What happens if a Buff City Soap customer uses a promotional discount?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
In the case of promotional discounts implemented by us at the BCS Makery, the amount actually paid by the guest after the discount, rather than the original amount, will be considered for purposes of the term Net Sales.
Source: Item 5 — INITIAL FEES (FDD pages 15–23)
What This Means (2025 FDD)
According to Buff City Soap's 2025 Franchise Disclosure Document, when a customer uses a promotional discount implemented by Buff City Soap at the Makery, the Net Sales calculation is based on the amount the customer actually pays after the discount is applied, rather than the original price of the product or service. This definition of Net Sales is important because several fees, such as the royalty fee and brand fund contribution, are calculated as a percentage of Net Sales.
Specifically, the royalty fee is 6% of Net Sales, and the brand fund contribution is 2% of Net Sales. The franchisee also needs to spend at least 1% of Net Sales on local marketing expenditures. However, the brand fund contribution and local marketing expenditure together will not exceed 4% of Net Sales during the initial term of the Franchise Agreement.
This means that if a Buff City Soap franchisee offers a promotional discount, they will pay a lower royalty fee and brand fund contribution because these fees are based on the discounted Net Sales amount. This could benefit the franchisee by reducing their overall costs during promotional periods, but it also means they will need to sell a higher volume of products or services to maintain the same level of revenue.