How does Crisp & Green treat credit sales when calculating Gross Sales?
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 include all revenue from the franchised restaurant's operations. This encompasses sales of food, beverages, and other products and services, whether at the premises or elsewhere, including sales from a Crisp & Go location. The method of payment, whether cash, check, credit or debit card, barter exchange, trade credit, or other credit transactions, does not affect its inclusion in gross sales.
Crisp & Green treats each credit sale as a sale for the full price on the day it occurs, regardless of when or if payment is received. This means that franchisees are responsible for paying royalties on credit sales immediately, even if the customer has not yet paid.
However, there are some exclusions and reductions to gross sales. These include sales, use, or service taxes collected from customers and remitted to the appropriate taxing authority. Gross sales are also reduced by documented refunds, credits, allowances, adjustments, promotional discounts (including loyalty program discounts), and charge-backs provided to customers in good faith. This comprehensive definition ensures that royalties are calculated on actual revenue while accounting for typical business adjustments.