Are tips/gratuity included in the 'Gross Sales' calculation for a Bombs Away business?

According to Bombs Away's 2024 Franchise Disclosure Document, the definition of Gross Sales does not include tips or gratuities. Gross Sales is defined as the total dollar amount of all sales generated through the Business, including payments for services or products sold, whether for cash or credit. However, the definition explicitly excludes (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).

Item 19 of the 2024 FDD includes financial performance information for the Bombs Away business owned by their affiliate. For the period of January 1st, 2023 to December 31st, 2023, the Gross Sales for this location was $419,423. The notes clarify that Gross Sales means the total of all collected revenue in a period, not including discounts, taxes, tips/gratuity or voids.

For a Bombs Away franchisee, this means that royalty fees and marketing fund contributions, which are calculated as a percentage of Gross Sales, will not be based on customer tips or gratuities. This exclusion can reduce the amount of these fees, potentially increasing the franchisee's profitability. It is important for prospective franchisees to understand exactly what constitutes Gross Sales, as this figure is used to calculate ongoing fees payable to Bombs Away.