Are lessee services excluded from 'Gross Revenue' calculation for a Beauty Bungalows franchise?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
- 1.12 "Gross Revenue" means the total of all income derived from gross sales and gross receipts, whether the income is received by cash, credit, checks, services, property, or other means of exchange. "Gross Revenue" shall exclude only those sales taxes that Franchisee must by law collect from customers and that Franchisee pays to the government, promotional or discount coupons to the extent that Franchisee realizes no income, and employee or lessee receipt of services, if free, or any portion not paid for by an employee or studio lessee.
Source: Item 22 — CONTRACTS (FDD pages 47–48)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, the calculation of 'Gross Revenue' excludes employee or lessee receipt of services, if free, or any portion not paid for by an employee or studio lessee. Gross Revenue for a Beauty Bungalows franchise is defined as the total income from gross sales and receipts, regardless of whether it's received in cash, credit, checks, services, property, or other means of exchange.
This means that if a Beauty Bungalows franchisee provides free services to employees or studio lessees, or if employees or lessees only pay a portion of the service cost, the value of those free or discounted services is not included when calculating Gross Revenue. However, any portion of the service that is paid for by the employee or lessee would be included in the Gross Revenue calculation.
For a prospective franchisee, this exclusion could reduce the royalty fees owed to Beauty Bungalows, as royalty fees are typically calculated as a percentage of Gross Revenue. It is important for franchisees to accurately track and document any free or discounted services provided to employees or lessees to ensure accurate reporting of Gross Revenue and calculation of royalty payments.