Are the costs of charitable meals deducted from Gross Sales Receipts for a Bevaris Alliance franchise?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
- "Gross Sales Receipts" is the total gross sales revenues accrued or collected from the operations of Franchisee's Branded Business (as defined in the Franchise Agreement), whether for cash, check, credit card, pre-paid cards, pre order and paid meals through a designated software or on credit terms, from all sales of food, beverages, and other items and services (Food and Beverages) offered and sold by the Branded Business. The following shall be deducted from (or, as appropriate within its context, not included in) Gross Sales Receipts: (a) Any amounts, whether in cash, credit, or otherwise refunded to customers; (b) All amounts received in connection with the settlement of claims for damaged or unsalable Food and Beverages; (c) All amounts which are deemed to represent uncollectible accounts, bad debts or costs of collection; (d) The cost of meals provided to the employees of Franchisee at cost, if any, and the cost of charitable, promotional, and other complimentary meals given in the ordinary course of business and as is customary for similar operations.
Source: Item 6 — OTHER FEES (FDD pages 8–10)
What This Means (2024 FDD)
According to Bevaris Alliance's 2024 Franchise Disclosure Document, the costs of charitable meals are deductible from Gross Sales Receipts. Specifically, the FDD defines "Gross Sales Receipts" as the total gross sales revenues from the Branded Business, derived from all sales of food, beverages, and other items and services.
For Bevaris Alliance franchisees, this means that when calculating the revenue on which franchise fees are based, they can deduct the cost of charitable, promotional, and other complimentary meals given in the ordinary course of business, provided such practices are customary for similar operations. This deduction can reduce the overall revenue subject to franchise fees, potentially lowering the franchisee's costs.
It is important for prospective Bevaris Alliance franchisees to understand the specific conditions and limitations around these deductions. The FDD specifies that the charitable meals must be given in the ordinary course of business and be customary for similar operations. Franchisees should maintain accurate records of these meals to substantiate the deductions. Additionally, franchisees should seek clarification from Bevaris Alliance regarding what constitutes "customary" practices to ensure compliance and avoid potential disputes.