According to Ledgers, what revenues are excluded from the definition of 'Gross Revenues'?

According to Ledgers' 2025 Franchise Disclosure Document, 'Gross Revenues' are defined as all revenues a franchisee derives or receives, directly or indirectly, from operating the franchised business. The only exclusion from this definition is sales and use taxes. This definition is important because several fees payable to Ledgers are calculated as a percentage of Gross Revenues, including the Royalty Fee of 10% and the Advertising Fee of 3% of the previous month’s Gross Revenues.

This definition of Gross Revenues is fairly standard in the franchise industry. Franchise agreements typically define Gross Revenues broadly to include nearly all income streams generated by the business. The exclusion of sales and use taxes is also a common practice, as these taxes are collected on behalf of the government and not considered revenue for the business.

Prospective Ledgers franchisees should be aware of this broad definition of Gross Revenues and how it impacts the fees they will owe to Ledgers. It is important to carefully track all sources of revenue and to understand how these fees will affect the profitability of the franchise. Franchisees should also be aware that Ledgers has the right to audit their books and records to verify the accuracy of Gross Revenue reporting, as indicated by the Audit Fee listed in Item 6.