Are sales taxes collected from customers 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, sales taxes collected from customers are explicitly excluded from the definition of Gross Sales. Gross Sales are used to calculate royalty and marketing fees. This means that Hydrodog franchisees will not pay a percentage of collected sales taxes to the franchisor.
The FDD specifies that Gross Sales include all revenue derived from operating the business, encompassing amounts received at or away from the HydroDog Vehicle for any services, products, or activities associated with Hydrodog's trademarks, copyrights, or system. This includes transactions made via cash, check, barter, credit or debit card, and the redemption value of gift certificates.
However, the definition of Gross Sales specifically excludes "all federal, state or municipal sales, use or service taxes collected from customers and paid to the appropriate taxing authority." It also excludes customer refunds, adjustments, credits, and allowances actually made by the HydroDog Business, provided these are documented and verifiable. This exclusion of sales taxes from Gross Sales is a common practice in franchising, as it ensures that franchisees are not paying royalties on funds they are simply collecting on behalf of the government.