What customer-related deductions are excluded from Gross Revenues for a Canopy Lawn Care franchise, and what deductions are specifically not allowed?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) The term "Gross Revenues" means amounts derived from all products or services sold from or through your Franchise (across all Territories), including any sale of products or services made for cash or credit, or partly for cash and partly for credit. "Gross Revenues" also includes the fair market value of any services or products received by you in barter or in exchange for services and products. Gross Revenues are deemed received by the franchisee at the time the services or products are delivered or at the time the sale takes place, whatever occurs first, regardless if final payment has actually been received by the franchisee. There is no rollover credit for weeks in which the royalty amount exceeds the minimum. Gross Revenues do not include:
- (i) the amount of any tax imposed by any federal, state, municipal or other governmental authority directly on sales and collected from customers, provided that the amount of any such tax is shown separately and in fact paid by you to the appropriate governmental authority; and
- (ii) all customer refunds, valid discounts and coupons, and credits made by the Fencing Business (exclusions will not include any reductions for credit card user fees, financing program fees, returned checks or reserves for bad credit or doubtful accounts).
Source: Item 6 — OTHER FEES (FDD pages 19–24)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, gross revenues, which are used to calculate royalty fees, have specific inclusions and exclusions. Gross Revenues include amounts from all products and services sold through the franchise, whether for cash or credit, and the fair market value of bartered services or products. These revenues are considered received when the services/products are delivered or the sale takes place, regardless of when payment is received.
However, certain items are excluded from gross revenues. These exclusions include taxes imposed directly on sales by governmental authorities (federal, state, or municipal) that are collected from customers, provided these taxes are shown separately and paid to the appropriate authority. Additionally, customer refunds, valid discounts and coupons, and credits made by the Fencing Business are also excluded from gross revenues.
Importantly, the FDD specifies that reductions for credit card user fees, financing program fees, returned checks, or reserves for bad credit or doubtful accounts are NOT allowed as exclusions from gross revenues. This means that Canopy Lawn Care franchisees must pay royalties on the full sale amount before deducting these types of expenses. This is a fairly standard practice in franchising, as franchisors typically want to ensure royalties are calculated on the total revenue generated before franchisees' operating expenses.