How does Brueggers Bagels define 'Gross Sales' for the purpose of calculating fees?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Gross Sales. "Gross Sales" is defined as all sales generated through the Bakery including fees for any products or goods you sell, whether for cash or credit (regardless of collectability, except as provided below), and income of every kind or nature related to the Bakery, including, without limitation, revenues from the sale of branded merchandise and food products, whether from sales on the Premises, by delivery, from catering if the Bakery provides the product, by on-line, internet or phone-app ordering if picked up at the Bakery or at wholesale (whether the sales method is permitted or not) and from the use of vending machines or similar arcade-like machines. In the event your business operations are interrupted and you receive business interruption insurance proceeds, then the amount of Gross Sales used by you to determine your loss will be deemed the Gross Sales for that period and deemed made when you receive the insurance proceeds. But "Gross Sales" does not include any sales tax or other taxes you collect from customers for transmittal to the appropriate taxing authority. Gross Sales includes the retail value of all products sold in connection with the redemption of coupons, gift certificates, gift cards or vouchers; however, at the time such coupons, gift certificates, gift cards or vouchers are purchased, the retail price may be excluded from Gross Sales for the purpose of determining the amount of Gross Sales upon which fees are due. When calculating Gross Sales, you may deduct that portion of the normal full menu price of any item that you do not collect as a result of BFC approved promotions (whether local or system-wide, including coupons) and manager discounts (collectively, "Sales Discounts"), as well as discounted employee meals. Sales Discounts and discounted employee meals must be fully disclosed on all reports you submit to BFC, and BFC reserves the right, in its sole discretion, to disallow any Sales Discounts not meeting the requirements we set forth. We reserve the right to modify our policies consistent with restaurant industry practices regarding revenue recognition, revenue reporting, and the inclusion in or exclusion of certain revenue from "Gross Sa
Source: Item 6 — OTHER FEES (FDD pages 13–18)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, Gross Sales are defined as all sales generated through the bakery. This includes fees for any products or goods sold, whether for cash or credit, and all income related to the bakery. This encompasses revenues from branded merchandise, food products sold on the premises, delivery services, catering (if the bakery provides the product), online, internet, or phone-app orders picked up at the bakery, wholesale sales, and vending machine income, regardless of whether the sales method is explicitly permitted. If the bakery's operations are interrupted and business interruption insurance proceeds are received, the amount of Gross Sales used to determine the loss will be considered the Gross Sales for that period and deemed made when the insurance proceeds are received.
However, Gross Sales do not include sales tax or other taxes collected from customers for transmittal to the appropriate taxing authority. The retail value of products sold in connection with coupons, gift certificates, gift cards, or vouchers is included in Gross Sales, although the retail price may be excluded when these items are initially purchased. Franchisees can deduct the portion of the normal full menu price not collected due to Brueggers Bagels-approved promotions, including coupons, manager discounts, and discounted employee meals, from Gross Sales. These deductions, termed "Sales Discounts," must be fully disclosed in reports submitted to Brueggers Bagels, which reserves the right to disallow any Sales Discounts not meeting its requirements.
Brueggers Bagels retains the right to modify its policies regarding revenue recognition, reporting, and the inclusion or exclusion of certain revenue from Gross Sales, consistent with restaurant industry practices, as circumstances, business practices, and technology evolve. This definition of Gross Sales is important because it directly impacts the calculation of fees such as the marketing contribution, where a percentage of Gross Sales is allocated to the Systemwide Marketing Fund and Local Store Marketing (LSM). Franchisees should be aware of these inclusions and exclusions to accurately calculate and report their Gross Sales, as underreporting sales by 2% or more can lead to an audit, with the franchisee bearing all associated costs and expenses.