What items are specifically excluded from 'Gross Sales' when calculating revenue for a Churchs Chicken franchise?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. "Gross Sales" includes, as stated in Section 3.D of the Franchise Agreement, 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 Salesincludes, 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 do 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 the tax is added to or absorbed in the selling price and is actually paid by a franchisee to the governmental authority.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 55–62)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, 'Gross Sales' for a franchise encompass all revenue from the sale of services and products, as well as any other income, including stored value gift cards and gift certificates when redeemed. This includes revenue from food and merchandise sales, tangible property, and services performed at the restaurant, such as catering and delivery, regardless of the collection method.
However, the calculation of Gross Sales for a Churchs Chicken franchise specifically excludes certain items. These exclusions are the sale of food or merchandise for which refunds have been made in good faith to customers, sales of used equipment not in the ordinary course of business, and taxes imposed by a governmental authority directly on sales and collected from customers, provided the tax amount is added to or absorbed in the selling price and is actually paid to the governmental authority.
For a prospective franchisee, understanding what constitutes Gross Sales is crucial because it directly impacts royalty payments, marketing fees, and overall financial performance calculations. By excluding these specific items, Churchs Chicken aims to provide a more accurate representation of the restaurant's core operational revenue, ensuring that franchisees are not paying royalties or fees on refunded sales, infrequent equipment sales, or collected sales taxes.