Are sales taxes included in the calculation of Gross Sales for a C3 Wellness Spa?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
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, sales taxes are not included in the calculation of Gross Sales. Gross Sales are defined as the 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. Gross Sales include revenues and sales from any source, such as cash, credit, agreements to pay, or other consideration, including the retail value of goods or services traded.
Gross Sales also encompass revenues and sales derived from business conducted within or outside the designated territory related to the Spa Location Franchise. However, the definition of Gross Sales specifically excludes certain items. These exclusions include sales taxes that the franchisee collects and remits to the proper taxing authority, authorized promotional discounts provided to customers, employee tips, and revenue received during a previous weekly accounting period but redeemed in the current period.
For a prospective C3 Wellness Spa franchisee, this means that when calculating royalties, brand development fund fees, local marketing expenses, and other fees based on Gross Sales, they can deduct the amount of sales taxes collected from their revenue. This exclusion reduces the base amount on which these fees are calculated, potentially lowering the overall cost of operating the franchise. It is important for franchisees to accurately track and report their sales taxes to ensure compliance with both the franchise agreement and tax regulations.