What is excluded from the calculation 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 the 2025 Craters & Freighters Franchise Disclosure Document, Adjusted Gross Sales are used to calculate royalty fees and marketing fund contributions. Adjusted Gross Sales include the total of all amounts received from customers for services and products related to the franchised business. This includes sales made at or away from the premises, and amounts paid via various methods such as cash, credit, checks, gift certificates, coupons, services, property, or other means of exchange.
However, the calculation of Adjusted Gross Sales for a Craters & Freighters franchise specifically excludes all federal, state, or municipal sales or services taxes collected from customers and then paid to the appropriate taxing authority. This means that franchisees do not pay royalties or marketing fees on the tax portion of their sales, which is a common practice in franchising to avoid franchisees paying fees on money they simply pass through to government entities.
In practical terms, this exclusion reduces the base amount upon which Craters & Freighters calculates royalty fees and marketing fund contributions, potentially lowering these costs for the franchisee. Franchisees must accurately track and report their sales and tax collections to ensure proper calculation of Adjusted Gross Sales and avoid any discrepancies or penalties.