What sales taxes are excluded from Regular Gross Sales for a Best Brains franchise?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) "Regular Gross Sales" means all sales or revenues (other than Additional Program Sales and Add-On Gross Sales), derived directly or indirectly from the Franchised Business, including on and off premises (e.g., E-Learning).
Regular Gross Sales also includes registration fees for any program and business interruption insurance proceeds.
Regular Gross Sales does not include:
(i) sales taxes collected from customers and paid to the appropriate taxing authority, and
(ii) the amount of all coupons redeemed at the Franchised Business (but only if the coupons have been previously approved by the Company as provided in this Agreement and only if such coupons have been included in Regular Gross Sales)
Source: Item 23 — RECEIPTS (FDD pages 42–190)
What This Means (2025 FDD)
According to the 2025 Best Brains Franchise Disclosure Document, Regular Gross Sales for royalty fee calculation excludes sales taxes collected from customers and remitted to the appropriate taxing authority. This means that Best Brains franchisees do not have to pay royalty fees on the portion of their revenue that is collected as sales tax and then passed on to the government.
In addition to sales taxes, the amount of all coupons redeemed at the Franchised Business is also excluded from Regular Gross Sales, but only if the coupons have been previously approved by the Company and included in Regular Gross Sales.
This exclusion of sales taxes from the royalty calculation is a common practice in franchising, as it ensures that franchisees are not paying royalties on funds they are simply collecting on behalf of the government. The stipulation regarding coupons ensures that franchisees cannot arbitrarily reduce their gross sales, and therefore royalty payments, by accepting unapproved coupons.