Does the definition of Gross Revenue for a Devon Creek franchise include proceeds from business interruption insurance?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
Gross Revenues also include all proceeds from any business interruption insurance.
Excluded from Gross Revenues are: (1) sales taxes and other taxes separately stated that Franchisee collects from customers and pays to taxing authorities; (2) refunds and credits made in good faith to arms' length customers, provided such credits or refunds are made in accordance with Franchisor's standards and specifications; and (3) the discount value of any voucher or other allowance that Franchisor authorizes at the time Franchisee redeems the customer's voucher or allowance.
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to the 2024 Devon Creek Franchise Disclosure Document, gross revenues for a Devon Creek franchise include all proceeds from any business interruption insurance. This means that if a franchisee experiences a business interruption that is covered by insurance, the proceeds received from that insurance policy must be included when calculating gross revenues.
For a prospective franchisee, this is important because gross revenues are used to calculate royalty fees and brand development fund contributions owed to Devon Creek. By including business interruption insurance proceeds in gross revenues, Devon Creek ensures that it receives its share of income even during periods when the franchise's operations are disrupted.
The FDD also specifies items excluded from gross revenues: sales taxes collected from customers and paid to taxing authorities, refunds and credits made in good faith to customers according to Devon Creek's standards, and the discount value of any voucher or allowance that Devon Creek authorizes when a franchisee redeems a customer's voucher or allowance. Franchisees must report gross revenues weekly and pay the associated fees.