Are sales taxes collected from customers by a Beggars Pizza franchisee included in Gross Sales?
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. "Accounting Period" means every seven (7) days beginning on Monday and ending on Sunday.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, sales taxes collected from customers by a franchisee and paid directly to the appropriate taxing authority are not included in the calculation of Gross Sales. Gross Sales are defined as all revenues generated from sales of products and services at the restaurant, whether the sales are evidenced by cash, check, credit, charge, account, gift cards, loyalty cards, barter, exchange, and any proceeds from business interruption insurance coverage.
This definition is important for a prospective Beggars Pizza franchisee because the royalty fees owed to the franchisor are calculated as a percentage of Gross Sales. Specifically, the franchisee must pay the greater of 5% of Gross Sales or $500 for each accounting period. If applicable law prohibits a franchisee from paying a percentage of revenue from the sale of alcoholic beverages, the franchisee must pay the greater of 6.5% of Gross Sales (excluding revenues from the sale of alcoholic beverages) or $500 for each accounting period. By excluding sales taxes from the Gross Sales calculation, the franchisee pays royalties on the actual revenue received from sales, rather than on the total amount collected from customers, which includes pass-through tax revenue.
Additionally, Gross Sales do not include refunds 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), or any reduction in revenue due to discounts or coupon sales. An accounting period is defined as every seven days beginning on Monday and ending on Sunday.