For Bombs Away, what is excluded from the definition of 'Gross Sales' when calculating royalty fees?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- "Gross Sales" is defined in our franchise agreement as the total dollar amount of all sales generated through your business for a given period, including, but not limited to, payment for any services or products sold by you, whether for cash or credit. Gross Sales does not include (i) bona fide refunds to customers, (ii) sales taxes collected, (iii) sale of used equipment not in the ordinary course of business, or (iv) sales of prepaid cards or similar products (but the redemption of any such card or product will be included in Gross Sales).
Source: Item 6 — OTHER FEES (FDD pages 9–13)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the franchise agreement defines 'Gross Sales' as the total dollar amount of all sales generated through the business. This includes payments for any services or products sold, whether for cash or credit. However, certain items are specifically excluded from this definition for the purpose of calculating royalty fees.
Specifically, the following are not included in Gross Sales: bona fide refunds to customers, sales taxes collected, the sale of used equipment not in the ordinary course of business, and sales of prepaid cards or similar products. It is important to note that while the sale of prepaid cards is excluded, the redemption of these cards is included in Gross Sales.
For a prospective Bombs Away franchisee, understanding this definition is crucial because royalty fees, as well as the marketing fund and market cooperative contributions, are calculated as a percentage of Gross Sales. Accurately tracking and reporting Gross Sales, while excluding the specified items, will ensure compliance with the franchise agreement and avoid potential disputes with Bombs Away.