Are cash or credit refunds deducted from Gross Sales for a Browns Chicken franchise?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
The term "Gross Sales," as used in this Agreement, shall mean and include the aggregate actual gross selling prices of all food, beverages, and other products and services (including without limitation entertainment/video gaming) sold and/or performed and/or offered by or for Franchisee or the Store, in, upon or from the Premises, or through or by means of the business conducted therein or otherwise by the Store or Franchisee, including direct or indirect barter transactions, catering services, proceeds of business interruption insurance policies, whether for cash or for credit, provided, that in determining the amount of Gross Sales, there shall be excluded: (1) sales, use, or excise taxes passed on as such to the customer and paid to the
appropriate taxing authorities; (2) the amount of all refunds, adjustments, credits and allowances made by the Store; and (3) revenues of any fees paid by Franchisee to Third-Party Delivery Services, as determined by Brown and published in Brown's Operating Manual or as promulgated in writing by Brown.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, the definition of "Gross Sales" excludes the amount of all refunds, adjustments, credits, and allowances made by the store. This means that both cash and credit refunds given to customers are deducted from the total revenue when calculating Gross Sales for the purpose of determining royalty fees.
For a prospective Browns Chicken franchisee, this is a favorable term. It ensures that you only pay royalties on actual net sales, not on sales that were later reversed due to refunds or other adjustments. This aligns the royalty payments with the actual revenue generated by the franchise.
It is important for Browns Chicken franchisees to maintain accurate records of all refunds, adjustments, credits, and allowances to ensure proper calculation of Gross Sales and royalty fees. Browns Chicken has the right to audit the business records, and any understatement of Gross Sales may result in penalties and reimbursement of audit costs.