Does the Baya Bar definition of Gross Sales include customer refunds or adjustments?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
- For the purposes of determining the royalties to be paid under the Franchise Agreement, "Gross Sales" means the total selling price of all services and products and all income of every other kind and nature related to the Shop, whether for cash or credit and regardless of collection in the case of credit. If a cash shortage occurs, the amount of Gross Sales will be determined based on the records of the point of sale system and any cash shortage will not be considered in the determination. Gross Sales expressly excludes taxes collected from your customers and paid to the appropriate taxing authority and customer refunds or adjustments.
You must report your Gross Sales to us by Tuesday each week for the previous week ending Sunday. The royalty fee and marketing fund fees will be withdrawn from your designated bank account by electronic funds transfer ("EFT") weekly on Tuesday based on the Shop's Gross Sales for the preceding week ending Sunday. If you do not report the Shop's Gross Sales, we may debit your account for 120% of the last royalty fee and marketing fund fees that we debited. If the fees we debit are less than the fees you actually owe us, once we have been able to determine the true and correct Gross Sales, we will debit your account for the balance on a day we specify. If the fees we debit are greater than the fees you actually owe us, we will credit the excess against the amount we otherwise would debit from your account during the following week.
Source: Item 6 — OTHER FEES (FDD pages 11–16)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, Gross Sales do not include customer refunds or adjustments. The FDD specifies that Gross Sales means the total selling price of all services and products, and all income of every other kind and nature related to the Shop, whether for cash or credit and regardless of collection in the case of credit.
For a Baya Bar franchisee, this definition is important because royalties are calculated based on Gross Sales. The exclusion of customer refunds or adjustments from Gross Sales means that franchisees do not have to pay royalties on revenue that was later refunded or adjusted. This can help to reduce the royalty burden on franchisees, especially in cases where there are a significant number of refunds or adjustments.
The FDD also specifies that Gross Sales expressly excludes taxes collected from customers and paid to the appropriate taxing authority. Franchisees must report their Gross Sales to Baya Bar by Tuesday each week for the previous week ending Sunday. The royalty fee and marketing fund fees will be withdrawn from the franchisee's designated bank account weekly on Tuesday based on the Shop's Gross Sales for the preceding week ending Sunday.