What is included in the definition of 'Net Sales' for a Buff City Soap franchise?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
Monthly Net Sales are reported to us each day through the BCS Makery Point of Sale ("POS") system. "Net Sales" means the total selling price of all services and products and all income of every kind and nature related to your BCS Makery, whether for cash, cash equivalents, or credit, and regardless of collection in the case of credit.
Proceeds from the sale of coupons, gift cards, gift certificates or vouchers shall be included in Net Sales when and at the Makery from which the coupons, gift cards, gift certificates or vouchers are eventually redeemed.
Net Sales exclude the following: 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), tips and gratuities, and sums collected and actually paid by you for any sales or other excise tax imposed by any duly constituted government authority.
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.
Net Sales also includes the proceeds of any business interruption insurance applicable to your BCS Makery.
Source: Item 5 — INITIAL FEES (FDD pages 15–23)
What This Means (2025 FDD)
According to Buff City Soap's 2025 Franchise Disclosure Document, "Net Sales" is comprehensively defined for the purpose of calculating royalty fees, brand fund contributions, and local marketing expenditures. Net Sales include the total selling price of all services and products, encompassing all income related to the BCS Makery, whether received in cash, cash equivalents, or credit, irrespective of whether the credit has been collected. Proceeds from the sale of coupons, gift cards, gift certificates, or vouchers are included in Net Sales when they are redeemed at the Makery.
However, the definition of Net Sales also specifies certain exclusions. These exclusions include complimentary products and services, provided that these do not exceed 2% of Net Sales for the applicable week. Tips and gratuities are also excluded, as are sums collected and actually paid for sales or other excise taxes imposed by a government authority. In the case of promotional discounts implemented by Buff City Soap at the BCS Makery, the amount actually paid by the customer after the discount is considered for Net Sales purposes, rather than the original price.
Furthermore, Net Sales include proceeds from any business interruption insurance applicable to the franchisee's BCS Makery. This comprehensive definition ensures that all relevant income streams are accounted for when calculating the fees owed to Buff City Soap, while also providing clarity on what is excluded to avoid ambiguity. Franchisees should pay close attention to these inclusions and exclusions to accurately report their Net Sales and ensure compliance with the franchise agreement.