How is the Royalty Fee for a Chicken Guy franchise calculated?

a conditional opening shall be final and binding and shall be made in its sole discretion based upon those factors that Chicken Guy deems relevant, including its determination that a conditional opening will not be injurious to the reputation of the System. If Franchisee fails to fulfill all remaining terms of this Agreement on or before the Opening Deadline (or such extension thereof as may be granted by Chicken Guy in its sole discretion), this Agreement shall terminate without further action by Chicken Guy, and Franchisee shall take such steps as are required by Section 23.

7. FEES

• A. Initial Franchise Fee. Simultaneously with the execution of this Agreement, Franchisee shall pay an initial franchise fee to Chicken Guy in the amount set forth on the attached Data Sheet ("Initial Franchise Fee"). Franchisee acknowledges and agrees that the Initial Franchise Fee is fully earned by Chicken Guy when paid and is not refundable. Any Development Fees previously paid by Franchisee to Chicken Guy with respect to the Franchised Restaurant shall be credited against the Initial Franchise Fee.
• B. Royalty Fee. In addition to all other amounts to be paid by Franchisee to Chicken Guy, Franchisee shall pay Chicken Guy a nonrefundable and continuing royalty fee in the amount specified in the attached Data Sheet, which shall be a percentage of Gross Sales (as defined below) of the Franchised Restaurant, for the right to use the System and the Proprietary Marks at the Franchised Location. If, due to federal, state or local laws, Chicken Guy is prohibited from receiving a percentage royalty based on alcoholic beverage revenues, Franchisee shall pay Chicken Guy a royalty fee on all Gross Sales except alcoholic beverage revenues in the same dollar amount as would have been paid if Franchisee paid the specified royalty fee percentage on all Gross Sales. If any taxes, fees or assessments are imposed on Chicken Guy by reason of its acting as franchisor or licensing the Proprietary Marks under this Agreement, Franchisee shall reimburse Chicken Guy for the amount of those taxes, fees or assessments within 30 days after receipt of an invoice from Chicken Guy.
• C. Advertising Fees. Franchisee also shall spend and/or contribute for advertising. The exact amount of the advertising fees to be spent and/or contributed by Franchisee, and the allocation of the advertising fees, as of the date of this Agreement, is set forth in Section 9 and the attached Data Sheet.
• D. Gross Sales. Gross Sales shall include all revenue from the sale of all food products, beverages and all other income of every kind and nature related to the Franchised Restaurant (including the redemption value of stored value gift cards and gift certificates when purchases are made) whether for cash or credit and regardless of collection in the case of credit, monies or credit received from the sale of food and merchandise, from tangible property of every kind and nature, promotional or otherwise, and for services performed from or at the Franchised Restaurant, including, but not limited to, such off-premises services as catering and delivery. 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.
• **E.

Source: Item 22 — CONTRACTS (FDD page 50)