Is the redemption of a prepaid card included in the Gross Sales of 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, the redemption of a prepaid card is included in the calculation of Gross Sales. Gross Sales are used to calculate royalty fees and marketing fund contributions.
The FDD specifies that Gross Sales 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, Gross Sales does not include sales of prepaid cards or similar products, but the redemption of any such card or product will be included in Gross Sales.
For a Bombs Away franchisee, this means that while the initial sale of a prepaid card is not counted towards Gross Sales, the revenue recognized when a customer uses that card to purchase goods or services at the franchise location is included in the Gross Sales calculation. This is a common practice in franchising, as it ensures that royalties are paid on the actual value realized from the card when it is used for purchases.