What deductions are made from gross revenue to calculate 'Net Sales' for Checkersrallys restaurants?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
As used in this Item 19, "Net Sales" means all revenue derived from operating the Franchised Restaurant, including the aggregate of all sales amounts from food, beverages and other products sold and services rendered at the Premises or otherwise rendered in connection with the Franchised Restaurant, and all monies derived from sales at or away from the Franchised Restaurant, whether from cash, check, credit or debit card, barter exchange, trade credit, or other credit transactions, but: (1) excluding all federal, state or municipal sales, use or service taxes collected from customers and paid to the appropriate taxing authority; and (2) reduced by the amount of any documented refunds, credits, allowances, adjustments, promotional discounts, and charge-backs the Franchised Restaurant provides to customers in good faith.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 71–77)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, "Net Sales" is calculated by starting with all revenue derived from operating the franchised restaurant. This includes all sales amounts from food, beverages, other products, and services rendered at the premises or otherwise connected with the franchised restaurant. It also encompasses all monies derived from sales at or away from the restaurant, regardless of whether the payment is made via cash, check, credit or debit card, barter exchange, trade credit, or other credit transactions.
From this total revenue, two types of deductions are made to arrive at the "Net Sales" figure. First, all federal, state, or municipal sales, use, or service taxes collected from customers and paid to the appropriate taxing authority are excluded. Second, the amount of any documented refunds, credits, allowances, adjustments, promotional discounts, and charge-backs that the franchised restaurant provides to customers in good faith are subtracted.
For a prospective Checkersrallys franchisee, understanding this definition of "Net Sales" is crucial because many financial metrics, such as royalty fees and certain expenses, are calculated as a percentage of Net Sales. Therefore, accurately tracking and reporting these deductions is essential for compliance and financial planning.