For Bombs Away, what is included in the definition of 'Gross Sales'?

According to Bombs Away's 2024 Franchise Disclosure Document, Gross Sales are defined as the total dollar amount of all sales generated through the Business for a given period, including payments for any services or products sold by the Franchisee, whether for cash or credit. This is a standard definition used by many franchisors to calculate royalties and other fees.

However, the definition of Gross Sales for Bombs Away specifically excludes several items. These exclusions include bona fide refunds to customers, sales taxes collected by the Franchisee, sales 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 any such card or product will be included in Gross Sales.

For a prospective Bombs Away franchisee, understanding this definition is crucial because it directly impacts the royalty fees owed to the franchisor. By excluding certain items like sales taxes and refunds, the franchisee is not paying a percentage on those amounts. However, the inclusion of product and service payments, whether cash or credit, ensures that all revenue streams from the Bombs Away business are subject to royalty calculations when those prepaid cards are redeemed. Franchisees should keep accurate records of all sales and exclusions to ensure accurate royalty payments and avoid potential disputes with Bombs Away.