For Bb.Q Chicken franchises, what is included in the definition of 'Gross Sales' for royalty calculation?
Bb_Q_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
For the purposes of determining the royalties to be paid under the Franchise Agreement, "Gross Sales" means the total selling price of all services and products and all income of every other kind and nature related to the Franchised Business, whether for cash or credit and regardless of collection in the case of credit, including, and including any third-party delivery fees. If a cash shortage occurs, the amount of Gross Sales will be determined based on the records of the point-of-sale system and any cash shortage will not be considered in the determination. Gross Sales expressly excludes taxes collected from your customers and paid to the appropriate taxing authority and customer refunds or adjustments. Gross Sales includes your revenues from the sale of alcoholic beverages. If a state or local law applicable to your Franchised Business prohibits or restricts in any way your ability to pay and our ability to collect Royalty Fees or other amounts based on Gross Sales derived from the sale of alcoholic beverages at the Franchised Business, then we will renegotiate the Royalty Fees and other provisions to provide the same basic economic effect to both us and you as otherwise provided in this Agreement, with a corresponding change to the definition of Gross Sales.
Source: Item 6 — OTHER FEES (FDD pages 15–21)
What This Means (2025 FDD)
According to Bb.Q Chicken's 2025 Franchise Disclosure Document, 'Gross Sales' is defined as the total selling price of all services and products, and all income of every kind related to the franchised business. This includes both cash and credit transactions, regardless of whether the credit sales have been collected. It also specifically includes any third-party delivery fees and revenues from the sale of alcoholic beverages.
However, there are some exclusions from the 'Gross Sales' definition. Bb.Q Chicken franchisees do not have to include taxes collected from customers that are then paid to the appropriate taxing authority. Customer refunds or adjustments are also excluded from the calculation of Gross Sales.
It's important to note that if a state or local law restricts Bb.Q Chicken's ability to collect royalty fees based on gross sales derived from alcohol sales, Bb.Q Chicken will renegotiate the royalty fees and other provisions to maintain the same economic effect for both parties, with a corresponding change to the definition of Gross Sales. Furthermore, in the event of a cash shortage, the amount of Gross Sales will be determined based on the records of the point-of-sale system, and the cash shortage will not be considered in the determination.