What is excluded from the definition of 'Gross Sales' for a City Wide franchise?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.5 Definition of Gross Sales.
The term "Gross Sales" shall mean all Franchised Business's revenues invoiced by anyone and in any way resulting from the conduct and operation of Franchisee's business, less any sales of merchandise for which cash has been refunded, and any applicable sales, use or service taxes collected and paid to the appropriate taxing authority in any week from any source.
Gross Sales include all amounts received in the form of cash, credit coupons, rebates, agreements to pay, or other consideration, including the actual value of any goods or services traded, bartered, or otherwise received by Franchisee in exchange for any form of monetary or non-monetary consideration, and whether or not payment is received at the time of sale or any such amounts prove uncollectible.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the term 'Gross Sales' is defined as all revenues invoiced by the Franchised Business resulting from its operation. However, there are specific exclusions from this definition.
Specifically, the following are subtracted from total revenues to arrive at Gross Sales: any sales of merchandise for which cash has been refunded, and any applicable sales, use, or service taxes collected and paid to the appropriate taxing authority. This means that City Wide franchisees do not pay royalties on refunded sales or taxes they collect on behalf of the government.
Gross Sales include all amounts received in various forms, such as cash, credit coupons, rebates, agreements to pay, or other consideration. This also encompasses the actual value of any goods or services traded, bartered, or otherwise received by the franchisee in exchange for monetary or non-monetary consideration. Gross Sales includes these revenues whether or not payment is received at the time of sale or if such amounts prove uncollectible. This broad definition ensures that all forms of revenue are included in the calculation of Gross Sales for royalty purposes, except for the specific exclusions mentioned above.