Does the Buns On Fire royalty fee include income related to delivery services?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
In consideration of this franchise granted hereby, the services to be provided by Franchisor hereunder, the right to prepare and sell the Products, to the general public, and for the use of the Marks during the term hereof and any subsequent renewals, Franchisee shall pay to Franchisor, in addition to the Initial Franchise Fee stated herein, a royalty fee equal to six percent (6%) of the gross revenue generated by, from, or through the Franchisee's Franchised Business (the "Royalty Fee").
5.3 Definition of "Gross Revenue"
For the purposes of determining the royalties to be paid hereunder, "Gross Revenue" means all revenue of the Franchise Business, including all sales of products and services to customers of the Franchise Business, including income related to catering and delivery services, and any sales or orders of food products or food preparation services provided from or related to the Franchise Business, whether for cash or credit and regardless of collection in the case of credit. In the event of a cash shortage, the amount of Gross Revenue shall be determined based on the records of the electronic cash register system and any cash shortage shall not be considered in the determination. Gross Revenue shall expressly exclude the following:
(i.) Sums representing sales taxes collected directly from customers, based upon present or future
laws of federal, state
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
According to the 2025 Buns On Fire Franchise Disclosure Document, the royalty fee calculation does include income from delivery services. Buns On Fire franchisees must pay a royalty fee equal to 6% of their franchise's gross revenue. Gross revenue is defined as all revenue from the franchise, including sales of products and services to customers, income related to catering and delivery services, and any sales or orders of food products or food preparation services. This applies whether the sales are for cash or credit, and regardless of whether the franchisee has actually collected the revenue in the case of credit sales. The only exclusions from gross revenue are sums representing sales taxes collected directly from customers based on federal or state laws.
This means that Buns On Fire franchisees will pay royalties on all income streams related to their business, including delivery and catering. This is a common practice in the franchise industry, as franchisors typically want to collect royalties on all revenue generated by the franchise unit. Franchisees should carefully consider this when projecting their potential earnings, as the 6% royalty fee will apply to all sales, including those generated through delivery services.
It is important for prospective franchisees to understand how "Gross Revenue" is defined, as this forms the basis for calculating the royalty fees owed to Buns On Fire. By including income from delivery services in the definition of Gross Revenue, Buns On Fire ensures that it receives a percentage of all sales generated by the franchise, regardless of how those sales are generated.