Does the definition of 'Gross Sales' for a Chocolate Bash franchise include sales of prepaid cards?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
gns, layouts, operating procedures, customer data, information and know-how.
- "Gross Sales" means the total dollar amount of all sales generated through the Business for a given period, including, but not limited to, payment for any services or products sold by Franchisee, whether for cash or credit. Gross Sales does not include (i) bona fide refunds to customers, (ii) sales taxes collected by Franchisee, (iii) sales of used equipment not in the ordinary course of business, or (iv) sales of prepaid cards or similar products (bu
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the definition of 'Gross Sales' does not include the sale of prepaid cards. However, the redemption of these prepaid cards is included in Gross Sales.
For a Chocolate Bash franchisee, this means that while the initial sale of a prepaid card does not count towards their gross sales figures (which are often used to calculate royalties and other fees), the revenue generated when customers use those cards to purchase products or services at the franchise location does count towards gross sales.
This distinction is important for financial planning and reporting. Franchisees need to track both the sale and redemption of prepaid cards to accurately calculate their gross sales and associated financial obligations to Chocolate Bash. This also ensures compliance with the franchise agreement and accurate reporting of revenue.