Are revenues from other businesses operated at the Chicken Guy facility included in Gross Sales?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
Subject to the provisions of this Agreement, Chicken Guy hereby grants to Franchisee the right ("Franchise") to continuously operate the Franchised Restaurant at the Franchised Location (as defined below) and to use the Proprietary Marks in the operation of the Franchised Restaurant. The Franchised Restaurant is located within a larger building at the street address specified in Exhibit A ("Facility"), and it occupies the physical area of the Facility (comprising the Franchised Restaurant, whether a food-court, in-line application, stand-alone restaurant or other location, and any dedicated back of the house area), as indicated on the floor plan attached to Exhibit A ("Franchised Location"). If the Franchised Restaurant serves a limited Chicken Guy! menu (as indicated in attached Exhibit A and as determined by Chicken Guy in its discretion), Franchisee may offer for sale and sell at the Franchised Location only those System menu items specified in Exhibit A. In addition to the Franchised Restaurant, Franchisee or its affiliates operate those other businesses at the Facility identified in attached Exhibit A.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
Based on the 2025 Chicken Guy FDD, the franchise agreement is modified when a restaurant is operated at a "Nontraditional Location" or "Captive Market Location." In these instances, the franchisee may operate other businesses at the same facility as the Chicken Guy restaurant. The FDD excerpt states, "In addition to the Franchised Restaurant, Franchisee or its affiliates operate those other businesses at the Facility identified in attached Exhibit A."
However, the excerpt does not specify whether the revenues from these other businesses are included in the gross sales figures reported for the Chicken Guy franchise. The FDD excerpt does state that the franchisee must maintain any other businesses operated at the facility in first-class condition and repair. The franchisee is also not required to keep the Chicken Guy restaurant open during times when the adjacent businesses at the facility are closed.
To fully understand how Chicken Guy accounts for revenue in situations where franchisees operate other businesses at the same facility, prospective franchisees should consult Exhibit A of the Franchise Agreement and seek clarification from the franchisor regarding the specific reporting requirements and how gross sales are defined in these scenarios.