What sales taxes are excluded from the 'Gross Revenue' calculation for Buns On Fire?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
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 or local governments, collected by Franchisee in the operation of the Franchised Business, and any other tax, excise or duty which is levied or assessed against Franchisee by any federal, state, municipal or local authority, based on sales of specific merchandise sold at or from the Franchised Business, provided that such taxes are actually transmitted to the appropriate taxing authority;
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
According to the 2025 Buns On Fire FDD, the calculation of 'Gross Revenue' for royalty fee purposes excludes specific types of sales taxes. Gross Revenue means all revenue of the Franchise Business, including all sales of products and services to customers, catering and delivery services income, and any sales or orders of food products or food preparation services 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.
Specifically excluded from Gross Revenue are sums representing sales taxes collected directly from customers. These must be based upon present or future laws of federal, state, or local governments. The exclusion applies to taxes collected by the franchisee in the operation of the franchised business. Also excluded are any other tax, excise, or duty which is levied or assessed against the franchisee by any federal, state, municipal, or local authority, based on sales of specific merchandise sold at or from the franchised business.
However, this exclusion is conditional. The taxes, excise, or duties must be actually transmitted to the appropriate taxing authority to qualify for exclusion from Gross Revenue. This means Buns On Fire franchisees must meticulously track and remit these taxes to the relevant government entities to ensure they are not included in the revenue on which the royalty fee is calculated. This is a fairly standard practice in franchising, as franchisees generally act as collection agents for sales taxes, which are then passed on to the government.