What sales taxes are excluded from the '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, "Gross Revenue" is defined as the total income from gross sales and receipts, regardless of how it's received (cash, credit, etc.). However, the calculation of Gross Revenue for a Beauty Bungalows franchise excludes specific items.
Specifically, the only sales taxes excluded from the gross revenue calculation are those that the franchisee is legally obligated to collect from customers and then remit to the government. This means that franchisees do not have to pay royalties on the portion of their revenue that represents sales tax collected on behalf of the government.
In addition to sales taxes, the gross revenue calculation also excludes promotional or discount coupons, but only to the extent that the franchisee does not realize any income from them. Also excluded is employee or lessee receipt of services, if free, or any portion not paid for by an employee or studio lessee. This definition is important because many of the franchisee's financial obligations to Beauty Bungalows, such as royalty fees and marketing contributions, are calculated as a percentage of Gross Revenue.