What sales are excluded from the Gross Sales calculation for a Kidokinetics franchise?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
"Gross Sales" means the revenues you receive from the sales 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). Gross Sales include sales of gift cards and gift certificates at the time the franchisee receives the funds from the purchase of such gift cards and gift certificates.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 46–54)
What This Means (2024 FDD)
According to Kidokinetics' 2024 Franchise Disclosure Document, the calculation of Gross Sales excludes specific items. Gross Sales is defined as all revenues from goods, services, and products sold through the Kidokinetics business, including all other income related to the business, whether from cash, credit, or other means. This includes the full redemption value of any gift cards, gift certificates, or coupons sold for use in the Kidokinetics Business.
However, the following items are specifically excluded from the Gross Sales calculation: (i) any sales tax or other taxes collected from customers and turned over to the governmental authority imposing the tax, (ii) properly documented refunds to customers, and (iii) properly documented employee discounts, which are limited to 3% of Gross Sales.
This definition is important for franchisees because Gross Sales figures are used to calculate royalty fees and other payments to Kidokinetics. Understanding what is included and excluded from Gross Sales ensures accurate financial reporting and compliance with the franchise agreement. Franchisees should maintain meticulous records of sales, taxes, refunds, and employee discounts to ensure accurate calculation of Gross Sales and to avoid potential disputes with Kidokinetics.