How are commissions per gift card sold by a Buff City Soap franchisee calculated?

According to Buff City Soap's 2025 Franchise Disclosure Document, the commission for gift cards sold by a franchisee is determined by multiplying the estimated average handling costs of $0.50 by 105%. This formula is used to calculate the commission amount that the franchisee will receive for each gift card sold. The estimate of average handling costs is made by the gift card issuer, who is responsible for reviewing and adjusting these estimates at reasonable intervals, at least annually.

The issuer determines the average handling costs, which include direct and indirect costs, without reducing potential income from unredeemed gift cards. Direct costs encompass expenses like employee compensation, materials, printing, shipping, marketing, promotional discounts, and intellectual property license fees. Indirect costs include utilities, occupancy, and overhead. The issuer or its agent estimates these expenses at least quarterly using any reasonable method and may use the same estimated average handling costs for all franchisees at their discretion.

In practical terms, this means that a Buff City Soap franchisee's commission on gift cards is not a fixed percentage of the gift card's face value but rather a markup on the estimated costs associated with issuing and handling the gift card. The franchisor retains the flexibility to adjust the handling cost estimates, which could impact the franchisee's commission. The franchisee should pay attention to any changes in these estimates, as they will directly affect their revenue from gift card sales.