What are some examples of items excluded from 'Gross Sales' calculations for a Fly To Fit franchise?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
- "Gross Sales" means the total dollar amount of all sales generated through the Business for a given period, including, but not limited to, payment for any services or products sold by Franchisee, whether for cash or credit. Gross Sales does not include (i) bona fide refunds to customers, (ii) sales taxes collected by Franchisee, (iii) sales of used equipment not in the ordinary course of
business, or (iv) sales of prepaid cards or similar products (but the redemption of any such card or product will be included in Gross Sales).
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, 'Gross Sales' for royalty calculation purposes includes the total dollar amount of all sales generated through the Business, whether for cash or credit. However, certain items are specifically excluded from this calculation.
Specifically, the following are not included in the 'Gross Sales' calculation: (i) bona fide refunds to customers, (ii) sales taxes collected by the Franchisee, (iii) sales of used equipment not in the ordinary course of business, and (iv) sales of prepaid cards or similar products. However, it is important to note that the redemption of any such prepaid card or product will be included in Gross Sales.
For a prospective Fly To Fit franchisee, understanding what constitutes 'Gross Sales' is crucial because the royalty fees and marketing contributions are calculated as a percentage of this figure. Therefore, accurately tracking and reporting sales, while also accounting for the exclusions, is essential for financial compliance and profitability.