What deductions are allowed 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 Gross Sales Receipts include all revenues from food, beverages, and other items and services sold by the Branded Business. However, certain items can be deducted from the Gross Sales Receipts when calculating royalties or other fees.
The following items are deductible from Gross Sales Receipts: refunds to customers, settlement claims for damaged or unsalable food and beverages, uncollectible accounts or bad debts, and the cost of meals provided to employees at cost. Additionally, the cost of charitable, promotional, and other complimentary meals given in the ordinary course of business and customary for similar operations can also be deducted.
These deductions provide some financial relief to the franchisee by reducing the base upon which certain fees are calculated. It is typical in the franchise industry to allow deductions for certain items like refunds and bad debt, as these directly impact the actual revenue received by the franchisee. The inclusion of employee meals and promotional meals as deductions is a beneficial aspect for Bevaris Alliance franchisees, as it acknowledges the operational costs associated with these practices.