Are sales taxes collected by a Better Blend franchisee included in Adjusted Gross Sales?

According to Better Blend's 2024 Franchise Disclosure Document, sales taxes collected by the franchisee are not included in the calculation of Adjusted Gross Sales. Adjusted Gross Sales is a crucial figure because it is used to calculate royalty fees and other payments to Better Blend.

Adjusted Gross Sales for a Better Blend franchise includes the total dollar amount of all sales generated through the business, encompassing payments for services or products sold, whether in cash or credit. It also incorporates any proceeds from business interruption insurance. This means that a franchisee must report all revenue from these sources when calculating their Adjusted Gross Sales.

However, the definition explicitly excludes certain items from Adjusted Gross Sales. These exclusions include coupons, discounts, and bona fide refunds to customers, ensuring that these reductions in revenue are not subject to royalty fees. Additionally, sales taxes collected by the franchisee are excluded, as well as sales of prepaid cards or similar products (though the redemption of these cards or products is included when they are used). Service gratuities directed by customers to employees are also not counted towards Adjusted Gross Sales, providing further clarity on what constitutes revenue subject to fees.

By excluding sales taxes from Adjusted Gross Sales, Better Blend ensures that franchisees are not paying royalty fees on money that they are simply collecting on behalf of the government. This is a common practice in franchising, as it aligns the interests of the franchisor and franchisee by focusing royalty payments on actual revenue generated by the business.