What is excluded from 'Net Sales' when calculating the royalty fee for a Buff City Soap franchise?

According to Buff City Soap's 2025 Franchise Disclosure Document, the royalty fee is 6% of Net Sales. Net Sales is defined as the total selling price of all services and products, and all income of every kind related to your Buff City Soap location, whether for cash or credit. Proceeds from the sale of coupons, gift cards, gift certificates, or vouchers are included in Net Sales when they are redeemed at the specific Buff City Soap location. Net Sales also include proceeds from any business interruption insurance applicable to your location. In the case of promotional discounts implemented by Buff City Soap, the amount actually paid by the customer after the discount is considered for Net Sales purposes.

However, certain items are excluded from the calculation of Net Sales for royalty fee purposes. These exclusions include complimentary products and services, provided that the aggregate amount of such products and services does not exceed 2% of Net Sales for the applicable week. Also excluded are tips and gratuities received by employees, and sums collected and actually paid by you for any sales or other excise tax imposed by a government authority.

It is important for prospective Buff City Soap franchisees to understand exactly how Net Sales is defined, as this figure directly impacts the royalty fees owed to the franchisor. Accurately tracking and reporting sales, while properly accounting for exclusions, is essential for financial compliance and profitability. Franchisees should pay close attention to the limitations on complimentary products and services to ensure they remain within the allowable threshold to avoid impacting their royalty obligations.