Are sales taxes collected from customers included in the Carls Jr. revenue calculation?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
-
- Revenue. Revenue includes all revenue from the sale of all services and products (except CJRapproved promotional items) and all other income of every kind and nature (excluding revenue from the sale of stored value gift cards or gift certificates but including revenue when gift certificates are redeemed or stored value gift cards are debited), whether for cash or credit and regardless of collection in the case of credit; provided, however, that Revenue does not include sales taxes or other taxes collected from customers by you for transmittal to the appropriate taxing authority.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 66–68)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, revenue figures do not include sales taxes collected from customers. Specifically, the FDD states that revenue includes income from all services and products, excluding revenue from stored value gift cards until they are redeemed. However, it explicitly excludes sales taxes or other taxes collected from customers that are then transmitted to the appropriate taxing authority. This means that the reported revenue figures represent the income Carls Jr. franchisees retain after deducting sales taxes.
For a prospective Carls Jr. franchisee, this is a positive aspect as it provides a clearer picture of the actual sales revenue the franchise generates. Franchisees can use this information to more accurately assess the financial performance of their location without the distortion of pass-through tax collections. This distinction is important for calculating profitability, return on investment, and other key financial metrics.
This exclusion of sales taxes from revenue calculations is a standard practice in the franchise industry. It ensures that financial performance representations accurately reflect the income available to the franchisee, rather than including amounts that are simply collected and remitted to government entities.