What is excluded from the definition of 'Gross Revenue' for a Closet Storage Concepts franchise?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
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 revenue a franchisee makes from operating their Closet & Storage Concepts business. This includes revenue from cash or credit sales, sales of products and services, and installation charges.
However, the definition of gross revenue specifically excludes certain items. These exclusions include all sales taxes, use taxes, gross revenue taxes, and other similar taxes that are added to the sales price and collected from customers. Additionally, any bona fide refunds, rebates, and discounts are also subtracted from the total revenue to arrive at the gross revenue figure.
Understanding what constitutes gross revenue is crucial for Closet Storage Concepts franchisees because it directly impacts the royalty fees they must pay to the franchisor. The royalty fee is calculated as a percentage of gross revenue, so accurately determining this figure is essential for compliance and financial planning.