What sales are excluded from 'Gross Sales' when calculating fees for a Brueggers Bagels franchise?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) "Gross Sales" Defined. "Gross Sales" means the amount received by Licensee for all sales of any food, beverages, or other products sold by Licensee or any other person or entity in, or from the Bakery for cash, credit or otherwise, including but not limited to sales and services where the order originated in, at or from the Bakery regardless of where delivery or performance is made, minus (i) non-branded, non-proprietary merchandise (e.g., newspapers); (ii) refunds to customers that were previously included in Gross Sales, (iii) coupons and other forms of discounts, the issuance of which have been pre-approved by Licensor, such that only the cash or credit charge amount received in a sale will be included, (iv) sales, excise or similar taxes imposed by any governmental authority and collected from customers and paid out by Licensee, and (v) the value of meals provided to employees working at the Bakery, incident to their employment.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels' 2025 Franchise Disclosure Document, the definition of 'Gross Sales' allows for certain exclusions when calculating fees. Specifically, the amount received by the Licensee for all sales of food, beverages, or other products from the Bakery is considered 'Gross Sales'.
However, there are deductions from this amount. These include: (i) non-branded, non-proprietary merchandise (e.g., newspapers); (ii) refunds to customers that were previously included in Gross Sales, (iii) coupons and other forms of discounts, the issuance of which have been pre-approved by Licensor, such that only the cash or credit charge amount received in a sale will be included, (iv) sales, excise or similar taxes imposed by any governmental authority and collected from customers and paid out by Licensee, and (v) the value of meals provided to employees working at the Bakery, incident to their employment.
For a prospective Brueggers Bagels franchisee, this means that when calculating the royalty fee (which is 5.0% of Gross Sales), they can reduce their total sales by the amounts specified above. This can lower the amount of royalty fees owed to the franchisor. It is important to ensure that all discounts and coupons are pre-approved by Brueggers Bagels to qualify for the exclusion. Additionally, proper records of employee meals and taxes collected must be maintained to justify these deductions.