If an Angry Chickz franchisee receives business interruption insurance proceeds, how are those proceeds treated in the Gross Sales calculation?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
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- "Gross Sales" means the gross selling price of all goods and services sold or provided in or from your Restaurant, including the total of all revenues received or receivable by you as payment, whether in cash, for credit, redemption of gift cards (or the like), or barter or received as donation, or other means of exchange (and, if for credit or barter, whether or not payment is received therefor), on account of any and all goods, merchandise, services or products sold or provided in or from your Restaurant or which are promoted or sold under any of the Marks, whether or not we have authorized such goods or services to be offered and sold, including; (a) delivery and/or catering fees, service charges, and the like (except service charges disclosed as gratuities and actually paid to employees); (b) revenues from sales of any nature or kind whatsoever, derived by you or by any other person or entity from your Restaurant; (c) revenues from sales of all products or services at your Restaurant, whether in compliance or in contravention of the franchise agreement; and (d) the proceeds of any business interruption insurance, after the satisfaction of any applicable deductible (but assuming the full gross revenues achievable by Franchisee).
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 48–51)
What This Means (2025 FDD)
According to Angry Chickz's 2025 Franchise Disclosure Document, any proceeds from business interruption insurance received by a franchisee are included in the calculation of Gross Sales. The amount included is after subtracting any applicable deductible, but it is calculated assuming the franchisee achieved full gross revenues. This means that even if the insurance payment doesn't fully cover the lost revenue, the Gross Sales calculation will reflect what the revenue would have been without the interruption.
This inclusion of business interruption insurance proceeds in Gross Sales has implications for franchisees. Gross Sales figures are often used to calculate royalty payments to the franchisor. By including these insurance proceeds, Angry Chickz ensures that it receives royalties on the revenue the franchisee would have generated had the business not been interrupted. This could potentially increase the royalty payments during periods when the restaurant is not fully operational due to unforeseen circumstances.
It is important for prospective Angry Chickz franchisees to understand how Gross Sales are defined, as this figure impacts their financial obligations to the franchisor. Franchisees should carefully review the definition of Gross Sales in the Franchise Agreement and consider how business interruption insurance proceeds, among other factors, will affect their royalty payments and overall profitability. Understanding these details is crucial for making an informed decision about investing in an Angry Chickz franchise.