How does Better Blend define 'Adjusted Gross Sales' in its franchise agreement?

According to Better Blend's 2024 Franchise Disclosure Document, 'Adjusted Gross Sales' is a critical figure used to calculate royalty fees and marketing fund contributions. Better Blend defines it as the total dollar amount of all sales generated by the business, including payments for any services or products sold, whether for cash or credit. It also includes any proceeds received from business interruption insurance. This means that virtually all revenue streams are factored into the calculation of what a franchisee owes to Better Blend.

However, the definition also specifies certain exclusions. Adjusted Gross Sales does not include (i) coupons, discounts, and bona fide refunds to customers, (ii) sales taxes collected, or (iii) sales of prepaid cards or similar products. It is important to note that while the sale of prepaid cards is excluded, the redemption of these cards is included in Adjusted Gross Sales. This distinction ensures that Better Blend receives its percentage when the actual product or service is provided.

Better Blend requires franchisees to report their adjusted gross sales weekly. Failure to do so can result in Better Blend withdrawing estimated royalty fees and marketing fund contributions based on 125% of the most recent adjusted gross sales reported. This acts as a penalty for non-compliance and ensures that Better Blend receives timely payments. The document states that Better Blend will 'true-up' the actual fees after the franchisee reports adjusted gross sales, suggesting a reconciliation process to correct any over- or under-payments based on the estimated figures.

Understanding the definition of Adjusted Gross Sales is crucial for prospective Better Blend franchisees. It directly impacts the amount of royalties and marketing fund contributions payable to Better Blend. Franchisees should pay close attention to what is included and excluded from this calculation to accurately report their sales and avoid potential penalties or disputes with Better Blend.