Are taxes included in the 'Gross Sales' calculation for a Bombs Away business?
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 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 31–33)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, 'Gross Sales' for royalty and marketing fee calculation excludes sales taxes collected by the franchisee. Gross Sales is defined as the total dollar amount of all sales generated through the Business for a given period, including payment for any services or products sold by Franchisee, whether for cash or credit.
Specifically, the definition of 'Gross Sales' does not include bona fide refunds to customers, sales taxes collected by the franchisee, sales of used equipment not in the ordinary course of business, or sales of prepaid cards or similar products (although the redemption of any such card or product will be included in Gross Sales).
This means that Bombs Away franchisees will not pay royalty or marketing fees on taxes they collect from customers, which is a common practice in franchising. Franchisees are only responsible for paying fees on the actual revenue they generate from sales, after deducting refunds and excluding sales tax.