Are authorized employee discounts included in the Gross Revenue calculation for an Aw franchise?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 10.4 Definition of "Gross Revenue". As used in this Agreement, the term "Gross Revenue" means the amount of all receipts from the sale of any and all food, beverages, merchandise or other products or services made and rendered in, on or from the Premises, or through any other means, including sales outside of the Premises, that is in any way related to your Papa Ray's Pizza Restaurant, whether for cash, exchange or credit (and regardless of collection in the case of credit), except that Gross Revenue will not include any receipts from sales, use, or service taxes collected from customers and paid to the appropriate taxing authority, promotional customer discounts and coupons, authorized employee discounts and complimentary products for promotional or charitable purposes.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the definition of "Gross Revenue" specifically excludes authorized employee discounts. Gross Revenue for an Aw franchise is defined as the total amount of all receipts from the sale of food, beverages, merchandise, or services, whether the payment is in cash, exchange, or credit. This includes sales made on the premises or through any other means related to the Papa Ray's Pizza Restaurant.
However, the calculation of Gross Revenue does not include sales, use, or service taxes collected from customers and remitted to the appropriate taxing authority. Additionally, promotional customer discounts and coupons, authorized employee discounts, and complimentary products offered for promotional or charitable purposes are also excluded from the Gross Revenue calculation.
This definition is important for franchisees because the royalty fee (5%) and the National Marketing Fund contribution (2%) are calculated as a percentage of Gross Revenue. By excluding these discounts from the Gross Revenue calculation, Aw franchisees pay royalties and marketing contributions on actual sales revenue received, rather than on the undiscounted price of goods and services. This can lower the amount of royalty fees and marketing contributions owed to Aw.