What sales are excluded from the Gross Sales calculation for a Floyds 99 franchise?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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, the calculation of Gross Sales excludes specific items. Gross Sales includes all sales of services, products, or merchandise, whether for cash or credit, revenues from vending machines, and sales of promotional items. However, the following are excluded from the Gross Sales calculation: (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 Floyds 99 in writing; and (iii) other exclusions as may be authorized in writing by Floyds 99.
For a prospective Floyds 99 franchisee, understanding the Gross Sales definition is crucial because the weekly royalty is calculated as 6% of Gross Sales. Accurately tracking and reporting Gross Sales, while properly excluding the items listed, ensures compliance with the franchise agreement and avoids potential disputes with Floyds 99. Franchisees must obtain written approval for any discounts they wish to exclude from Gross Sales to ensure these are properly accounted for.
It is important to note that the definition of Gross Sales is comprehensive, covering nearly all forms of revenue generated by the Floyds 99 shop. The exclusions are limited to specific, well-defined categories like sales taxes and approved discounts. Franchisees should maintain meticulous records of all sales and exclusions to accurately calculate and remit royalty payments. Any ambiguity or uncertainty regarding what constitutes Gross Sales should be clarified with Floyds 99 in writing to avoid potential issues.
This type of gross sales definition is fairly standard in the franchise industry. Most franchisors charge royalties based on a percentage of gross sales, with similar exclusions for taxes and approved discounts. Franchisees should pay close attention to these definitions in any franchise agreement to fully understand their financial obligations.