What happens if a Bang Cookies franchisee underreports gross sales by 5% or more?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
"Reporting Non-Compliance Fee" shall have the meaning defined and set forth in Article 12.C. of this Agreement.
"Reporting Violation" shall have the meaning defined and set forth in Article 12.C. of this Agreement.
"Gross Sales" refers to and means the total dollar sales from all business and customers of the Franchised Business 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 Franchisee 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 Franchisee or any other person or Corporate Entity from business conducted or which started in, on, from or through the Franchised Business, Franchisee's Shop Location, and/or Franchisee's Shop Facility whether such business is/was conducted in compliance with or in violation of the terms of this Agreement. Supplementing the foregoing, Gross Sales further includes the total gross amount of revenues and sales from whatever source derived from and/or derived by Franchisee (including any person and/or Corporate Entity acting on behalf of Franchisee) from business conducted within and/or outside the Designated Territory that is related to the Franchised Business and/or a Competitive Business located and/or operated at Franchisee's Shop Location, at Franchisee's Shop Facility, within the Designated Territory, outside the Designated Territory, and/or otherwise (the foregoing does not constitute approval for Franchisee's operation of a Competitive Business and/or the operation of a Bang Cookies Shop outside of the Designated Territory). Gross Sales do not include (a) sales taxes that Franchisee collects and remits to the proper taxing authority, and (b) authorized promotional discounts that Franchisee provides to Shop customers.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
I am unable to provide information about the specific penalties or actions Bang Cookies may take if a franchisee underreports gross sales by 5% or more, according to the 2024 Franchise Disclosure Document excerpts provided. The excerpts do define "Gross Sales" as the total dollar sales from all business and customers of the Franchised Business, but they do not specify the consequences of underreporting sales figures.
However, the FDD excerpts do define a "Reporting Non-Compliance Fee" and a "Reporting Violation", suggesting that there are consequences for failing to accurately report financial information. The document also states that the franchisee must comply with the terms of the Franchise Agreement.
A prospective Bang Cookies franchisee should ask the franchisor for details about the specific penalties or fees associated with underreporting gross sales, as well as the procedures the franchisor follows to audit or verify sales reports. This information is crucial for understanding the financial obligations and potential risks of operating a Bang Cookies franchise.