What is the definition of Gross Revenue for a Closet Storage Concepts franchise?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
3.3.2 "Gross Revenue" Defined.
For the purpose of this Agreement, above, the term "Gross Revenue" is defined as the total gross revenue derived by Franchisee from the operation of Franchisee's Closet & Storage Concepts business whether from sales for cash or credit, including sales of both products and services, and including installation charges, exclusive of all sales taxes, use taxes, Gross Revenue taxes and other similar taxes added to the sales price and collected from the customer, and less any bona fide refunds, rebates, and discounts.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, Gross Revenue is defined as the total gross revenue a franchisee derives from operating their Closet & Storage Concepts business. This includes revenue from cash and credit sales, encompassing both product and service sales. Installation charges are also included in Gross Revenue.
However, there are some exclusions. Gross Revenue does not include sales taxes, use taxes, gross revenue taxes, or other similar taxes that are added to the sales price and collected from customers. Additionally, bona fide refunds, rebates, and discounts are subtracted from the total to arrive at Gross Revenue.
Understanding the definition of Gross Revenue is crucial for Closet Storage Concepts franchisees because it directly impacts the calculation of royalty fees and local advertising fees. The royalty fee is 5% of weekly Gross Revenues, subject to a minimum of $125 per week. Franchisees must also spend the greater of 7% of monthly Gross Revenues or $2,500 per month on local advertising. Therefore, accurately tracking and reporting Gross Revenue is essential for compliance with the franchise agreement and for managing the financial aspects of the business.