What documentation is required for customer refunds, adjustments, credits, and allowances to be excluded from Hydrodog's 'Gross Sales'?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
- "Gross Sales" means all revenue derived from operating the HydroDog Business, including, but not limited to, all amounts received 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 regardless of whether such gift certificates are issued by the HydroDog Business 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 the HydroDog Business, provided that such refunds, adjustments, credits and allowances are documented and verifiable.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 38–40)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, customer refunds, adjustments, credits, and allowances can be excluded from the calculation of 'Gross Sales' if they are properly documented and verifiable. This means that Hydrodog franchisees must maintain records that substantiate any such deductions taken from their gross sales figures. These records would need to be produced in the event of an audit.
For a prospective Hydrodog franchisee, this documentation requirement is crucial for accurately reporting financial performance and avoiding potential disputes with Hydrodog regarding royalty payments or other financial obligations. Gross sales figures are often used to calculate royalties and other fees payable to the franchisor, so ensuring accurate reporting is essential for maintaining a transparent and compliant relationship.
The requirement for documentation and verification is a standard practice in franchising, as it protects both the franchisee and the franchisor by providing a clear and auditable record of financial transactions. Franchisees should establish robust record-keeping systems to capture all relevant details related to refunds, adjustments, credits, and allowances. This may include retaining copies of receipts, credit memos, or other supporting documentation that validates the deductions taken from gross sales.
It is important for prospective Hydrodog franchisees to understand the specific types of documentation that Hydrodog will accept as verification. Franchisees should also clarify how frequently and in what format this documentation must be submitted to Hydrodog, if at all. Maintaining meticulous records will help franchisees accurately track their financial performance and ensure compliance with Hydrodog's reporting requirements.