How is 'Direct Gross Profit' calculated for a Bee Organized franchise?
Bee_Organized Franchise · 2025 FDDAnswer from 2025 FDD Document
ited to interest, taxes, depreciation, amortization, and Franchise Related Expenses.
- (f) Direct Gross Profit means Gross Sales less Direct Cost of Goods Sold and Direct Labor Cost. Direct Gross Profit is not net profit or income and, except as to Direct Cost of Goods Sold and Direct Labor Cost, does not include the deduction of all other expenses incurred by a Bee Organized Business including, but not limited to, managerial labor and expenses, administrative labor and expenses, marketing expenses, insurance expenses, operating expenses, general expenses including, but not limited to interest, taxes, depreciation, amortization, and Franchise Related Expenses.
- (g) Direct Labor Cost means the direct non-owner labor expenses incurred in the operations of the Outlet and for employees that directly perform or provide services resulting in Gross Sales and includes wages, payroll taxes, workers' compensation, and paid employee benefits, if any. Direct Labor Cost does not include compensation related to administrative labor or management labor. For Franchise Outlets, Direct Labor Cost does not include labor expenses or compensation paid to the franchise owners that perform services on behalf of their Bee Organized Business.
- (h) Disclosed Expenses means the following select expenses: insurance, advertising and marketing, office expenses, and other selling, general, and administrative expenses.
- (i) Franchise Outlet refers to a Bee Organized Business operated under a Franchise Agreement that is not a
Company Owned Outlet.
- (j) Franchise Related Expenses means the following select fees currently required under the Franchise Agreements: Royalty Fees, Brand Development Fund Fees, Technology Fees, Business Management System Fees, and local marketing expenses. Franchise Related Expenses do not include all fee and payment obligations required under a Franchise Agreement.
- (k) Gross Sales means the total revenue derived by each Bee Organized Business less sales tax, discounts, allowances, and returns.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 40–50)
What This Means (2025 FDD)
According to Bee Organized's 2025 Franchise Disclosure Document, Direct Gross Profit is calculated by subtracting Direct Cost of Goods Sold and Direct Labor Cost from Gross Sales. It is important to note that this Direct Gross Profit is not the same as net profit or income.
Direct Cost of Goods Sold includes the direct costs of goods and services sold, such as supplies and materials used to provide services and products to clients, but excludes labor costs. Direct Labor Cost includes non-owner labor expenses like wages, payroll taxes, workers' compensation, and employee benefits for employees directly providing services. It does not include administrative or management labor costs, or compensation paid to franchise owners who perform services.
Gross Sales is defined as the total revenue derived by each Bee Organized Business, less sales tax, discounts, allowances, and returns. Therefore, a franchisee needs to carefully track these specific income and expense categories to accurately determine their Direct Gross Profit, which is a key metric but does not represent the complete financial picture of the business.