How does Floyds 99 define 'Gross Sales' for the purpose of calculating weekly royalty payments?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.1 Weekly Royalty. The Franchisee shall pay to the Franchisor a weekly royalty ("Royalty") equal to 6% of the total amount of its "Gross Sales" (defined in Section 12.2 below), generated from or through its FLOYD'S 99 Shop.
- 12.2 Gross Sales. "Gross Sales" shall mean and include the aggregate amount of all sales of services, products or merchandise of every kind or nature sold from, at or in connection with or arising out of the operation or conduct of business at the Barbershop or, if the Franchisee is an entity, arising out of the operation or conduct of any business by such entity, including sales made at or away from the Barbershop, whether for cash or credit, and any revenues from vending machines and from sales of promotional items such as caps, T-shirts, jackets, and similar items, less merchandise returns for which refunds are made, and less service refunds, provided that no refund shall exceed the sales price, but excluding all: (i) federal, state or municipal sales or service taxes collected from clients and paid to the appropriate taxing authority; (ii) discounts that have been approved in advance by the Franchisor in writing; and (iii) other exclusions as may be authorized in writing by the Franchisor.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to Floyds 99's 2025 Franchise Disclosure Document, "Gross Sales" is a comprehensive figure used to calculate the weekly royalty payments. It includes the total amount of all sales of services, products, and merchandise of any kind, whether sold at the barbershop or elsewhere, and any revenues from vending machines and promotional items. This encompasses both cash and credit sales, reflecting the total revenue generated by the Floyds 99 shop.
However, the definition of "Gross Sales" also specifies certain exclusions. Floyds 99 franchisees do not have to include federal, state, or municipal sales or service taxes collected from clients and remitted to the appropriate taxing authority. Additionally, discounts approved in advance and in writing by Floyds 99 are excluded from the gross sales calculation. The FDD also mentions that other exclusions may be authorized in writing by Floyds 99, providing some flexibility in the calculation.
For a prospective Floyds 99 franchisee, understanding this definition is crucial because the weekly royalty, calculated as 6% of Gross Sales, directly impacts profitability. Accurately tracking and reporting all sales, while properly accounting for approved discounts and tax exclusions, is essential for compliance and financial management. Franchisees should seek clarification from Floyds 99 regarding any potential exclusions to ensure accurate royalty payments.