What are the two deductions Bft franchisees can make from gross revenue when calculating royalty fees?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as provided below, the term "Gross Sales" means the total revenue, in whatever form, generated by your Studio, whether or not in compliance with your Franchise Agreement and regardless of receipt, including all revenue generated from the sale and provision of any and all gift cards and other products and services at or through your Studio and all proceeds from any business interruption insurance related to the nonoperation of your Studio. Please note that the following are excluded from Gross Sales: (a) any sales tax and equivalent taxes that you collect for or on behalf of any governmental taxing authority and paid to it, and (b) the value of any allowance issued or granted to any client of the Studio that you credit in good faith in full or partial satisfaction of the price of the Approved Products or Approved Services offered in connection with your Studio.
Source: Item 6 — OTHER FEES (FDD pages 21–26)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, franchisees can deduct two items from their gross sales when calculating royalty fees. The document specifies that 'Gross Sales' means the total revenue generated by the studio, but it excludes (a) any sales tax and equivalent taxes collected for or on behalf of any governmental taxing authority and paid to it, and (b) the value of any allowance issued or granted to any client of the Studio that you credit in good faith in full or partial satisfaction of the price of the Approved Products or Approved Services offered in connection with your Studio.
In simpler terms, Bft franchisees do not have to include sales taxes they collect and remit to the government in their gross sales figures. Additionally, they can deduct the value of any discounts or allowances they give to clients that are used to pay for Bft's approved products or services. This means the royalty fee, which is a percentage of gross sales, will not be applied to these deducted amounts, potentially lowering the franchisee's royalty payments.
It is important for prospective Bft franchisees to understand exactly what qualifies as a deductible 'allowance' and to maintain accurate records of all sales taxes collected and allowances granted. This will ensure accurate calculation of gross sales and royalty fees, and prevent any discrepancies or issues during audits. Franchisees should also be aware of the requirement to participate in Bft's electronic funds transfer and reporting programs for remitting payments.