What revenue sources are specifically excluded from 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" are defined as the total dollar revenue from the sale of all goods, wares, merchandise, and services. However, certain revenue sources are specifically excluded from this definition for the purpose of calculating royalties.
Specifically, the following revenue sources are excluded from the calculation of Gross Sales: revenue from sales of motor fuel, car wash services that do not use Circle K's trademarks, money orders, lottery, pay phones, ATMs, postage stamps, pre-paid phone cards, gift cards, and gaming machines. Also excluded is revenue from sales from other approved royalty-based franchises that require separate point-of-sale equipment as part of their business system, with an exclusion for any approved Additional Business that is subject to a separate Co-Branded Fee.
Additionally, the amount of any authorized cash or credit refunds made upon transactions that were previously included in Gross Sales is excluded, 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. The amount of any separated, collected, and stated city, county, state, or federal sales, luxury, or excise tax on such sales, which the franchisee pays directly to the governmental taxing authorities rather than to its suppliers, is also excluded. However, franchise or capital-stock tax or any other similar tax based upon income, profits, or gross sales cannot be deducted from Gross Sales. The franchisor may approve calculating Gross Sales on the basis of earnings as opposed to sales proceeds for certain products or services. Finally, if applicable law prohibits collection of royalty fees on the sale of alcoholic beverages from the store, the definition of Gross Sales will not include any income from the sale of alcoholic beverages.