For Big O Tires, what is excluded from the definition of 'Gross Revenues' or 'Total Income'?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of this Item 19, "Gross Revenues" or "Total Income" means the total revenue of a Big O Store, less taxes, refunds and allowances, returns, proceeds from sales of equipment used in a Big O Store not acquired for resale in the ordinary course of business, proceeds from sales of equipment used in a Big O Store not acquired for resale in the ordinary course of business, proceeds from sales to other Big O Stores, amounts received in settlement of claims for loss or damage other than business interruption insurance, sums received for reimbursement of reasonable towing and freight charges, and cer
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 85–89)
What This Means (2025 FDD)
According to Big O Tires's 2025 Franchise Disclosure Document, the terms 'Gross Revenues' or 'Total Income' are defined as the total revenue of a Big O Tires store, but with specific exclusions. These exclusions are important for prospective franchisees to understand as they directly impact the calculation of royalties and the overall financial performance metrics presented in the FDD.
Specifically, the following items are subtracted from the total revenue to arrive at 'Gross Revenues' or 'Total Income': taxes, refunds and allowances, returns, proceeds from sales of equipment used in a Big O Store not acquired for resale in the ordinary course of business, proceeds from sales to other Big O Stores, amounts received in settlement of claims for loss or damage other than business interruption insurance, sums received for reimbursement of reasonable towing and freight charges, and certain amounts collected for products replaced under warranty.
These exclusions provide a more accurate picture of the revenue generated from the core operations of a Big O Tires franchise. By excluding items like taxes and refunds, the franchisor focuses on the actual sales revenue attributable to the franchise's primary business activities. Understanding these exclusions is crucial for franchisees when comparing their store's performance against the financial performance representations in Item 19 of the FDD and for calculating royalty payments owed to Big O Tires.