What items are excluded from 'Gross Sales' calculations for a Desi District franchise?

According to Desi District's 2024 Franchise Disclosure Document, 'Gross Sales' for the purpose of calculating royalty fees and other payments, means the total dollar amount of all sales generated through the Business for a given period, including payment for any services or products sold by Franchisee, whether for cash or credit.

However, the following items are specifically excluded from the 'Gross Sales' calculation: 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. It is important to note that while the sale of prepaid cards is excluded, the redemption of these cards is included in Gross Sales.

This definition is important for prospective franchisees as it directly impacts the royalty fees and marketing contributions they will be required to pay. By excluding certain items like sales taxes and customer refunds, Desi District aims to ensure that franchisees are not paying fees on money that doesn't actually contribute to the business's net revenue. Franchisees should carefully track these exclusions to accurately report their Gross Sales and avoid any discrepancies with Desi District's calculations, especially since Desi District has the right to remotely access the franchisee's point-of-sale system to verify sales figures.