What is a C3 Wellness Spa franchisee required to do with the Gross Sales of their Spa Location Franchise?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
You must deposit all Gross Sales of your Spa Location Franchise into the designated bank accounts that are subject to our ACH authorization. You must install and use, at your expense, the pre-authorized payment, point of sale, automatic payment, automated banking, electronic debit and/or electronic funds transfer systems that we designate and require in the operation of your Spa Location Franchise. You must pay all service charges and fees charged to you by your bank so that we may electronically debit your bank account.
Note 3: Gross Sales – "Gross Sales" means the greater of either total dollar sales from all business and customers of your Spa Location Franchise or, the Spa operated by the company that your Spa Management Business manages in connection with your Spa Location Franchise. Without limitation to the foregoing, Gross Sales shall mean and include the total gross amount of revenues and sales from whatever source derived, whether in form of cash, credit, agreements to pay or other consideration including the actual retail value of any goods or services traded, borrowed, or received by you or any other person or entity in exchange for any form of non-money consideration (whether or not payment is received at the time of the sale), from or derived by you or any other person (including Authorized Care Providers) or Corporate Entity involving or relating to either (a) the Approved Spa Products and Services, or (b) business conducted or which started in, on, from, related to, or through your Spa Location Franchise, your Spa Location, and, if applicable, your Spa Management Business, whether such business is conducted in compliance with or in violation of the terms of the Franchise Agreement. Gross Sales shall further include the total gross amount of revenues and sales from whatever source derived from and/or derived by you (including any person and/or Corporate Entity acting on your behalf and/or an Authorized Care Provider) from business conducted within and/or outside your designated territory that is related to your Spa Location Franchise, the underlying Spa associated with your Spa Location Franchise and/or a competitive business located and/or operated at your Spa Location, within your designated territory, outside your designated territory, and/or otherwise. Gross Sales do not include (a) sales taxes that you collect and remit to the proper taxing authority, (b) authorized promotional discounts that you provide to customers, (c) employee tips, and (d) revenue received during a previous weekly accounting period, yet redeemed in the current accounting period, provided that the revenue received shall be deemed Gross Sales during the weekly accounting period it is received.
Source: Item 6 — OTHER FEES (FDD pages 16–21)
What This Means (2024 FDD)
According to C3 Wellness Spa's 2024 Franchise Disclosure Document, franchisees are required to deposit all gross sales of their Spa Location Franchise into designated bank accounts that are subject to ACH authorization. This means C3 Wellness Spa has the right to electronically debit these accounts for fees and other amounts owed. Franchisees must also install and use pre-authorized payment, point-of-sale, automatic payment, automated banking, electronic debit, and/or electronic funds transfer systems that C3 Wellness Spa designates. Franchisees are responsible for paying all service charges and fees charged by their bank for these electronic debits.
Gross Sales are defined as the total dollar sales from all business and customers of the Spa Location Franchise or the Spa operated by the company that the Spa Management Business manages in connection with the Spa Location Franchise, whichever is greater. Gross Sales include revenues from all sources, whether in cash, credit, or other forms of consideration, derived from the Approved Spa Products and Services or any business conducted through the Spa Location Franchise. This includes business conducted by the franchisee, Authorized Care Providers, or any Corporate Entity related to the franchise, whether compliant with the Franchise Agreement or not. Gross Sales also include revenues from business conducted within or outside the designated territory that is related to the Spa Location Franchise or a competitive business at the Spa Location.
However, Gross Sales do not include sales taxes that are collected and remitted, authorized promotional discounts provided to customers, employee tips, and revenue received during a previous weekly accounting period but redeemed in the current period. The revenue received is considered Gross Sales during the weekly accounting period it is received. This comprehensive definition ensures that C3 Wellness Spa receives its due fees based on nearly all revenue streams associated with the franchise.
These stipulations are typical in franchising, as they allow C3 Wellness Spa to maintain financial control and ensure consistent fee collection. Franchisees should be aware of these requirements and factor in the associated bank fees and system costs when evaluating the financial viability of the franchise. The ACH authorization also means franchisees must maintain sufficient funds in their designated accounts to cover these deductions.