Does the definition of 'Gross Sales' for a Chocolate Fish Coffee franchise include payment for services?

According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, the definition of 'Gross Sales' includes payments for services. Specifically, Gross Sales is defined as the total dollar amount of all sales generated through the Chocolate Fish Coffee business for a given period. This encompasses payments for any services or products sold by the franchisee, regardless of whether the payment is made in cash or credit.

However, the definition of Gross Sales for a Chocolate Fish Coffee franchise does not include 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, or (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 these cards is included in Gross Sales.

For a prospective Chocolate Fish Coffee franchisee, understanding what constitutes Gross Sales is crucial because it directly impacts the calculation of royalty fees and brand fund contributions owed to the franchisor. By excluding certain items like sales taxes and customer refunds, the franchisor ensures that franchisees are not paying royalties on amounts that do not represent actual revenue for the business. Franchisees should carefully track their sales and exclusions to accurately report Gross Sales and avoid any discrepancies with the franchisor's calculations.