Are promotional discounts included in the Gross Sales calculation for a Crisp & Green franchise?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
"Gross Sales" means all revenue derived from operating the Franchised Restaurant, including the aggregate of all sales amounts from food, beverages and other products sold and services rendered at the premises or otherwise rendered in connection with the Franchised Restaurant, and all monies derived from sales at or away from the Franchised Restaurant (including without limitation through a Crisp & Go Location), whether from cash, check, credit or debit card, barter exchange, trade credit, or other credit transactions, but: (1) excluding all federal, state or municipal sales, use or service taxes collected from customers and paid to the appropriate taxing authority; and (2) reduced by the amount of any documented refunds, credits, allowances, adjustments, promotional discounts (including pursuant to the loyalty program), and charge-backs the Franchised Restaurant provides to customers in good faith. We treat each charge or sale upon credit as a sale for the full price on the day during which that charge or sale is made, irrespective of when you receive payment (whether full or partial, or at all) on that sale. Generally, at the time and to the extent that transactions relating to coupons, gift certificates, gift cards, or vouchers (including pursuant to the loyalty program) result in the recognition of revenue under applicable accounting standards and the rules of our gift card or loyalty program, that revenue will be included in Gross Sales for the month in which such revenue is recognized.
Source: Item 6 — OTHER FEES (FDD pages 15–22)
What This Means (2024 FDD)
According to Crisp & Green's 2024 Franchise Disclosure Document, gross sales for royalty calculation purposes do not include promotional discounts. Gross Sales is defined as all revenue from operating the franchised restaurant, including sales of food, beverages, and other products and services, whether from cash, credit, or other transactions. This includes sales at or away from the restaurant, such as through a Crisp & Go location.
However, the calculation of Gross Sales excludes sales, use, or service taxes collected from customers and paid to the appropriate taxing authority. It is also reduced by the amount of any documented refunds, credits, allowances, adjustments, promotional discounts (including those pursuant to the loyalty program), and charge-backs that the franchised restaurant provides to customers in good faith.
This means that Crisp & Green franchisees will not pay royalties on the portion of their revenue that is attributable to discounts, refunds or taxes. This is a common practice in franchising, as it ensures that franchisees are not penalized for offering promotions or complying with tax laws. Franchisees must maintain proper documentation of these deductions to ensure accurate royalty reporting.