Are sales of fixtures included in Gross Sales for a Browns Chicken franchise?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) The term "Gross Sales" as used herein shall mean the total amount of dollars of the actual sales price, whether for cash or on credit or partly for cash and partly on credit, of all sales of food and beverages conducted in or from the Premises, including all mail or telephone orders received or filled at or from the Premises. Gross Sales shall not, however, include any sums collected and paid out for any sales or excise tax imposed by any duly-constituted governmental authority, nor the amount of any cash or credit refund made upon any sale where the merchandise sold, or some part thereof, is thereafter returned by the purchaser and accepted by Sublessee, nor sales of fixtures which are not a part of Sublessee's stock in trade.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, gross sales do not include sales of fixtures that are not part of the franchisee's stock in trade. Gross sales are used to calculate the royalty fee, which is 5% of gross sales, except for revenue from video gaming, where the royalty fee is 10%.
This means that if a Browns Chicken franchisee sells fixtures that are considered part of their stock in trade, the revenue from those sales would be included in the gross sales calculation. However, if the fixtures are not part of the franchisee's stock in trade, the revenue from those sales would not be included in the gross sales calculation. This distinction is important because it affects the amount of royalty fees that the franchisee must pay to Browns Chicken.
For a prospective Browns Chicken franchisee, it is important to understand what constitutes "stock in trade" in the context of fixtures. This should be clarified with Browns Chicken during the due diligence process to ensure accurate reporting of gross sales and calculation of royalty fees. Maintaining accurate records of sales and exclusions is crucial for compliance with the franchise agreement and avoiding potential disputes with the franchisor.