What sales are excluded from the B Bops gross sales definition?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
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 for the purpose of calculating fees do not include sales or other taxes imposed by a governmental authority that are directly on sales and collected from patrons.
Specifically, the tax amount must be added to the selling price or otherwise absorbed therein. Additionally, the franchisee must actually pay this tax to the relevant governmental authority for it to be excluded from gross sales.
This definition of gross sales is important because B Bops franchisees pay both a monthly royalty and service fee equal to 5% of gross sales and an advertising fee equal to 3% of gross sales. Therefore, a precise definition of gross sales directly impacts the amount of these fees. By excluding sales taxes, B Bops ensures that franchisees are not paying a percentage on money that is simply being passed through to a taxing authority.