What sales are excluded from the 'Adjusted Gross Sales' calculation for Big O Tires?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
Adjusted Gross Sales – Gross Sales excluding Gross Sales (a) to National Account Customers and Key Account Customers, (b) of Farm Class Tires, (c) on Excess Service Department Sales, and (d) on which no royalty is due and not otherwise excluded from the definition of Gross Sales.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, Adjusted Gross Sales are calculated by excluding certain categories of sales from the overall Gross Sales figure. This is important because royalties are based on Adjusted Gross Sales.
The following sales are excluded from the Gross Sales figure to arrive at Adjusted Gross Sales: (a) Gross Sales to National Account Customers and Key Account Customers, (b) Gross Sales of Farm Class Tires, (c) Gross Sales on Excess Service Department Sales, and (d) sales on which no royalty is due and not otherwise excluded from the definition of Gross Sales.
For a Big O Tires franchisee, understanding these exclusions is crucial for accurately calculating royalty payments. Excluding these sales categories can lower the royalty fees owed to Big O Tires, directly impacting the franchisee's profitability. Franchisees should ensure they properly track and report these excluded sales to avoid overpayment of royalties.