Are Gross Revenues for Big Apple Bagels based on retail or wholesale prices?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
Gross Revenues are based on retail prices (unless the purchaser has an arrangement for wholesale purchases, in which event Gross Revenues are based on wholesale prices), subject only to the exclusions noted in (1) and (2) of this paragraph.
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, Gross Revenues are generally based on retail prices. However, if a purchaser has a wholesale arrangement with the franchisee, then Gross Revenues are based on wholesale prices. This definition is important because the franchisee's royalty fee, which is 5% of Gross Revenues, is calculated from this amount.
The FDD also specifies what is excluded from Gross Revenues. Sales, use, or service taxes collected from customers and paid to the appropriate taxing authority are excluded. Additionally, any bona fide customer refunds, approved rebates, discounts, and allowances are also excluded from the calculation of Gross Revenues.
The inclusion or exclusion of fees paid to Third Party Delivery Services (such as GrubHub, DoorDash, and UberEats) in Gross Revenues will be determined by Big Apple Bagels and published in their Operations Manual or a Policy Statement. This means that franchisees need to stay updated on Big Apple Bagels' policies regarding these delivery services to accurately calculate their Gross Revenues and, consequently, their royalty fees.