What is excluded from the definition of 'Gross Sales' when calculating revenue for a Beef O Bradys franchise?
Beef_O_Bradys Franchise · 2025 FDDAnswer from 2025 FDD Document
As used in this Item 19, "Adjusted Gross Sales" means Gross Sales less: (1) complimentary food and beverage service, or sums collected and actually paid by you for any sales, drink or other excise tax imposed by any duly constituted governmental authority on alcoholic beverages sales in a state that prohibits the payment of Royalties on the sales; (2) the value of gift certificates and the amounts paid for them; and, (3) the amount of all reasonable over-rings, allowances, discounts to customers, tips to employees (including discounts attributable to coupon sales as determined by us in our sole judgment, provided they have been included in Gross Sales). The term "Gross Sales" means all revenue you derive from operating the Family Sports Pub, including, for example, all amounts you receive at or away from the Site from any activities or services whatsoever, including any that are in any way associated with the Marks, and whether from cash, check, barter, credit or debit card or credit transactions, including the redemption value of gift certificates redeemed by you regardless of whether the gift certificates are issued by you or someone else; but excluding: (1) all federal, state or municipal sales, use or service taxes collected from customers and paid to the appropriate taxing authority, and (2) customer refunds, adjustments, credits and allowances actually made by the Family Sports Pub. Gross Sales also includes revenues from delivery service sales, retail, concessions, hotel room service, catering, special functions, etc. and sales of products bearing or associated with the Marks.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS. (FDD pages 54–62)
What This Means (2025 FDD)
According to Beef O Bradys's 2025 Franchise Disclosure Document, the definition of Gross Sales includes all revenue derived from operating the Family Sports Pub. This encompasses all amounts received at or away from the site for any activities or services associated with the Marks, whether from cash, check, barter, credit or debit card, or credit transactions. It also includes the redemption value of gift certificates, regardless of who issued them, revenues from delivery service sales, retail, concessions, hotel room service, catering, special functions, and sales of products bearing or associated with the Marks.
However, the following items are specifically excluded from Gross Sales: all federal, state, or municipal sales, use, or service taxes collected from customers and paid to the appropriate taxing authority, and customer refunds, adjustments, credits, and allowances actually made by the Family Sports Pub.
For a prospective Beef O Bradys franchisee, understanding this definition is crucial because royalties are typically calculated as a percentage of Gross Sales. Therefore, accurately tracking and reporting revenue, while properly excluding the items listed above, is essential for compliance and financial management. This ensures that franchisees are paying the correct royalty fees and have a clear understanding of their true revenue.