What is the threshold for underreporting of gross sales by a Beard Papas franchisee that results in underpayment of obligations and fees?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
d States Generally Accepted Accounting Principles.
"Gift Cards" refers to and means any and all gift cards, vouchers, receipts, cards, and other evidence of a pre-paid purchase transaction or credit that Franchisor authorizes concerning a Beard Papa's Shop.
"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 o
Source: Item 23 — RECEIPTS (FDD pages 58–275)
What This Means (2025 FDD)
Based on the 2025 Beard Papas Franchise Disclosure Document, the document does not specify a particular threshold or percentage for underreporting gross sales that would trigger underpayment of obligations and fees. However, the FDD does define "Gross Sales" as the total dollar sales from all business and customers of the Franchised Business, including revenues from any source, whether cash, credit, or other consideration. Gross Sales excludes sales taxes collected and remitted to the proper taxing authority, and authorized promotional discounts provided to shop customers.
Beard Papas franchisees are obligated to pay royalty and other fees based on their Gross Sales, as outlined in their Franchise Agreement. Franchisees cannot withhold payments due to Beard Papas under any circumstances, even if they claim non-performance by the franchisor.
Prospective franchisees should carefully review the Franchise Agreement to fully understand their obligations regarding accurate sales reporting and timely payment of all fees. It is advisable to seek clarification from the franchisor regarding the specific procedures and potential consequences related to underreporting of gross sales.