Are proceeds from business interruption insurance included in Better Blend's definition of Adjusted Gross Sales?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
- "Adjusted Gross Sales" is defined in our franchise agreement as the total dollar amount of all sales generated through your business for a given period, including, but not limited to, payment for any services or products sold by you, whether for cash or credit. It also includes any proceeds you receive from business interruption insurance. 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 (but the redemption of any such card or product will be included in Adjusted Gross Sales).
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- You must report your adjusted gross sales to us each week. If you fail to report your adjusted gross sales, we will withdraw estimated royalty fees and marketing fund contributions
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, proceeds from business interruption insurance are included in the calculation of Adjusted Gross Sales. Adjusted Gross Sales is a critical figure because several fees, including the weekly royalty fee of 6% and the marketing fund contribution (currently 1%, but with the potential to increase to 2%), are calculated as a percentage of this amount.
For a Better Blend franchisee, this means that if the business experiences an interruption covered by insurance, the proceeds received from that insurance will be factored into the Adjusted Gross Sales figure. This will in turn affect the royalty fees and marketing fund contributions owed to Better Blend during that period.
It is important to note that Adjusted Gross Sales does not include coupons, discounts, bona fide refunds to customers, sales taxes collected, or sales of prepaid cards. However, the redemption of prepaid cards is included in Adjusted Gross Sales. Franchisees must report their adjusted gross sales to Better Blend each week; failure to do so will result in Better Blend withdrawing estimated royalty fees and marketing fund contributions based on 125% of the most recent adjusted gross sales reported.