For Bombs Away, are tips/gratuity included in the calculation of 'Gross Sales'?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
, techniques, designs, layouts, operating procedures, customer data, information and know-how.
- "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 th
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 31–33)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, tips/gratuity are explicitly excluded from the calculation of Gross Sales. 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, whether for cash or credit.
However, 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).
This definition is important for franchisees because the royalty fee and marketing fund contributions are calculated as a percentage of Gross Sales. In Bombs Away's case, the franchisee pays a royalty fee equal to 8% of Gross Sales and a marketing fund contribution equal to 2% of Gross Sales. Therefore, excluding tips/gratuities from Gross Sales reduces the amount on which these fees are calculated, potentially lowering the franchisee's costs.