Does the 'Gross Sales' definition for a Carbones Pizzeria franchise include amounts received for catering?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
ion may be venued in any court having jurisdiction over all the parties and a significant nexus to the parties; and (2) to the extent that either party believes it is necessary to seek injunctive relief against the other, the party seeking relief may initiate that action in the county in which the other party has its principal office (which in the case of an action against Franchisee, shall be the county in which Franchisee is domiciled, or the county in which the Restaurant is located).
26. Definitions.
The following definitions shall apply to this Agreement:
- a. Competing Business. The term "Competing Business" means an eat-in, or take-out, or combination eat-in/take out restaurant of any other facility that serves pizza.
- b. Confidential Information. The term "Confidential Information" means all business plans and methods developed by Franchisor and its affiliates to be used in connection with the operation of a restaurant or other facility operated under the Names and Marks, including the Secret Recipes, any other recipes, standards, specifications, methods, procedures, techniques, sourcing, technology, and management systems, all of which may be changed, improved, and further developed from time to time by Franchisor, and all information contained in Franchisor's Operations Manual as it may be amended from time to time by Franchisor (the "Manual").
- c. Gross Sales.
Source: Item 23 — RECEIPTS (FDD pages 30–116)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the definition of 'Gross Sales' does include amounts received for catering. Specifically, the document states that 'Gross Sales' encompasses the total revenue from all business activities at the restaurant, including catering. This means that Carbones Pizzeria franchisees must include catering revenue when calculating their royalty payments.
For a prospective Carbones Pizzeria franchisee, this definition is important because it directly impacts the royalty fees owed to the franchisor. The royalty is calculated as a percentage of Gross Sales, with rates varying based on sales volume: 4% on the first $1,000,000, 3% on the next $1,000,000, and 2% on sales exceeding $2,000,000 in a calendar year. By including catering revenue in Gross Sales, the franchisor ensures that all income streams from the Carbones Pizzeria business contribute to the royalty calculation.
However, the FDD also specifies certain exclusions from 'Gross Sales'. Amounts collected and remitted for sales or occupation taxes, non-food vending machine sales, and revenue from alcohol sales at fully licensed establishments are excluded from the Gross Sales calculation. Therefore, while catering revenue is included, franchisees can deduct these specific items before calculating their royalty payments. Understanding these inclusions and exclusions is crucial for accurate financial reporting and royalty payments to Carbones Pizzeria.