Are delivery costs deducted from the Gross Revenue calculation for a Cilantro Taco Grill franchise?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
1 "Gross Revenue" includes all sales of every kind and nature at or from your Franchised Business location or made pursuant to the rights granted to you by the Franchise Agreement, without deduction for delivery costs or other write-offs. "Gross Revenue" does not include (i) any sales tax or similar taxes collected from customers and turned over to the governmental authority imposing the tax, (ii) properly documented refunds to customers, (iii) properly documented promotional discounts (i.e. coupons) and (iv) properly documented employee discounts (limited to 3% of Gross Revenue). Gross Revenue does not include gift card purchases, at the time of purchase, but Gross Revenue does include the redemption amount of purchases made by gift card. If you do not report revenues for any week, then we will collect 120% of the last Royalty Fee collected and settle the balance the next period in which you report revenue. You are required to set up authorization at your bank to allow us to electronically transfer funds from your bank account to our bank account. Interest and late fees will apply to any late payments or electronic funds transfer requests denied due to insufficient funds.
Source: Item 6 — OTHER FEES (FDD pages 12–18)
What This Means (2024 FDD)
According to Cilantro Taco Grill's 2024 Franchise Disclosure Document, delivery costs are not deducted from the calculation of Gross Revenue. Gross Revenue includes all sales of any kind from the franchised business location or made pursuant to the rights granted in the Franchise Agreement, without any deduction for delivery costs.
This means that Cilantro Taco Grill franchisees will pay royalties and other fees based on total sales, including any revenue generated from deliveries, without subtracting the expenses associated with providing those deliveries. This could impact the franchisee's profitability, as they must cover delivery costs while also paying a percentage of that revenue to the franchisor.
However, the FDD does state that certain items are excluded from Gross Revenue, including sales tax, properly documented refunds to customers, properly documented promotional discounts (i.e., coupons), and properly documented employee discounts (limited to 3% of Gross Revenue). Also excluded are gift card purchases at the time of purchase, though the redemption amount of purchases made by gift card is included in Gross Revenue.