What are the exclusions from 'Gross Sales' when calculating revenue for a Bombs Away franchise?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
- "Gross Sales" means the total dollar amount of all sales generated through the Business for a given period, including, but not limited to, payment for any services or products sold by Franchisee, whether for cash or credit. Gross Sales does not include (i) bona fide refunds to customers, (ii) sales taxes collected by Franchisee, (iii) sales 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 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, 'Gross Sales' for the purpose of calculating royalties and other fees, means the total dollar amount of all sales generated through the Business for a given period, including payment for any services or products sold by the Franchisee, whether for cash or credit. However, certain items are excluded from this calculation.
Specifically, the following are not included in Gross Sales: (i) bona fide refunds to customers, (ii) sales taxes collected by the Franchisee, (iii) sales of used equipment not in the ordinary course of business, and (iv) sales of prepaid cards or similar products. However, the FDD clarifies that when these prepaid cards or similar products are redeemed, the revenue from that redemption is included in Gross Sales.
It is important for a prospective Bombs Away franchisee to understand exactly how Gross Sales is defined, as this figure is used to calculate royalty fees and marketing fund contributions. Accurately tracking and reporting Gross Sales, and understanding what is included or excluded, will ensure compliance with the franchise agreement and avoid potential disputes or penalties.