What is excluded from 'Gross Revenues' when calculating the Ledgers Royalty Fee?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
You will pay us a continuing royalty fee in an amount equal to ten percent (10%) of Gross Revenue (the "Royalty Fee") for each month during the term of this Agreement, which will be paid to Franchisor by the tenth (10th) day of each month based on the Gross Revenue from the preceding month.
The term "Gross Revenues" is defined as all revenues that you derive or receive, directly or indirectly, from the operation of the Franchised Business, excluding only sales and use taxes.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, the Royalty Fee is 10% of Gross Revenues. Gross Revenues are defined as all revenues that you derive or receive, directly or indirectly, from the operation of the Franchised Business, excluding only sales and use taxes.
In practical terms, this means that Ledgers franchisees must pay a royalty fee of 10% on all income generated by their franchise, but they do not have to pay a royalty on sales and use taxes that they collect. Sales tax is a tax collected from customers on behalf of the government and is not considered revenue for the business.
For a prospective Ledgers franchisee, this definition is important because it clarifies exactly what income is subject to the royalty fee. Franchisees should ensure they understand this definition and how it applies to their specific business operations to accurately calculate and pay their royalty fees. Understanding the exclusions can help in financial planning and ensuring compliance with the franchise agreement.