factual

What is a Bang Cookies franchisee required to do with the Gross Sales of their Shop?

Bang_Cookies Franchise · 2024 FDD

Answer from 2024 FDD Document

ry Notes to Item 6 "Other Fees"

Note 1: Type of Fee – The above table describes fees and payments that you must pay to us, our affiliates, or that our affiliates may impose or collect on behalf of a third party. All fees are uniformly imposed for all franchises offered under this Disclosure Document, are recurring, are not refundable, and are payable to us, unless otherwise specified. If you enter into a Multi-Unit Development Agreement or open multiple Shops then these fees shall apply, respectively, to each and every Shop. Payment is subject to our specification and instruction, including, our election to have all fees automatically drafted from your business bank account or automatically debited or charged to your business bank account. You will be required to sign an ACH Authorization Form (Franchise Agreement, Exhibit 7) permitting us to electronically debit your designated bank account for payment of all fees payable to us and/or our affiliates. You must deposit the Gross Sales of your Shop into the designated bank accounts that are subject to our ACH authorization. You must install and use, at your expense, the pre-authorized payment, point of sale, credit card processing, automatic payment, automated banking, electronic debit and/or electronic funds transfer systems that we designate and require in the operation of your Shop. You must pay all service charges and fees charged to you by your bank so that we may electronically debit your bank account.

Note 2: Royalty Fees – The royalty fee is a continuing weekly fee equal to 6% (the "Royalty Rate") of your weekly Gross Sales. If any federal, state or local tax other than an income tax is imposed on the Royalty Fee which we cannot directly and, dollar for dollar, offset against taxes required to be paid under any applicable federal or state laws, you must compensate us in the manner prescribed by us so that the net amount or net effective Royalty Fees received by us is not less than 6% of your Gross Sales.

Note 3: Gross Sales – "Gross Sales" means the total dollar sales from all business and customers of your Shop and includes the total gross amount of revenues and sales from whatever source derived, whether in form of cash, credit, agreements to pay or other consideration including the actual retail value of any goods or services traded, borrowed, or received by you in exchange for any form of non-money consideration (whether or not payment is received at the time of the sale), from or derived by you or any other person or Corporate Entity from business conducted or which started in, on, from or through your Shop and/or your Shop Location, whether such business is conducted in compliance with or in violation of the terms of the Franchise Agreement. Gross Sales include the total gross amount of revenues and sales from whatever source derived from and/or derived by you (including any person and/or Corporate Entity acting on your behalf) from business conducted within and/or outside your designated territory that is related to your Shop and/or a competitive business located and/or operated at your Shop Location, within your designated territory, outside your designated territory, and/or otherwise.

Source: Item 6 — OTHER FEES (FDD pages 13–17)

What This Means (2024 FDD)

According to Bang Cookies's 2024 Franchise Disclosure Document, a franchisee is required to deposit the Gross Sales of their shop into designated bank accounts that are subject to the franchisor's ACH authorization. This means Bang Cookies has the right to electronically debit these accounts for fees payable to them or their affiliates. The franchisee must also install and use the payment, point of sale, credit card processing, automatic payment, automated banking, electronic debit, and/or electronic funds transfer systems that Bang Cookies designates. The franchisee is responsible for all service charges and fees charged by their bank for these electronic debits.

Gross Sales are defined as the total dollar sales from all business and customers of the Bang Cookies shop, including revenues from any source, whether in cash, credit, or other forms of consideration. This includes the retail value of goods or services traded, borrowed, or received in exchange for non-monetary consideration, regardless of when payment is received. Gross Sales also include revenues from business conducted within or outside the designated territory that is related to the shop, even if the business is not compliant with the Franchise Agreement. Excluded from Gross Sales are sales taxes collected and remitted to the proper taxing authority and authorized promotional discounts provided to customers.

This requirement ensures that Bang Cookies can collect royalty fees, which are 6% of weekly Gross Sales, and any other fees owed by the franchisee. It also allows Bang Cookies to monitor the franchisee's sales and financial performance. The franchisee must also spend at least 2% of quarterly Gross Sales on local marketing. This level of control over a franchisee's finances is common in franchising, as it protects the franchisor's revenue stream and ensures brand consistency. However, franchisees should carefully consider the implications of granting such access to their bank accounts and ensure they understand all associated fees and charges.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.