For Cool Binz, what constitutes 'Gross Sales' for royalty calculation purposes?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Royalties are payment for the use of the Marks, System, Territory, and Manuals. "Gross Sales" means all revenue generated from operating the COOL BINZ Business, whether in cash, in services in kind, from barter and/or exchange, or otherwise, less any sales tax or refunds for non-salvageable items. Commissions paid to lead sources may not be deducted from Gross Sales, and are subject to Royalty.
Source: Item 6 — OTHER FEES (FDD pages 19–27)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, "Gross Sales" is defined as all revenue generated from operating the Cool Binz business. This includes revenue received in cash, services in kind, or through barter and/or exchange. From this total revenue, a franchisee can deduct any sales tax or refunds for non-salvageable items.
It is important to note that commissions paid to lead sources cannot be deducted from Gross Sales and are still subject to royalty fees. This means that even if a franchisee pays a portion of their revenue to acquire leads, they must still pay royalties on the total revenue before deducting these commissions.
For a prospective Cool Binz franchisee, this definition of Gross Sales is crucial for understanding how royalties are calculated and ensuring accurate reporting. Franchisees need to keep detailed records of all revenue, including non-cash transactions, and be aware that certain expenses like lead generation commissions are not deductible when calculating royalty payments. This could impact the franchisee's profitability and financial planning.