What is included in the definition of "Gross Sales" for a Circle K franchise?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
-
- "Gross Sales" means the total dollar revenue from the sale of all goods, wares, merchandise, and services sold (including car wash services, provided the car wash is 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 Franchisee 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) revenue from sales of motor fuel, car wash services that do not use the Marks, money orders, lottery, pay phones, ATMs, postage stamps, pre-paid phone cards, gift cards, and gaming machines; (ii) revenue from 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 that is subject to the separate Co-Branded Fee as set forth in Section 5.3); (iii) the amount of any 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 customer and accepted, which refunds may be deducted from Gross Sales in the month made; and (iv) the amount of any separated, collected, and stated city, county, state, or federal sales, luxury, or excise tax on such sales, which Franchisee pays directly to the governmental taxing authorities rather than to its 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.
Notwithstanding the foregoing, Franchisor may, in its sole discretion, from time to time approve in writing that with respect to certain products or services, Gross Sales shall be calculated on the basis of earnings as opposed to sales proceeds.
If applicable law prohibits collection of royalty fees on sale of alcoholic beverages from the Store, the definition of Gross Sales will not include any income from the sale of alcoholic beverages.
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, "Gross Sales" is comprehensively defined for royalty and fee calculation purposes. Gross Sales includes the total dollar revenue from all goods, wares, merchandise, and services sold at the Circle K, encompassing cash sales, checks, credit payments, barter transactions, and any other form of compensation received. This also extends to handling fees, placement fees, and revenue generated from coin-operated or other machines within the Circle K store.
However, the definition explicitly excludes certain revenue streams. These exclusions include revenue from motor fuel sales, car wash services not using Circle K's trademarks, money orders, lottery sales, pay phone income, ATM revenue, postage stamp sales, pre-paid phone cards, gift card sales, and gaming machine revenue. Additionally, revenue from other approved royalty-based franchises that require separate point-of-sale equipment is excluded, with a specific exception for any approved Additional Business that is subject to a separate Co-Branded Fee. The definition also allows for deductions of authorized cash or credit refunds for returned merchandise and any city, county, state, or federal sales, luxury, or excise taxes collected and remitted directly to governmental authorities.
It is important to note that Circle K retains the discretion to approve, in writing, the calculation of Gross Sales based on earnings rather than sales proceeds for specific products or services. Furthermore, if applicable law prohibits the collection of royalty fees on alcohol sales, income from alcoholic beverages will also be excluded from Gross Sales. This comprehensive definition ensures clarity in calculating royalties and other fees payable to Circle K, while also accounting for various operational and legal considerations.