What is included in the definition of Gross Sales for a Floors To Go showroom?

According to Floors To Go's 2025 Franchise Disclosure Document, gross sales include all revenue from the showroom for goods and services. However, the definition of gross sales specifically excludes sales and use taxes, as well as refunds. This definition is important because several fees, such as the local advertising fee, are calculated as a percentage of monthly gross sales.

Specifically, Floors To Go expects franchisees to spend between 4% and 6% of monthly gross sales on local advertising. Since this percentage is based on gross sales, understanding what constitutes gross sales is crucial for budgeting and financial planning. Franchisees need to be aware that while all revenue from goods and services is included, they do not need to include sales taxes or subtract refunds when calculating their gross sales for the purpose of determining their local advertising expenditure.

Furthermore, Floors To Go has the right to audit a franchisee's books and records to ensure compliance with the requirement to purchase $350,000 or 80% of their total floor covering and window treatment purchases through the FTG Marketing System. This audit is based on gross sales, so the definition directly impacts the audit process and potential penalties for underreporting. If an audit reveals a deficiency of 2% or more, the franchisee is responsible for reimbursing Floors To Go for all costs associated with the audit, including accounting and legal fees.