Are sales taxes included in the definition of 'Gross Revenues' for a My Salon Suite franchise?

According to My Salon Suite's 2025 Franchise Disclosure Document, the definition of Gross Revenues excludes sales taxes under specific conditions. Gross Revenues is defined as the total selling price of all services and products sold at the Franchised Business, including all income and revenue, whether received in cash, check, credit, or other forms of exchange. However, the definition explicitly excludes "the amount of any applicable sales tax imposed by any federal, state, municipal or other governmental authority if such taxes are stated separately when the customer is charged, and Franchisee pays such amounts as and when due to the appropriate taxing authority."

For a prospective My Salon Suite franchisee, this means that sales taxes collected from customers are not considered part of the revenue on which royalties or other fees are calculated, provided that these taxes are separately stated when charging the customer and are properly remitted to the appropriate taxing authorities. This is a common practice in franchising, as franchisees typically act as collection agents for sales taxes, which are then passed on to the government.

It is crucial for My Salon Suite franchisees to maintain accurate records of sales taxes collected and remitted to ensure compliance with tax laws and to correctly calculate Gross Revenues for royalty payments. Failure to properly account for sales taxes could lead to disputes with the franchisor or legal issues with tax authorities. Therefore, franchisees should consult with a tax professional to ensure they understand and comply with all applicable tax regulations.