What is included in the definition of 'Gross Sales' for a Brueggers Bagels franchise, specifically regarding business interruption insurance proceeds?

According to Brueggers Bagels's 2025 Franchise Disclosure Document, Gross Sales encompass all sales generated through the bakery, including fees for products sold, whether in cash or credit. This includes revenues from branded merchandise, food products sold on the premises, through delivery, catering (if the bakery provides the product), online or phone-app ordering (if picked up at the bakery), and wholesale, regardless of whether the sales method is permitted. It also includes sales from vending machines or similar arcade-like machines. However, sales tax collected for transmittal to taxing authorities is excluded from Gross Sales. Gross Sales also include the retail value of products sold via coupons, gift certificates, gift cards, or vouchers.

Notably, the FDD specifies how business interruption insurance proceeds are treated in the context of Gross Sales. If a Brueggers Bagels franchisee experiences an interruption in business operations and receives business interruption insurance proceeds, the amount of Gross Sales used to determine the loss will be deemed the Gross Sales for that period. This amount is considered to be made when the insurance proceeds are received.

This definition is important because franchise fees and other payments to Brueggers Bagels are typically calculated as a percentage of Gross Sales. Therefore, understanding what constitutes Gross Sales, including the treatment of business interruption insurance, is crucial for a franchisee's financial planning and reporting. The inclusion of business interruption insurance proceeds in Gross Sales ensures that Brueggers Bagels receives its percentage of revenue even during periods when the bakery is not fully operational due to unforeseen circumstances.