What revenues are excluded from 'Gross Sales' when calculating royalties for a Beggars Pizza franchise?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
- 4.3 Gross Sales; Accounting Period. "Gross Sales" means all revenues generated from sales of all products and services conducted at, from, or with respect to the Restaurant whether such sales are evidenced by cash, check, credit, charge, account, gift cards, loyalty cards, barter, or exchange, and any proceeds from business interruption insurance coverage.
Gross Sales will 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 derived from the sale or issuance of System gift or loyalty cards (although revenue derived 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, any sales taxes or other taxes collected from customers by Franchisee and paid directly to the appropriate taxing authority.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the royalty fee is calculated as the greater of 5% of Gross Sales or $500 per accounting period. However, if applicable law prohibits a franchisee from paying a percentage of revenue from alcohol sales, the royalty fee is the greater of 6.5% of Gross Sales (excluding revenues from alcohol) or $500 per accounting period.
For the purpose of calculating royalties, Beggars Pizza defines 'Gross Sales' as all revenues from the sales of products and services at the restaurant, whether the sales are evidenced by cash, check, credit, charge, account, gift cards, loyalty cards, barter, or exchange, including proceeds from business interruption insurance.
However, the following are specifically excluded from Gross Sales: refunds made in good faith to customers, sales of equipment or furnishings used in the restaurant's operation, revenue from the sale or issuance of system gift or loyalty cards (though revenue from products/services paid for with these cards is included), revenue reductions due to discounts or coupon sales, and any sales taxes or other taxes collected from customers and paid to the appropriate taxing authority. This definition is important for franchisees as it directly impacts the royalty fees they must pay to Beggars Pizza.