What are examples of items excluded from Gross Sales calculations for Circle K franchises?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
1 The Royalty Fee is based upon a percentage of Gross Sales. "Gross Sales" means the total dollar income from the sale of all goods, wares, merchandise, and services sold (including car wash services provided using the Marks), whether sold for cash, for payment by check, on credit, on barter or otherwise, without reserve or deduction for the inability or failure to collect from customers, and all other items of value received by you as payment in the course of such operations (including, without limitation, handling and placement fees and fees for the operation of coin-operated and other machines), excluding the following:
- (i) motor fuel sales, car wash revenues (provided the car wash is not using the Marks), money orders, lottery, pay phones, ATMs, postage stamps, pre-paid phone card, gift cards, and gaming machines;
- (ii) sales from other approved royalty-based franchises that require separate point-of-sale equipment as part of their business system (excluding any approved Additional Business (as defined below in Note 5) which is subject to the separate Co-Branded Royalty Fee noted in the table above);
- (iii) authorized cash or credit refunds made upon transactions that were previously included in Gross Sales, not exceeding the selling price of merchandise returned by the purchaser and accepted, which refunds may be deducted from Gross Sales in the month made;
- (iv) the amount of any separated, collected, and stated city, county, state, or federal sales, luxury, or excise tax on such sales, which you pay directly to the taxing authorities rather than to suppliers; provided, however, that no franchise or capital-stock tax or any other similar tax based upon income, profits, or gross sales shall be deducted from Gross Sales; and
(v) other products or services we may from time to time approve in writing for calculation of gross sales on the basis of earnings as opposed to sales proceeds.
Source: Item 6 — OTHER FEES (FDD pages 22–35)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, the Royalty Fee is based on a percentage of Gross Sales. Gross Sales includes income from all goods, merchandise, and services, including car wash services using Circle K's branding, whether sold for cash, check, credit, barter, or other means. This also encompasses all items of value received as payment, such as handling and placement fees, and income from coin-operated machines.
However, the calculation of Gross Sales for Circle K specifically excludes several items. These exclusions include motor fuel sales, car wash revenues if the car wash does not use Circle K's branding, money orders, lottery sales, pay phone income, ATM revenue, postage stamp sales, pre-paid phone cards, gift card sales, and gaming machine income.
Additionally, authorized cash or credit refunds for transactions previously included in Gross Sales can be deducted, but these deductions cannot exceed the selling price of the returned merchandise. Furthermore, any separated, collected, and stated city, county, state, or federal sales, luxury, or excise taxes that the franchisee pays directly to the taxing authorities are also excluded from Gross Sales. However, franchise or capital-stock taxes, or any similar tax based on income, profits, or gross sales, cannot be deducted.