What revenues are excluded from 'Gross Revenues' when calculating fees for a Pump It Up franchise?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) "Gross Revenues" means all revenue that you derive from operating the Franchised Business, including, but not limited to, all services and products sold, all video game machine and vending machine proceeds, and all amounts that you receive at or away from the Premises, and whether from cash, check, credit and debit card, barter, exchange, trade credit, third-party coupon providers or other credit transactions. Gross Revenues excludes all federal, state, or municipal sales, use, or service taxes collected from customers and paid to the appropriate taxing authority and will be reduced by: (i) the amount of any documented refunds, credits, allowances, and charge-backs provided to customers in good faith; and (ii) any documented contributions (up to a maximum amount set by us) you make to an approved not-for-profit organization in conjunction with a PIU approved charitable event.
Source: Item 6 — OTHER FEES (FDD pages 15–21)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, "Gross Revenues" are used to calculate royalty fees, brand fund contributions, and local store marketing fees. Gross Revenues include all revenue derived from operating the franchised business, encompassing services, products sold, video game and vending machine proceeds, and amounts received both at and away from the premises, regardless of the form of payment (cash, check, credit/debit card, etc.).
However, the calculation of Gross Revenues for Pump It Up franchise fees excludes specific items. These exclusions include all federal, state, or municipal sales, use, or service taxes collected from customers and remitted to the appropriate taxing authority. Additionally, Gross Revenues are reduced by the amount of any documented refunds, credits, allowances, and charge-backs provided to customers in good faith. Finally, any documented contributions made to an approved not-for-profit organization in conjunction with a Pump It Up approved charitable event, up to a maximum amount set by the franchisor, are also excluded from Gross Revenues.
For a prospective Pump It Up franchisee, understanding these exclusions is crucial for accurately calculating royalty fees and other contributions. By excluding sales taxes, refunds, and charitable contributions (within the set limits), the franchisee's royalty and brand fund contributions are based on a net revenue figure, potentially lowering these payments. Franchisees must maintain thorough documentation of these exclusions to ensure accurate reporting and compliance with the franchise agreement.