How is 'Gross Revenue' defined for a Benjamin Franklin Plumbing franchise?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
s, surveys, and cost studies; (ix) research and development, test results, and feasibility studies; and (x) business plans and non-public financial information of or about us and our affiliates.
- 1.9. "Data Sheet" means Appendix A to this Agreement, which collects certain details specific to Franchisee and this Agreement.
- 1.10. "Designated Vendor" means a particular manufacturer, wholesaler, distributor or other source that we designate for particular products or services, which may be a third party, us, or our affiliate.
- 1.11. "Equipment Package" means the list of equipment and accessories that we prescribe for Franchised Businesses as of the time you are preparing to open.
- 1.12. "Franchised Business" means the business that you operate under this Agreement at and from the Approved Location. "Franchised Businesses" means your Franchised Business plus all other businesses that we have authorized to operate under the Marks and System by means of a valid franchise agreement.
- 1.13. "Gross Revenue" means all revenue from the sale of products and services and all other income of every kind related to the Franchised Business, whether for cash, credit, trade, barter or other value and regardless of collection in the case of credit and even if you have contracted with third parties to provide certain of the services, less any bona fide refunds given to customers in the ordinary course of business. "Gross Revenue" also includes amounts billed to insurance or government programs. You agree that "Gross Revenue" includes all revenue related to the sale of any products and the performance of any services (whether or not the products or services are approved by Franchisor) that are provided using any portion of the Franchised Business in any manner, including the Marks (such as service vehicles, invoices, and uniforms bearing the Marks), the System, Confidential Information, any of the employees of the Franchised Business, or the telephone number of the Franchised Business. "Gross Revenue" shall not be reduced on account of any fees or commissions you pay to third parties who refer customers.
Source: Item 23 — RECEIPTS (FDD pages 88–312)
What This Means (2025 FDD)
According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, Gross Revenue is comprehensively defined as all income derived from the Franchised Business. This includes revenue from the sale of both products and services, as well as any other form of income, irrespective of whether it's received in cash, credit, trade, barter, or other forms of value. This definition applies regardless of whether payment has been collected for credit transactions and even if third parties are contracted to provide some services. Gross Revenue also encompasses amounts billed to insurance or government programs.
For a prospective Benjamin Franklin Plumbing franchisee, this definition is crucial because royalty fees are typically calculated as a percentage of Gross Revenue. The definition clarifies that all revenue streams connected to the Franchised Business, even those from unapproved products or services, are included if they utilize any part of the business, such as vehicles displaying the brand's marks, the operating system, confidential information, employees, or the business's telephone number. This broad scope ensures that all activities associated with the franchise contribute to the Gross Revenue calculation.
However, Gross Revenue does not include sales taxes or other taxes that the franchisee collects from customers and remits directly to the appropriate taxing authority. Additionally, Gross Revenue is not reduced by any fees or commissions paid to third parties for customer referrals. Benjamin Franklin Plumbing retains the right to modify its policies regarding revenue recognition, reporting, and the inclusion or exclusion of certain revenue from Gross Revenue as business practices and technology evolve. Franchisees should stay informed of any such modifications to ensure accurate reporting and compliance.
It is important to note that accurate reporting of Gross Revenue is critical, as underreporting can lead to audits at the franchisee's expense. Specifically, if reported Gross Revenue for any three-month period is more than 2% below the actual Gross Revenue, the franchisee will be responsible for covering the costs of the audit, including travel and lodging expenses for the auditors. This underscores the importance of maintaining accurate and transparent financial records for the Benjamin Franklin Plumbing franchise.