Are the costs of promotional 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 promotional meals can be deducted from Gross Sales Receipts. Gross Sales Receipts are defined as the total gross sales revenues accrued or collected from the operations of the Franchisee's Branded Business, 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 offered and sold by the Branded Business.
Specifically, the FDD states that the cost of charitable, promotional, and other complimentary meals given in the ordinary course of business and as is customary for similar operations can be deducted from Gross Sales Receipts. This means that Bevaris Alliance franchisees are not required to pay royalties on the value of meals given away for promotional purposes, provided these meals are given in the ordinary course of business and are customary for similar operations.
This is a beneficial provision for franchisees as it reduces the royalty base, potentially lowering the amount of royalties owed to Bevaris Alliance. It is important for franchisees to maintain accurate records of these promotional meals to justify the deductions. Franchisees should also ensure that their promotional practices align with what is considered customary for similar businesses to avoid any disputes with the franchisor regarding the legitimacy of these deductions.