Are amounts refunded to customers excluded from Itan's definition of Gross Sales?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
-
- Definitions: As used in this Disclosure Document, the following capitalized terms have the meanings given to them below:
- "Brand Fund" means the brand and system development fund we currently administer to promote public recognition of our brand and improve our System.
- "Gross Sales" means all gross sums you bill or collect from all goods and services sold, plus all other sums you collect from the operation of your Salon including advertising revenue, sponsorship fees and business interruption insurance proceeds. Gross Sales excludes: (a) sales or use taxes; (b) amounts refunded to customers; (c) revenue from the sale of furniture, fixtures and equipment in the ordinary course of business; and (d) tips paid to and retained by staff members as a gratuity. The Manual may include policies governing
the manner in which proceeds from the sale of gift cards are treated for purposes of calculating Gross Sales. The Manual may also provide details on the calculation of Gross Sales relating to membership fees and qualifying purchases and redemptions by members under a customer loyalty or membership program.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, Gross Sales are defined as all gross sums billed or collected from goods and services, plus all other sums collected from the salon's operation, including advertising revenue, sponsorship fees, and business interruption insurance proceeds. However, the definition of Gross Sales for Itan specifically excludes certain items.
Specifically, amounts refunded to customers are excluded from the calculation of Gross Sales. This means that if an Itan franchisee provides a refund to a customer for any reason, that refunded amount is not included when calculating the total Gross Sales for the purpose of determining royalty fees or other financial obligations to Itan.
In addition to customer refunds, Gross Sales also exclude sales or use taxes, revenue from the sale of furniture, fixtures, and equipment in the ordinary course of business, and tips paid to and retained by staff members as a gratuity. The Itan manual may include policies governing the treatment of gift card proceeds and details on calculating Gross Sales related to membership fees and customer loyalty programs.