Are customer refunds included in the Gross Revenues calculation for a Big Apple Bagels franchise?

According to Big Apple Bagels's 2025 Franchise Disclosure Document, the calculation of Gross Revenues specifically excludes bona fide customer refunds. Gross Revenues for a Big Apple Bagels franchise are defined as the total amount of all gross sales and business receipts, including various forms of transactions and proceeds, but with certain exclusions. This definition is important for franchisees as it directly impacts the royalty fees owed to Big Apple Bagels and is a key metric in assessing the financial performance of the franchise.

The exclusion of customer refunds from Gross Revenues means that franchisees are not penalized for legitimate refunds issued to customers. This is a common practice in franchising, as including refunds would artificially inflate revenue figures and create a disincentive for providing good customer service. Additionally, sales, use, or service taxes collected from customers and paid to the appropriate taxing authority are also excluded from the Gross Revenues calculation.

Understanding what constitutes Gross Revenues is crucial for a prospective Big Apple Bagels franchisee. It not only affects royalty payments but also provides a clearer picture of the actual sales performance of the store. By excluding customer refunds, the franchisor ensures a more accurate representation of the franchise's financial health, which can be useful for financial planning and performance evaluation.