What is excluded from the definition of 'Gross Sales' for a Beggars Pizza franchise?

According to Beggars Pizza's 2025 Franchise Disclosure Document, "Gross Sales" is a crucial figure because the franchisee's royalty payments are based on it. Specifically, the franchisee must pay the greater of 5% of Gross Sales or $500 per accounting period (every seven days). However, if local laws prevent basing royalties on alcohol sales, the franchisee pays the greater of 6.5% of Gross Sales (excluding alcohol revenues) or $500.

For royalty calculation purposes, Beggars Pizza excludes several items from the definition of "Gross Sales." These exclusions include revenues from products or services for which refunds were legitimately given to customers. Also excluded are proceeds from the sale of equipment or furnishings used in the restaurant's operation.

Furthermore, the revenue derived from the sale or issuance of Beggars Pizza System gift or loyalty cards is excluded, though revenue from products and services purchased using these cards is included in Gross Sales. Any reduction in revenue due to discounts or coupon sales is also excluded. Finally, any sales taxes or other taxes collected from customers and remitted directly to the appropriate taxing authority are not included in Gross Sales. Understanding these exclusions is important for a franchisee to accurately calculate and report Gross Sales, and consequently, their royalty fees.