For Hear Again America, what is excluded from the calculation of 'Net Sales'?

According to Hear Again America's 2025 Franchise Disclosure Document, 'Net Sales' is defined as the total revenues and receipts from the sale of all products and services, less specific deductions. This means that the gross income a Hear Again America center generates is subject to certain reductions before arriving at the 'Net Sales' figure used for financial reporting and calculating royalties.

Specifically, the calculation of Net Sales for Hear Again America excludes returns, allowances, discounts, cancellations, and sales tax. These items are subtracted from the total revenues and receipts. For a franchisee, this means that when calculating royalty fees (which are 5% of Net Sales as shown in tables 1 and 2), the base figure will be lower than the total gross sales due to these exclusions.

This definition is important for franchisees to understand because it directly impacts the amount of royalty fees owed to Hear Again America and the financial performance metrics presented in the Item 19. By understanding what is included and excluded from Net Sales, a franchisee can more accurately assess their financial performance and profitability.