What sales taxes are excluded from the Gross Revenues calculation for a Big Apple Bagels franchise?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
- "Gross Revenues" is defined in the Franchise Agreement as the entire amount of all gross sales and business receipts, including direct or indirect barter transactions, catering accounts, proceeds of business interruption insurance policies, wholesale accounts (both on and off premises) arising out of the operation of the Store, or through or by means of the business conducted in connection therewith, whether for cash or credit, but excluding: (1) sales, use, or service taxes collected from customers and paid to the appropriate taxing authority; and (2) all bona fide customer refunds and approved rebates, discounts and allowances.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 76–80)
What This Means (2025 FDD)
According to Big Apple Bagels's 2025 Franchise Disclosure Document, the calculation of Gross Revenues excludes specific types of taxes. Gross Revenues are defined as the total income from sales and business operations, including cash or credit transactions, barter, catering, business interruption insurance, and wholesale accounts.
However, the definition explicitly excludes sales, use, or service taxes that are collected from customers and then remitted to the appropriate taxing authority. This means that Big Apple Bagels franchisees do not need to include these collected taxes when calculating their Gross Revenues for the purpose of royalty payments or financial reporting to the franchisor.
In addition to taxes, the Gross Revenues calculation also excludes all bona fide customer refunds, approved rebates, discounts, and allowances. This exclusion provides a more accurate representation of the actual revenue earned by the Big Apple Bagels franchise, as it accounts for reductions in sales due to returns or price adjustments.