What is excluded from the definition of Gross Sales for a Chicken Guy franchise?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
Gross Sales do not include sales taxes or other taxes collected from customers for transmittal to the appropriate taxing authority, promotional discounts and coupons, the value of any employee discounts provided to Franchisee's bona fide employees during the fiscal week in which the discounts are provided, all proceeds from the sale of gift certificates or stored value cards, customer refunds made in good faith to customers, or the sale of equipment used in the operation of the Franchised Restaurant.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, Gross Sales for the purpose of calculating royalty fees excludes several items. These exclusions directly impact the franchisee's royalty obligations, as the royalty fee is a percentage of Gross Sales.
Specifically, Gross Sales do not include sales taxes or other taxes collected from customers that are then remitted to the appropriate taxing authority. Promotional discounts and coupons offered to customers are also excluded, as is the value of employee discounts provided to bona fide employees during the fiscal week in which they are provided. The proceeds from the sale of gift certificates or stored value cards are excluded from Gross Sales until those certificates/cards are redeemed.
Customer refunds made in good faith and the sale of equipment used in the operation of the franchised restaurant are also not included in Gross Sales. By excluding these items, Chicken Guy aims to calculate royalties on actual net sales revenue rather than including amounts that pass through the franchisee or represent internal cost reductions.