Are discounts to customers included in the Adjusted Gross Sales calculation for a Better Blend franchise?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
"Adjusted Gross Sales" means the total dollar amount of all sales generated through the Business for a given period, including, but not limited to, payment for any services or products sold by Franchisee, whether for cash or credit, and any proceeds of business interruption insurance. Adjusted Gross Sales does not include (i) coupons, discounts, and bona fide refunds to customers, (ii) sales taxes collected by Franchisee, or (iii) sales of prepaid cards or similar products (but the redemption of any such card or product will be included in Adjusted Gross Sales). Service gratuities directed by customers to employees are not counted towards Adjusted Gross Sales.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, Adjusted Gross Sales are calculated as the total dollar amount of all sales generated through the Business. This includes payments for any services or products sold, whether for cash or credit, and any proceeds from business interruption insurance. However, the calculation of Adjusted Gross Sales for a Better Blend franchise specifically excludes coupons, discounts, and bona fide refunds to customers.
This definition is important for prospective franchisees because royalties and other fees payable to Better Blend are often based on a percentage of Adjusted Gross Sales. By excluding discounts from the calculation, franchisees are not paying royalties on revenue they did not actually receive. This can improve the franchisee's profitability, as the royalty calculation is based on net sales rather than gross sales.
Furthermore, the definition also excludes sales taxes collected by the franchisee and sales of prepaid cards or similar products until those cards are redeemed. Service gratuities directed by customers to employees are also excluded from Adjusted Gross Sales. This comprehensive definition ensures that the royalty calculation is fair and accurately reflects the franchisee's actual revenue.