When are sales of gift cards and gift certificates included in Gross Sales 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's 2024 Franchise Disclosure Document, gross sales include the 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. Gross Sales are defined as the revenues a franchisee receives from the sales of all goods, services, and products sold at, from, or through the Kidokinetics business. It also includes all other income of every kind related to the Kidokinetics business, whether from cash or credit. \n This means that when a Kidokinetics franchisee sells a gift card or gift certificate, the revenue from that sale is immediately included in the gross sales figure for that period. This is regardless of when the gift card or certificate is actually redeemed by a customer. The definition of Gross Sales also specifies that fees retained by or paid to third-party sellers of such gift cards, gift certificates or coupons are not excluded from this calculation. The definition also includes all proceeds from any business interruption insurance.\n However, Gross Sales do 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). This distinction is important for franchisees as it affects the calculation of royalties and other fees owed to Kidokinetics, which are typically based on a percentage of gross sales.