What revenues are specifically excluded from 'Gross Revenue' when calculating the Burros Fries Royalty Fee?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
As used in this Agreement, "Gross Revenue" shall include all revenue accrued from the performance of services in, at, upon, about, through or from the Business, whether for cash or credit and regardless of collection in the case of credit, and income of every kind and nature related to the Business including but not limited to revenues generated from: the sale, delivery and performance of all Products and Services from the Business premises or off-site, insurance proceeds and/or condemnation awards for loss of sales, profits or business; and fair market value for any product or service Franchise receives in barter or exchange for its Products or Services. Gross Revenue shall not include: (i) revenues from any sales taxes or other add on taxes collected by Franchisee for transmittal to the appropriate taxing authority; (ii) gratuities paid by guests to Franchisee's employees; and (iii) the amount of refunds Franchisee in good faith gives and refunds of previous payments Franchisee made.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, the royalty fee is 6% of the total Gross Revenue. Gross Revenue includes all revenue accrued from the performance of services in, at, upon, about, through or from the Business, whether for cash or credit and regardless of collection in the case of credit, and income of every kind and nature related to the Business including but not limited to revenues generated from: the sale, delivery and performance of all Products and Services from the Business premises or off-site, insurance proceeds and/or condemnation awards for loss of sales, profits or business; and fair market value for any product or service Franchise receives in barter or exchange for its Products or Services.
However, the document specifies certain exclusions from Gross Revenue for royalty calculation purposes. These exclusions include revenues from any sales taxes or other add-on taxes collected by the franchisee for transmittal to the appropriate taxing authority. This means that Burros Fries franchisees do not pay a royalty on the taxes they collect and remit to the government.
Additionally, gratuities paid by guests to the franchisee's employees are excluded from Gross Revenue. This benefits the employees, as it ensures that their tips are not subject to royalty fees. Finally, the amount of refunds the franchisee in good faith gives and refunds of previous payments the franchisee made are also excluded from Gross Revenue. This protects franchisees from paying royalties on revenue they have had to refund to customers.