At what point are Gross Revenues deemed received by the Canopy Lawn Care franchisee?

According to Canopy Lawn Care's 2025 Franchise Disclosure Document, Gross Revenues are considered received by the franchisee either when the services or products are delivered or when the sale occurs, whichever happens first. This holds true regardless of whether the franchisee has actually received final payment. Gross Revenues include amounts derived from all products or services sold through the Lawn Care Business, including cash and credit transactions, as well as the fair market value of bartered services or products.

This definition is important for Canopy Lawn Care franchisees because it dictates when royalty fees are calculated and due. Even if a customer has not yet paid for a service, the franchisee must still remit royalties on the revenue as if it has been collected. This could create a cash flow challenge for franchisees if they have a significant amount of outstanding receivables.

However, Gross Revenues do not include taxes imposed directly on sales and collected from customers, provided these taxes are shown separately and paid to the appropriate governmental authority. This exclusion helps to avoid franchisees paying royalties on funds that are simply being passed through to tax authorities.

It is fairly standard practice in the franchise industry to calculate royalties based on revenue recognized rather than cash received, but franchisees should carefully consider the implications for their working capital, especially in businesses where payment may lag service delivery.