Are customer refunds included in Hydrodog's definition of Gross Sales?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
"Gross Sales" are defined in the Franchise Agreement as all revenue you derive from operating the Business, including, but not limited to, all amounts you receive at or away from the HydroDog Vehicle from any Services, Products or activities whatsoever including any that are in any way associated with the Marks, Copyrights or System, and whether from cash, check, barter, credit or debit card or credit transactions, including the redemption value of gift certificates redeemed by you regardless of whether such gift certificates are issued by you or someone else; but excluding: (1) all federal, state or municipal sales, use or service taxes collected from customers and paid to the appropriate taxing authority; and (2) customer refunds, adjustments, credits and allowances actually made by your HydroDog Business, provided that such refunds, adjustments, credits and allowances are documented and verifiable.
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, customer refunds are explicitly excluded from the calculation of Gross Sales, which is relevant because several fees are calculated as a percentage of Gross Sales. The FDD defines Gross Sales as all revenue derived from operating the business, including revenue from services, products, or activities associated with Hydrodog, whether received via cash, check, barter, credit/debit card, or gift certificate redemption.
However, this definition specifically excludes certain items. These exclusions include all federal, state, or municipal sales, use, or service taxes collected from customers and remitted to the appropriate taxing authority. Critically, the definition also excludes customer refunds, adjustments, credits, and allowances actually made by the Hydrodog business.
For a Hydrodog franchisee, this means that when calculating Gross Sales for royalty and marketing fee payments, they can deduct the amount of documented and verifiable refunds, adjustments, credits, and allowances provided to customers. This is a beneficial provision, as it ensures that franchisees are not paying fees on revenue they did not ultimately retain due to customer refunds or similar adjustments. The franchisee must maintain proper documentation to support these deductions.