How is 'Gross Revenue' defined for the purpose of calculating the Beauty Bungalows royalty fee?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) "Gross Revenue" means the total of all receipts derived from gross rental receipts and other revenue, whether the receipts are evidenced by cash, credit, checks, services, property, or other means of exchange.
Gross Revenue excludes only sales tax receipts that you must by law collect from customers and that you actually pay to the government, promotional or discount coupons to the extent that Franchisee realizes no revenue, and employee receipt of services, if free, or any portion not paid for by an employee.
On a monthly basis, we will calculate the Gross Revenue generated from the operation of your Beauty Bungalows Franchise from reports generated by the software programs we require you to use.
You must authorize us to make electronic funds transfer debits from your bank account for payment of the Royalty Fee and any other fees you owe to us.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2025 FDD)
According to Beauty Bungalows's 2025 Franchise Disclosure Document, Gross Revenue is defined as the total of all receipts derived from gross rental receipts and other revenue, whether the receipts are evidenced by cash, credit, checks, services, property, or other means of exchange. This is a comprehensive definition that captures nearly all forms of income a Beauty Bungalows franchise might generate. The royalty fee is 5.5% of Gross Revenue or a minimum royalty of $250 per week, whichever is greater.
However, the definition does provide a few specific exclusions. Gross Revenue does not include sales tax receipts that the franchisee must by law collect from customers and actually pays to the government. It also excludes promotional or discount coupons to the extent that the franchisee realizes no revenue from them, and employee receipt of services, if free, or any portion not paid for by an employee. These exclusions are fairly standard in franchise agreements, as they prevent franchisees from being charged royalties on money that is simply being passed through or on services not generating revenue.
Beauty Bungalows will calculate Gross Revenue monthly from reports generated by the software programs they require franchisees to use. This implies that franchisees must use specific software dictated by Beauty Bungalows, ensuring standardized reporting. Furthermore, franchisees must authorize Beauty Bungalows to make electronic funds transfer debits from their bank account for payment of the Royalty Fee and any other fees owed. This mandatory electronic funds transfer system provides Beauty Bungalows with a direct and reliable method of collecting fees, while requiring the franchisee to maintain sufficient funds in their account to cover these deductions.