Are refunds to customers included in the Gross Sales calculation 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
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, Gross Sales are calculated as the total dollar amount of all sales generated through the Business for a given period, including payments for any services or products sold, whether for cash or credit. However, Gross Sales does not include bona fide refunds to customers.
This means that when calculating the royalty and marketing fund contribution, a Bombs Away franchisee can deduct the amount of legitimate refunds given to customers from their total sales. This is a benefit to the franchisee, as it lowers the base on which these fees are calculated, thereby reducing the amount owed to Bombs Away.
In addition to customer refunds, Gross Sales also exclude 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. However, it is important to note that the redemption of any such prepaid card or product will be included in Gross Sales.