Are revenues from Video Gaming considered 'Gross Sales' for Browns Chicken franchisees?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that its revenues from Video Gaming shall be considered to be "Gross Sales" as that term is defined in Section 19.B. of the Franchise Agreement.
Franchisee shall pay Franchisor a royalty fee of ten percent (10%) of Franchisee's gross sales from Video Gaming at Franchisee's Store, in the same manner and at the same time that Franchisee pays the royalty fee required under Section 19.A. of the Franchise Agreement.
Franchisee shall pay to the Advertising Fund, four percent (4%) of Franchisee's gross sales from Video Gaming at Franchisee's Store, in the same manner and at the same time that Franchisee pays the Advertising Fund required under Section 11.A. of the Franchise Agreement.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, revenues from video gaming are considered 'Gross Sales'. Specifically, the franchisee agrees that revenues from video gaming will be considered 'Gross Sales' as defined in Section 19.B of the Franchise Agreement. This means that the total revenue generated from video gaming activities at the Browns Chicken store is included when calculating the store's gross sales.
Browns Chicken franchisees are required to pay a royalty fee based on their gross sales, and this includes revenue from video gaming. The royalty fee for video gaming revenue is 10%, which is higher than the standard royalty fee of 5% for other sales. Additionally, franchisees must contribute 4% of their gross sales from video gaming to the Advertising Fund. These payments are made in the same manner and at the same time as the standard royalty and advertising fees.
This arrangement has several implications for prospective Browns Chicken franchisees. First, it provides an additional revenue stream through video gaming. Second, it increases the amount of royalty and advertising fees paid to Browns Chicken. Finally, franchisees are subject to specific regulations and requirements related to video gaming, including compliance with the Illinois Video Gaming Act, maintaining a liquor license, and restricting access to the gaming area to individuals 21 years and older. Franchisees must also report the presence of video gaming to their insurance carrier and maintain adequate liability insurance.