How does Creative World School define 'Adjusted Gross Revenues'?
Creative_World_School Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) Adjusted Gross Revenues means Gross Revenue less the amount of certain discounts and deductions we have authorized as described in the manuals or otherwise ("Authorized Deductions"). For purposes of determining Adjusted Gross Revenue, we may limit any discounts, offsets, credits, or deductions of any nature for childcare and day care service. If you offer any discounts to customers (employees or otherwise) which exceed the amount of the Authorized Deductions, then the computation of amounts due us (including Royalty and Marketing Contributions) you must add back in the amount of any discounts or deductions in excess. We are entitled to collect all amounts due based upon your then current published rates, tuition, or other fees that would have been charged if you had offered only the amount of the Authorized Deductions regardless of the amounts actually received by the Franchisee from such customer
Source: Item 6 — OTHER FEES (FDD pages 15–18)
What This Means (2025 FDD)
According to Creative World School's 2025 Franchise Disclosure Document, Adjusted Gross Revenues are defined as Gross Revenues less any authorized discounts and deductions as specified in the manuals or otherwise communicated by Creative World School. This calculation is important because it directly impacts the royalty and marketing contributions franchisees must pay.
Creative World School retains the right to limit the discounts, offsets, credits, or deductions that franchisees can apply to childcare and day care services when calculating Adjusted Gross Revenue. If a franchisee offers discounts exceeding the authorized amount, they must add back the excess discount amount when calculating royalties and marketing contributions. This ensures that Creative World School receives its due payments based on the standard rates, regardless of the excess discounts offered by the franchisee.
This policy has significant implications for franchisees. It means that while franchisees have some flexibility in offering discounts, they must adhere to Creative World School's guidelines to avoid increasing their royalty and marketing contribution obligations. Franchisees need to be aware of the authorized deductions and carefully manage their discounting practices to align with the franchisor's requirements. Understanding these authorized deductions is crucial for accurate financial reporting and avoiding potential disputes with Creative World School regarding royalty and marketing contribution payments.