Are catering revenues included in the 'Gross Sales' calculation for a Carbones Pizzeria franchise?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
-five Thousand Dollars ($25,000.00) (the "Franchise Fee"), payable in full upon the execution of this Agreement. It is expressly understood and agreed by the parties that the Franchise Fee is and shall be fully earned by Franchisor upon the signing of this Agreement and no part of the Franchise Fee shall be refunded to Franchisee for any reason whatsoever.
- b. In addition to the Franchise Fee, Franchisee shall pay to the Franchisor during the term of this Agreement, a "Royalty" as follows: (a) 4% of total Gross Sales on the initial $1,000,000 in Gross Sales per calendar year, at which point the Royalty is reduced to (b) 3% of Gross Sales on the next $1,000,000 per calendar year, a
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
Based on the 2025 Carbones Pizzeria Franchise Disclosure Document, the calculation of "Gross Sales" is important because it determines the royalty fees a franchisee must pay. The standard royalty structure involves a tiered percentage based on revenue. Specifically, the franchisee pays 4% of total Gross Sales on the initial $1,000,000 in Gross Sales per calendar year. Once sales exceed that amount, the royalty is reduced to 3% of Gross Sales on the next $1,000,000 per calendar year. Finally, the royalty is further reduced to 2% of Gross Sales over $2,000,000 in such calendar year.
Notably, the FDD stipulates that sales of alcohol by a Carbone's Pizzeria franchisee at a facility which is a "fully licensed liquor establishment" are excluded from the Gross Sales calculation. This exclusion could significantly impact the royalty payments for franchisees that operate locations with substantial alcohol sales.
The FDD does not explicitly mention whether catering revenues are included in the calculation of gross sales. As such, prospective franchisees should seek clarification from the franchisor regarding the inclusion of catering revenues, as this could impact the overall royalty fees paid by the franchisee.