What constitutes 'Gross Revenues' for the purpose of calculating royalties owed to Learningrx?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
"Gross Revenues" means the total of all receipts derived from services or Products sold by you, whether the receipts are evidenced by cash, credit, checks, gift certificates, scrip, coupons, services, property, bartering, or other means of exchange. Gross Revenue excludes only sales tax receipts that you must by law collect from customers and that you actually pay to the government, promotional or discount coupons to the extent that Franchisee realizes no revenue, and employee receipt of services or Products, if free, or any portion not paid for by an employee. Cash income reports from the accounting software, without any deductions for any fees due to collection method, are used to calculate the royalty amounts due each month.
Source: Item 6 — OTHER FEES (FDD pages 13–19)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, "Gross Revenues" is comprehensively defined for royalty calculation purposes. It encompasses the total of all income derived from services or products sold by a Learningrx franchisee. This includes receipts in various forms such as cash, credit, checks, gift certificates, scrip, coupons, services, property, bartering, or other means of exchange. This broad definition ensures that all forms of revenue are included when calculating royalties.
However, the definition of Gross Revenues for Learningrx does provide a few specific exclusions. These exclusions are sales tax receipts that the franchisee is legally obligated to collect from customers and subsequently pays to the government. Also excluded are promotional or discount coupons, but only to the extent that the franchisee does not realize any revenue from them. Finally, employee receipt of services or products are excluded if provided free of charge, or for any portion not paid for by the employee.
For Learningrx franchisees, accurate tracking of revenue is essential, and cash income reports from the accounting software, without any deductions for any fees due to collection method, are used to calculate the royalty amounts due each month. Understanding what constitutes Gross Revenues, including the exclusions, is critical for accurately calculating and paying royalties to Learningrx. Franchisees should ensure their accounting practices align with this definition to avoid discrepancies or potential audit issues, as the FDD states that audits may be conducted at the franchisee's expense if underreporting of gross revenues exceeds 2%.