What revenues are excluded from Gross Sales when calculating the royalty fee for a Carbones Pizzeria franchise?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
ITEM 6. OTHER FEES
| (Column 1) Type of Fee1 | (Column 2) Amount | (Column 3) Due Date | (Column 4) Remarks |
|---|---|---|---|
| Royalty | 4% of Gross Sales on the initial $1,000,000 in Gross Sales per year, 3% of Gross Sales on the next $1,000,000 per year and 2% of Gross Sales on any additional Gross Sales over $2,000,000 per year. | Payable monthly on 10th day following the month covered | Gross Sales includes all revenues from the operation of the Restaurant including any delivery or off premises sales. Gross Sales do not include sales tax or use tax, non-food vending machine sales, revenue from alcoh |
Source: Item 6 — OTHER FEES (FDD pages 8–10)
What This Means (2025 FDD)
According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the royalty fee is based on a percentage of Gross Sales, but certain revenues are excluded from this calculation. Specifically, Gross Sales do not include sales tax or use tax, non-food vending machine sales, revenue from alcohol sales, and discounts. This means that Carbones Pizzeria franchisees will not pay royalty fees on these specific revenue streams.
For a prospective Carbones Pizzeria franchisee, this is beneficial as it lowers the royalty fees owed to the franchisor. By excluding these revenues, the franchisee's royalty payments are based on a smaller, more accurate representation of their core food sales. This can improve the franchisee's profitability, especially if a significant portion of their revenue comes from alcohol sales or vending machines.
It's important for franchisees to accurately track and report their sales, separating out the excluded revenue categories from the total Gross Sales. This ensures that the royalty fees are calculated correctly and avoids any potential disputes with Carbones Pizzeria. Franchisees should consult with their accountant or financial advisor to establish proper accounting procedures for tracking these exclusions.