Does the definition of 'Gross Sales' for a Carbones Pizzeria franchise include amounts received for beverages?

According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the definition of Gross Sales does include amounts received from beverages. Specifically, Gross Sales is defined as the total revenue from all business activities at the restaurant, including services, products, and food and beverages sold from the restaurant, a food truck, or other vehicle. However, the definition of Gross Sales excludes amounts collected for sales or occupation taxes, non-food vending machine sales discounts and amounts received from alcohol sales.

For a Carbones Pizzeria franchisee, this means that the royalty fees and advertising fees, which are calculated as a percentage of Gross Sales, will be based on the total revenue of the restaurant, including revenue from beverages, but excluding revenue from alcohol sales (under specific conditions), sales or occupation taxes, and non-food vending machine sales discounts. The royalty paid to the franchisor is on a tiered scale: 4% of Gross Sales up to $1,000,000, 3% of Gross Sales on the next $1,000,000, and 2% of Gross Sales over $2,000,000 in a calendar year. The advertising fee is 1% of monthly Gross Sales, but is not due on Gross Sales exceeding $2,000,000 in any calendar year.

It is important to note that the exclusion of alcohol sales from Gross Sales applies only if the franchisee operates a "fully licensed liquor establishment." If a Carbones Pizzeria franchisee intends to sell alcohol, they must first obtain written approval from the franchisor, which may require additional training and insurance. The franchisor also reserves the right to independently access the restaurant's accounting and financial systems to determine Gross Sales and fees due. Franchisees should carefully track their sales and understand how Gross Sales are calculated, as this directly impacts their royalty and advertising fee obligations to Carbones Pizzeria.