What documentation is required for customer refunds to be excluded from Hydrodog's 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, to exclude customer refunds, adjustments, credits, and allowances from gross sales, they must be documented and verifiable. This means that Hydrodog franchisees need to maintain thorough records of any instances where they provide a refund, adjustment, credit, or allowance to a customer.
For a prospective Hydrodog franchisee, this implies a need for meticulous record-keeping practices. The documentation must be sufficient to prove that the refund, adjustment, credit, or allowance was actually given to the customer. Without proper documentation, Hydrodog can include these amounts in the franchisee's gross sales, which would increase the royalty and marketing fees owed to Hydrodog.
It is important to note that the FDD does not specify the exact form that this documentation must take. Therefore, a prospective franchisee should seek clarification from Hydrodog regarding what specific types of records (e.g., receipts, credit memos, transaction logs) will be considered acceptable to substantiate customer refunds, adjustments, credits, and allowances.