When are royalties assessed on gift cards for a Burneys Sweets More franchise?
Burneys_Sweets_More Franchise · 2025 FDDAnswer from 2025 FDD Document
The Royalty is currently three percent (3%) of monthly Gross Sales but can be raised in Franchisor's sole discretion to as much as five percent (5%) of monthly Gross Sales. For purposes of this Attachment 1, "Gross Sales" shall mean the total of gross revenue derived from the operation of the Franchised Business, including, but not limited to, revenue from services rendered by the Franchised Business and from the sale of products, whether from sales for cash or credit and regardless of the collection thereof, including sales made on a retail, wholesale, or any other basis. Gross Sales also includes any business interruption insurance proceeds Franchisee receives. Gross Sales does not include tips, sales taxes or gift cards when redeemed, nor does it include sales to other franchisees and company-owned Shops. Royalties on gift cards are assessed when the gift card is sold, not redeemed. The Royalty due monthly on the fifteenth (15th) day of the month shall be calculated based on the Gross Sales of the Shop during the month immediately preceding the Due Date of the Royalty.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Burneys Sweets More's 2025 Franchise Disclosure Document, royalties on gift cards are assessed when the gift card is sold, not when it is redeemed. The standard royalty is currently three percent (3%) of monthly Gross Sales but can be raised to as much as five percent (5%) of monthly Gross Sales. Gross Sales includes revenue from services and product sales, whether cash or credit, retail, wholesale, or any other basis, and business interruption insurance proceeds. Gross Sales does not include tips, sales taxes, sales to other franchisees and company-owned Shops, or gift cards when redeemed.
For a Burneys Sweets More franchisee, this means that you will pay royalties on the revenue generated from gift card sales in the month they are sold. However, when customers redeem those gift cards for products, that revenue is not subject to additional royalties. This can impact your cash flow and accounting practices, as you need to track gift card sales separately from redemptions to accurately calculate your royalty payments.
It is important to note that the royalty is due monthly on the fifteenth (15th) day of the month and is calculated based on the Gross Sales of the Shop during the immediately preceding month. Therefore, you need to maintain accurate records of your sales, including gift card sales, to ensure timely and accurate royalty payments to Burneys Sweets More. Franchisees should consult the Brand Standards Manual for specific procedures and policies related to gift card sales and redemption.