What sales taxes are excluded from the 'Gross Sales' calculation for an Angry Chickz franchise?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) "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). Notwithstanding the foregoing, "Gross Sales" shall: (i) be calculated before reduction of any amounts (whether fees or expenses) from any third-party order or delivery applications, platforms, marketplaces, or the like, and other persons or vendors that may collect funds from a customer and remit a balance to you, unless we specify otherwise; and (ii) exclude the following: (1) sums representing sales taxes collected directly from customers by you in the operation of your Restaurant, and any sales, value added or other tax, excise or duty charged to customers which is levied or assessed against you by any Federal, state, municipal or local authority, based on sales of specific goods, products, merchandise or services sold or provided at or from your Restaurant, provided that such taxes are actually transmitted to the appropriate governmental authority; (2) tips or gratuities paid to employees; (3) proceeds from isolated sales of furniture, fixtures and equipment (other than inventory); (4) bona fide refunds paid to customers (subject to any limitations in the Manuals); (5) uncollectible amounts, provided that uncollectible amounts cannot exceed 0.5% of Gross Sales in any fiscal year and subsequent collections of such amounts shall be included in Gross Sales when collected; and (6) and the retail price of any gift certificates and vouchers when sold but not yet redeemed.
Source: Item 6 — OTHER FEES1 (FDD pages 11–15)
What This Means (2025 FDD)
According to Angry Chickz's 2025 Franchise Disclosure Document, the calculation of 'Gross Sales' excludes specific types of sales taxes. Gross Sales is a critical figure because the Continuing Royalty fee is calculated as 6% of Gross Sales. For an Angry Chickz franchise, Gross Sales means the total revenue from all goods and services sold at the restaurant, whether paid in cash, credit, gift card redemption, barter, or donation. This includes revenues from delivery, catering fees, and service charges (excluding disclosed gratuities paid to employees), as well as proceeds from business interruption insurance after deductibles.
However, the FDD specifies exclusions from the Gross Sales calculation. Sums representing sales taxes collected directly from customers, along with any sales, value-added, excise, or other duties charged to customers and levied by federal, state, municipal, or local authorities based on sales of specific goods, products, merchandise, or services, are excluded, provided these taxes are actually transmitted to the appropriate governmental authority. This means that Angry Chickz franchisees do not pay a royalty on the portion of their revenue that is collected for and remitted as sales tax.
In addition to sales taxes, other items excluded from Gross Sales include tips or gratuities paid to employees, proceeds from isolated sales of furniture, fixtures, and equipment (excluding inventory), bona fide refunds paid to customers, and uncollectible amounts (up to 0.5% of Gross Sales in any fiscal year, with subsequent collections included when received). Also excluded is the retail price of gift certificates and vouchers when sold but not yet redeemed. These exclusions provide a more accurate basis for calculating the Continuing Royalty fee, ensuring that franchisees are not paying royalties on amounts that are passed through or are not true revenue.