided that B Bops has given its consent for such sales. However, gross sales do not include any sales or other taxes imposed by governmental authorities that are directly on sales and collected from patrons, as long as the amount of such tax is added to the selling price and actually paid by the franchisee to the governmental authority. This ensures that franchisees are not paying royalty or advertising fees on tax amounts collected on behalf of the government.