What is excluded from the definition of 'Gross Sales' for a Buona franchise?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor has the right to periodically specify (in the Manuals or otherwise in writing) different payees and/or payment methods, such as weekly/biweekly/monthly payment, payment by auto-draft and payment by check.
- 3.7 Gross Sales. For purposes of this Agreement, the term "Gross Sales" means all sales, revenues and receipts generated by the Franchised Business, including fees for any and all services Franchisee performs, whether for cash or credit (regardless of collectability) and revenues of every kind related to the Franchised Business, including but not limited to revenues from the sale of food, beverages, merchandise, proprietary products or clothing, delivery and catering not included in the price of menu items, and other services made and rendered in, on, or from the premises of the Franchised Business, or through any other means, including sales outside of the premises, that are in any way related to the Franchised Business, whether for cash, exchange or credit (and regardless of collection in the case of credit), and proceeds of business interruption insurance policies, except that Gr
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the term 'Gross Sales' is comprehensively defined for the purpose of calculating royalties and other fees. Gross Sales include all revenues and receipts generated by the franchised business, covering all services performed, whether paid in cash or credit, and all revenues related to the business. This includes sales of food, beverages, merchandise, proprietary products, clothing, delivery and catering charges not included in menu prices, and other services rendered from the premises. It also encompasses sales outside the premises that are related to the franchised business, regardless of whether payment is received in cash, exchange, or credit. Furthermore, proceeds from business interruption insurance policies are included in Gross Sales.
However, the definition of Gross Sales for a Buona franchise specifically excludes sales, use, or service taxes collected from customers that are actually paid to the appropriate taxing authority. This means that franchisees do not have to pay royalty fees or marketing fund contributions on the tax amounts they collect and remit to the government. This exclusion is a common practice in franchising, as these taxes are simply pass-through funds and not considered revenue for the business.
For a prospective Buona franchisee, understanding this definition is crucial for accurate financial reporting and calculation of royalty fees and marketing fund contributions. By excluding sales taxes from Gross Sales, the franchisee's royalty and marketing fund obligations are based on actual revenue generated from sales, which can impact the overall profitability and financial planning of the franchise.