Does Gross Sales for Extreme Art Studio include the amount of gift card redemptions?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
o Business under this Franchise Agreement and immediately upon opening each subsequent Extreme Art Studio Business under a Standard Franchise (if applicable).
- 3.2.2 For purposes of this Franchise Agreement, "Gross Sales" means all revenue that you receive from operating the Franchised Business (including any modules), including, but not limited to, all amounts or other consideration that you receive, directly or indirectly, at or away
from the Extreme Art Studio Business, and in the form of cash, check, credit and debit card, barter exchange, trade credit, or other credit transactions, and including all proceeds from any business interruption insurance. For example, Gross Sales includes, without limitation, the following:
- (a) all monies you receive from customers, including, but not limited to, monies received from the sale of products and services;
- (b) the amount of gift card redemptions;
- (c) the proceeds of any business loss or interruption insurance or similar insurance; and
- (d) any other revenue you derive.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, Gross Sales does include the amount of gift card redemptions. Gross Sales is defined as all revenue received from operating the franchised business. This includes all amounts received directly or indirectly, whether in the form of cash, check, credit/debit card, barter exchange, or other credit transactions.
For an Extreme Art Studio franchisee, this means that when calculating the royalty fee (8% of Gross Sales or $500 per month, whichever is greater), the revenue generated from gift card redemptions must be included. This is important for accurately reporting revenue and paying the correct royalty fees to Extreme Art Studio.
Gross Sales does not include sales, use, or service taxes collected from customers and remitted to the appropriate taxing authority, nor does it include bona fide customer refunds or customer tips. Franchisees should keep detailed records of all sales, including gift card redemptions, to ensure accurate royalty payments and compliance with the franchise agreement.