Is revenue from the sale of Beggars Pizza System gift cards included in Gross Sales?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 2. "Gross Sales" means all revenues generated from sales of all products and services conducted at, from, or with respect to the Restaurant, whether these sales are evidenced by cash, check, credit, charge, account, gift cards, loyalty cards, barter, or exchange, and the proceeds from any business interruption insurance policies. Gross Sales do not include the sale of products or services for which refunds have been made in good faith to customers, the sale of equipment or furnishings used in the operation of the Restaurant, revenue from the sale or issuance of System gift or loyalty cards (although revenue from the sale of products and services paid for with gift or loyalty cards is included), any reduction in revenue due to discounts or coupon sales, or any sales taxes or other taxes collected from customers and paid directly to the appropriate taxing authority.
Source: Item 6 — OTHER FEES (FDD pages 9–11)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the revenue from the sale or issuance of Beggars Pizza System gift cards is not included in Gross Sales. However, the revenue generated from the sale of products and services when customers redeem these gift cards is included in Gross Sales.
This distinction is important for franchisees because Gross Sales is used to calculate certain fees and obligations, such as the monthly local advertising spend. The FDD states that franchisees must spend at least 2% of their monthly Gross Sales on local advertising after the initial three months of operation. By excluding the initial sale of gift cards from Gross Sales, Beggars Pizza ensures that franchisees are not paying advertising fees on money that has not yet been used to purchase products or services.
This practice is fairly common in the franchise industry, as it aligns advertising fees with actual revenue from goods and services. It's beneficial for prospective franchisees to understand exactly what constitutes Gross Sales, as this figure directly impacts their financial obligations to Beggars Pizza. Franchisees should also be aware that the proceeds from any business interruption insurance policies are included in Gross Sales.