What is the definition of 'Adjusted Gross Sales' for a Craters & Freighters franchise?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
"Adjusted Gross Sales" means the total of all amounts received from customers for services performed and products sold from, at or in connection with Franchisee's Franchised Business, or arising out of the operation or conduct of business by Franchisee's Franchised Business, including sales made at or away from the Premises, whether such amounts are paid by cash, credit, checks, gift certificates, coupons, services, property or other means of exchange, but excluding all federal, state or municipal sales or services taxes collected from customers and paid to the appropriate taxing authority.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, "Adjusted Gross Sales" is defined as the total income from services and products sold by the franchisee's business. This includes sales made both at the primary business location and elsewhere, covering all transactions regardless of payment method (cash, credit, checks, gift certificates, coupons, or other forms of exchange).
However, the definition of Adjusted Gross Sales for Craters & Freighters specifically excludes sales or service taxes that are collected from customers and then remitted to the appropriate tax authorities. This means that franchisees do not have to pay royalties or marketing fund contributions on the tax portion of their sales.
Understanding this definition is crucial for Craters & Freighters franchisees because royalty fees and marketing fund contributions are calculated as a percentage of Adjusted Gross Sales. Accurately calculating and reporting Adjusted Gross Sales is essential for compliance with the franchise agreement and to avoid potential disputes with the franchisor. Failure to accurately report Adjusted Gross Sales can result in penalties or even termination of the franchise agreement.