Are sales taxes collected by the Fly To Fit franchisee included in Gross Sales?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
ystems, formulas, techniques, designs, layouts, operating procedures, customer data, information and know-how.
- "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
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, sales taxes collected by the franchisee are not included in the calculation of Gross Sales. Gross Sales are defined as the total dollar amount of all sales generated through the Business for a given period, including payments for any services or products sold, whether for cash or credit.
Specifically, the FDD states that Gross Sales does not include bona fide refunds to customers, sales taxes collected by the franchisee, sales of used equipment not in the ordinary course of business, or sales of prepaid cards or similar products. However, the redemption of any such card or product will be included in Gross Sales.
This definition is important for Fly To Fit franchisees because the Royalty Fee and Marketing Fund Contribution are calculated as a percentage of Gross Sales. By excluding sales taxes from Gross Sales, the franchisee pays these fees on the revenue they actually retain, rather than on the total amount collected from customers.