Are sales taxes included in the Gross Sales calculation for a Deck Medic franchise?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
Note 3: Gross Sales – "Gross Sales" means the total dollar sales from all business and customers of your Deck Medic Business and includes the total gross amount of revenues and sales from whatever source derived, whether in form of cash, credit, agreements to pay or other consideration including the actual retail value of any goods or services traded, borrowed, or received by you in exchange for any form of non-money consideration (whether or not payment is received at the time of the sale), from or derived by you or any other person or Corporate Entity from business conducted or which started in, on, from or through your Deck Medic Business and/or your Operating Territory, whether such business is conducted in compliance with or in violation of the terms of the Franchise Agreement. Gross Sales include the total gross amount of revenues and sales from whatever source derived from and/or derived by you including, any person and/or Corporate Entity acting on your behalf, from business conducted within and/or outside your operating territory that is related to your Deck Medic Business and/or a competitive business located and/or operated within your Operating Territory, outside your operating territory, and/or otherwise. Gross Sales do not include (a) sales taxes that you collect and remit to the proper taxing authority, and (b) authorized promotional discounts that you provide to customers.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2024 FDD)
According to Deck Medic's 2024 Franchise Disclosure Document, gross sales do not include sales taxes that you collect and remit to the proper taxing authority. Gross Sales means the total dollar sales from all business and customers of your Deck Medic Business and includes the total gross amount of revenues and sales from whatever source derived, whether in form of cash, credit, agreements to pay or other consideration including the actual retail value of any goods or services traded, borrowed, or received by you in exchange for any form of non-money consideration (whether or not payment is received at the time of the sale), from or derived by you or any other person or Corporate Entity from business conducted or which started in, on, from or through your Deck Medic Business and/or your Operating Territory, whether such business is conducted in compliance with or in violation of the terms of the Franchise Agreement.
This definition of Gross Sales is important because several fees payable to Deck Medic are calculated as a percentage of Gross Sales. These include the royalty fee, which is 6% of monthly Gross Sales, and the national advertising fund fee, which is up to 2% of monthly Gross Sales (currently 1%). Additionally, franchisees must spend 5% of the preceding year's annual Gross Sales on local marketing beginning in the second year of operation.
Therefore, it is beneficial to Deck Medic franchisees that sales taxes are excluded from the Gross Sales calculation, as this reduces the amount on which these fees are based. Franchisees should ensure they properly track and remit sales taxes to avoid any issues with the taxing authorities and to accurately calculate their Gross Sales for fee payments.