What is included in the calculation of 'Gross Sales' for a Chocolate Fish Coffee franchise?

According to the 2024 Franchise Disclosure Document, Chocolate Fish Coffee defines 'Gross Sales' as the total dollar amount of all sales generated through the Business for a given period. This includes payments for any services or products sold by the franchisee, whether those payments are made in cash or via credit.

However, the calculation of Gross Sales for a Chocolate Fish Coffee location does not include a few specific 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 sale of prepaid cards is excluded, the redemption of any such card or product will be included in Gross Sales.

Understanding what constitutes Gross Sales is crucial for a Chocolate Fish Coffee franchisee because royalty fees and brand fund contributions are typically calculated as a percentage of Gross Sales. Therefore, accurately tracking and reporting Gross Sales is essential for compliance with the franchise agreement and for managing the financial performance of the franchise. Franchisees should pay close attention to the inclusions and exclusions in the definition to ensure accurate reporting.