What is included in the definition of 'Gross Sales' for a Kidokinetics business?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
Royalty Fee: "Gross Sales" means the revenues you receive from the sale of all goods, services and products sold at, from, or through the Kidokinetics Business or made pursuant to the rights granted hereunder, and all other income of every kind and nature related to the Kidokinetics Business, whether from cash or credit or otherwise, and regardless of collection in the case of credit, including the full redemption value of any gift card, gift certificate or coupon sold for use in the Kidokinetics Business (fees retained by or paid to third-party sellers of such gift cards, gift certificates or coupons are not excluded from this calculation), and all proceeds from any business interruption insurance.
It does not include (i) any sales tax or other taxes collected from customers for, and turned over to, the governmental authority imposing the tax, (ii) properly documented refunds to customers, or (iii) properly documented employee discounts (limited to 3% of Gross Sales).
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, "Gross Sales" is defined as the revenue a franchisee receives from all goods, services, and products sold through the Kidokinetics business. This includes all income, regardless of whether it's from cash or credit transactions, and includes the full redemption value of gift cards, gift certificates, or coupons sold for use in the Kidokinetics business. Gross Sales also encompasses proceeds from any business interruption insurance. Fees retained by or paid to third-party sellers of such gift cards, gift certificates or coupons are not excluded from this calculation.
However, the definition of Gross Sales for a Kidokinetics franchise specifically excludes certain items. These exclusions include any sales tax or other taxes collected from customers that are then turned over to the appropriate governmental authority. Additionally, properly documented refunds to customers are excluded from Gross Sales. Finally, properly documented employee discounts are also excluded, but these discounts are limited to a maximum of 3% of Gross Sales.
Understanding what constitutes Gross Sales is crucial for Kidokinetics franchisees because it directly impacts the calculation of royalty fees and other contributions, such as the brand development fund contribution and local advertising requirements. The royalty fee is the greater of 8% of Gross Sales or a minimum royalty amount, payable weekly with a monthly reconciliation. The brand development fund contribution is 2% of Gross Sales, also paid weekly. Additionally, franchisees must spend the greater of $500 per month or 2% of Gross Sales per month on local advertising. Therefore, accurately tracking and reporting Gross Sales is essential for compliance and financial management.