What are 'Indirect Costs' related to the Buff City Soap gift card program?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
"Direct Costs" means and includes all costs identified specifically with the Issuer services, including an allocable portion of costs for compensation, bonuses and travel expenses attributable to employees directly engaged in providing Issuer services, for materials and supplies directly consumed in providing Issuer services, and for other direct costs, such as costs of printing, storing, and shipping Gift Cards, shared services costs, costs of marketing and promotional services provided by any third party service providers, promotional discounts on Gift Cards, and license fees for intellectual property.
Direct Costs shall not include interest expense on indebtedness not incurred specifically for the benefit of you. "Indirect Costs" means and includes all costs that are not specifically identified with the Issuer services but that relate to the Direct Costs.
Indirect Costs may include (for example) costs with respect to utilities, occupancy and other overhead burdens.
The estimate of Issuer Expenses for each measurement period, which shall be at least quarterly, shall be made by Issuer or its agent.
Issuer (or its agent) may make its estimates by any reasonable method.
Source: Item 5 — INITIAL FEES (FDD pages 15–23)
What This Means (2025 FDD)
According to the 2025 Buff City Soap Franchise Disclosure Document, 'Indirect Costs' related to the gift card program include all costs that are not specifically identified with the Issuer services but that relate to the Direct Costs. These Indirect Costs may include costs related to utilities, occupancy, and other overhead burdens.
For a prospective Buff City Soap franchisee, understanding these indirect costs is crucial for accurately assessing the overall expenses associated with the gift card program. While the direct costs cover items like printing and shipping, the indirect costs account for the less obvious but still significant expenses of running the program.
By understanding both direct and indirect costs, franchisees can better evaluate the profitability and operational impact of the gift card program on their business. It is important to note that the estimate of Issuer Expenses for each measurement period, which shall be at least quarterly, shall be made by Issuer or its agent, and that Issuer (or its agent) may make its estimates by any reasonable method.