What is excluded from Gross Sales for a Churchs Chicken franchise operating a Co-Branded Business?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
The following new Subsection (19) is added to Section 18.A.:
- (19) Franchisee fails to record separately the sales of Church's Texas Chicken menu items and promotional items approved for sale in Church's Texas Chicken Restaurants at the Franchised Restaurant from the sales of any other business operated by Franchisee at the Facility as set forth in Section 10.C.(1).
Source: Item 22 — CONTRACTS (FDD pages 67–68)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, franchisees operating a co-branded business must accurately separate sales of Churchs Texas Chicken menu items and promotional items from the sales of the co-branded business. Failure to do so constitutes a breach of the franchise agreement. This segregation of sales is crucial for calculating royalties and ensuring financial transparency between the franchisee and Churchs Chicken.
This requirement ensures that Churchs Chicken can accurately assess royalties based on the sales of its branded products within the co-branded facility. It also prevents any potential disputes over revenue allocation between the Churchs Chicken franchise and the other business operating at the same location. The franchisee is responsible for implementing and maintaining a point-of-sale system that can provide this segregated sales data in a format that Churchs Chicken specifies.
For a prospective Churchs Chicken franchisee, this means investing in a POS system capable of detailed sales tracking and reporting. They must also adhere to the franchisor's guidelines for categorizing and reporting sales data. This requirement adds a layer of complexity to the accounting and operational procedures of a co-branded location, but it is essential for maintaining compliance with the franchise agreement and ensuring accurate royalty payments.