Does the definition of 'Gross Sales' for a Crown Gold Exchange franchise include credit sales?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
, techniques, designs, layouts, operating procedures, customer data, information and know-how.
- "Gross Sales" means the total dollar amount of all sales generated through the Business for a given period, including, but not limited to, payment for any services or products sold by Franchisee, whether for cash or credit. Gross Sales does not include (i) bona fide refunds to customers, (ii) sales taxes collected by Franchisee, (iii) sales of used equipment not in the ordinary course of business, or (iv) sales of prepaid cards or si
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, the definition of Gross Sales includes all sales generated through the business, whether for cash or credit. This means that when calculating the total revenue for royalty fees and other financial reporting, a Crown Gold Exchange franchisee must include the dollar amount of all credit sales.
However, the definition of Gross Sales does not include certain items. Specifically, bona fide refunds to customers, sales taxes collected by the franchisee, sales of used equipment not in the ordinary course of business, and sales of prepaid cards or similar products are excluded from Gross Sales. However, the redemption of any such card or product will be included in Gross Sales.
This definition is important because Crown Gold Exchange franchisees pay ongoing royalty fees based on a percentage of Gross Sales. Therefore, understanding exactly what constitutes Gross Sales is crucial for accurate financial reporting and avoiding potential disputes with the franchisor. Franchisees should carefully track all sales, refunds, and exclusions to ensure compliance with the franchise agreement.