Are sales of used equipment included in the 'Gross Sales' calculation for a Chocolate Bash franchise?

According to Chocolate Bash's 2024 Franchise Disclosure Document, the calculation of 'Gross Sales' for a Chocolate Bash franchise includes the total dollar amount of all sales generated through the business for a given period. This encompasses payments for any services or products sold by the franchisee, whether the transaction is cash or credit.

However, the calculation of Gross Sales specifically excludes certain items. These exclusions are (i) bona fide refunds to customers, (ii) sales taxes collected by the franchisee, (iii) sales of used equipment not in the ordinary course of business, and (iv) sales of prepaid cards or similar products. It is important to note that while the initial sale of prepaid cards is excluded, the redemption of any such card or product will be included in Gross Sales.

For a prospective Chocolate Bash franchisee, this definition of Gross Sales is important because it directly impacts the royalty fees owed to the franchisor. Royalty fees are typically calculated as a percentage of Gross Sales, so understanding what is included and excluded from this calculation is crucial for financial planning and accurate reporting. Franchisees should ensure they maintain accurate records of all sales and exclusions to properly calculate and remit royalty payments.