What happens if a Churchs Chicken franchisee underreports Gross Sales?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- D. Gross Sales. "Gross Sales" means all revenue from the sale of all services and products and all other income of every kind and nature (including stored value gift cards and gift certificates when redeemed but not when purchased) related to the Franchised Restaurant, whether such sales are evidenced by cash, check, credit, charge, account, barter or exchange. Gross Sales shall include, without limitation, 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, off-premises services such as catering and delivery, regardless of the method of collection (including cash registers, vending machines, payments to third-party delivery providers or otherwise). Gross Sales shall not include (1) the sale of food or merchandise for which refunds have been made in good faith to customers, (2) the sale of used equipment not in the ordinary course of business, or (3) taxes imposed by a governmental authority directly on sales and collected from customers, provided that the amount for such tax is added to or absorbed in the selling price and is actually paid by Franchisee to such governmental authority.
- E. Remittance Reports. Within 24 hours after the end of each fiscal week (as defined by Cajun from time to time), Franchisee shall submit to Cajun in writing by electronic mail, polling by computer or such other form or method as Cajun may designate, the amount of Gross Sales from the Franchised Restaurant during the preceding fiscal week and such other data or information as Cajun may require.
F. Payment of Fees.
- (1) Within 5 business days after the end of each fiscal week (as defined by Cajun from time to time), Franchisee shall pay to Cajun (by electronic funds transfer or by such other form or method as Cajun may designate) the Royalty Fee and advertising contributions applicable to Gross Sales for the Franchised Restaurant for the preceding fiscal week and any other amounts owed under this Agreement.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
Based on the 2025 Churchs Chicken Franchise Disclosure Document, franchisees are required to report their Gross Sales to Churchs Chicken on a weekly basis. Gross Sales include all revenue from the sale of services and products, as well as any other income related to the franchised restaurant. This encompasses sales made through various methods such as cash, credit, and even third-party delivery services. However, Gross Sales do not include refunds made to customers in good faith, sales of used equipment outside the normal course of business, or taxes collected from customers and remitted to governmental authorities.
Within 24 hours of each fiscal week's end, franchisees must submit a report detailing the Gross Sales from the preceding week, along with any other data or information that Churchs Chicken may require. Franchisees are also obligated to pay Churchs Chicken the Royalty Fee and advertising contributions applicable to their Gross Sales within 5 business days after the end of each fiscal week. These payments must be made via electronic funds transfer or any other method designated by Churchs Chicken.
The FDD excerpt does not explicitly state the consequences of underreporting Gross Sales. However, given the detailed requirements for reporting and payment of fees based on Gross Sales, it is reasonable to infer that underreporting would constitute a breach of the franchise agreement. This could potentially lead to penalties, legal action, or even termination of the franchise agreement. A prospective franchisee should seek clarification from Churchs Chicken regarding the specific repercussions of underreporting Gross Sales.