For Chocolate Fish Coffee, what is excluded from the definition of 'Gross Sales'?

According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, "Gross Sales" is defined as the total revenue from the sale of goods or services, but with specific exclusions. Understanding this definition is crucial for franchisees as it directly impacts royalty fees and brand fund contributions, which are calculated as percentages of gross sales. Accurately tracking and reporting gross sales, while excluding the specified items, is essential for compliance and financial transparency within the Chocolate Fish Coffee franchise system.

Specifically, the definition of Gross Sales for Chocolate Fish Coffee excludes sales tax, discounts, and returns. This means that when calculating the total revenue subject to royalty and brand fund fees, franchisees do not include the amount collected for sales tax, any discounts provided to customers, or the value of returned items. This exclusion is beneficial for franchisees as it reduces the base amount on which these fees are calculated, potentially lowering their overall costs.

For example, if a Chocolate Fish Coffee location generates $100,000 in total revenue, but $5,000 of that is from sales tax, $2,000 from discounts, and $1,000 from returns, the "Gross Sales" figure used to calculate royalty and brand fund fees would be $92,000 ($100,000 - $5,000 - $2,000 - $1,000). This distinction is important for franchisees to understand to accurately manage their finances and ensure correct reporting to Chocolate Fish Coffee.