In the Burger King franchise agreement, what section defines 'Gross Sales'?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
C. Gross Sales
The term "Gross Sales" as used in this Agreement includes all sums charged by Franchisee for goods, merchandise or services sold at or from the Franchised Restaurant, including all premiums unless exempted by BKC. The sale of BURGER KING products away from the Franchised Restaurant is not authorized; however, should any such sales be approved in the future, they will be included within the definition of Gross Sales. Gross Sales excludes any federal, state, county or city Tax, excise Tax, or other similar Taxes collected by Franchisee from customers based upon sales, and cash received as payment in credit transactions where the extension of credit itself has already been included in the figure upon which the Royalty and Advertising Contribution is computed.
Source: Item 23 — RECEIPTS (FDD pages 127–995)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, the definition of 'Gross Sales' is found in Section C of Item 23, which covers receipts. This section specifies that 'Gross Sales' includes all sums charged for goods, merchandise, or services sold at or from the franchised restaurant, including premiums, unless exempted by Burger King.
It's important to note that while the sale of Burger King products away from the franchised restaurant is generally not authorized, any such sales approved in the future will be included in the definition of Gross Sales. However, Gross Sales excludes any federal, state, county, or city tax, excise tax, or other similar taxes collected from customers based upon sales. It also excludes cash received as payment in credit transactions where the extension of credit itself has already been included in the figure upon which the Royalty and Advertising Contribution is computed.
For a prospective Burger King franchisee, understanding this definition is crucial because royalties and advertising contributions are calculated as a percentage of Gross Sales. Knowing exactly what is included and excluded from this calculation will help in accurately forecasting revenue and expenses. Franchisees should pay close attention to any potential changes to what is included in gross sales, as this could impact their financial obligations to Burger King.