Are sales, use, or service taxes included in the definition of 'Gross Sales' for a Hydrodog franchise?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
- 6.10 Definition of Gross Sales. As used in this Agreement, the term "Gross Sales" means all revenue you derive from operating your HydroDog 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.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, gross sales do not include sales, use, or service taxes collected from customers and remitted to the appropriate taxing authority. Gross Sales for a Hydrodog business include all revenue derived from operating the HydroDog Business. This encompasses all amounts received at or away from the HydroDog Vehicle from any services, products, or activities associated with the HydroDog brand, including cash, checks, barter, credit or debit card transactions, and the redemption value of gift certificates.
For a prospective Hydrodog franchisee, this means that when calculating royalties and other fees owed to the franchisor, you will not include the amounts collected for sales, use, or service taxes. This exclusion can help reduce the royalty burden, as these taxes are simply pass-through funds collected on behalf of the government.
However, it is crucial for Hydrodog franchisees to accurately track and report their gross sales, ensuring that all applicable revenue streams are included while properly excluding taxes and customer refunds. Underreporting gross sales can lead to audits and potential penalties, as Hydrodog retains the right to withdraw underpaid royalties or other amounts, including interest and late charges, from the franchisee's account.