What is excluded from 'Gross Sales' when calculating revenue for a Crab N Spice franchise?
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
- "Gross Sales" means the total dollar amount of all sales generated through the Business for a given period, including, but not limited to, payment for any services or products sold by Franchisee, whether for cash or credit. Gross Sales does not include (i) bona fide refunds to customers, (ii) sales taxes collected by Franchisee, (iii) sales of used equipment not in the ordinary course of business, or (iv) sales of prepaid cards or similar products (but the redemption of any such card or product will be included in Gross Sales).
Source: Item 22 — CONTRACTS (FDD pages 50–51)
What This Means (2024 FDD)
According to Crab N Spice's 2024 Franchise Disclosure Document, 'Gross Sales' for a franchise encompass the total dollar amount from all sales generated through the business, including payments for services or products sold, whether in cash or credit. However, certain items are specifically excluded from this calculation.
Specifically, the following are not included in the 'Gross Sales' figure: bona fide refunds to customers, sales taxes collected by the franchisee, sales of used equipment not in the ordinary course of business, and sales of prepaid cards or similar products. It is important to note that while the sale of prepaid cards is excluded, the redemption of these cards is included in Gross Sales.
For a prospective Crab N Spice franchisee, understanding this definition is crucial for accurately reporting revenue and calculating royalties or other fees owed to the franchisor. Franchisees must maintain meticulous records to properly account for these exclusions and ensure compliance with the franchise agreement.