What constitutes 'Net Sales' for a Costa Vida Fresh Mexican Grill franchise?
Costa_Vida_Fresh_Mexican_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
*Note 2. "Net Sales" means all revenues received or receivable by you as payment, whether in cash, credit, or other means of electronic payment or exchange, for sales of Costa Vida Products and any other items, goods and services made and offered in the operation of your Costa Vida Restaurant(s), whether or not these items are approved for sale from the Restaurant, including sales made at or away from your Restaurant.
Net Sales excludes (i) all federal, state or municipal sales, use, or service taxes collected from customers and paid to the appropriate taxing authority, and (ii) declared tips, gratuities or service charges paid directly by customers to your employees or paid to you and promptly turned over to your employees in lieu of direct tips or gratuities.
For items sold pursuant to coupons or other discounts (which must be approved by us), Net Sales also excludes the amount discounted from the purchase price of such item(s) and from sales of pre-paid gift cards or certificates, but franchisees must pay royalties on revenues received on redemption of gift cards or certificates at their Restaurants.*
Source: Item 6 — OTHER FEES (FDD pages 16–22)
What This Means (2025 FDD)
According to Costa Vida Fresh Mexican Grill's 2025 Franchise Disclosure Document, Net Sales are defined as all revenues received or receivable by a franchisee for sales of Costa Vida products and any other items, goods, and services offered at the restaurant, regardless of whether those items are approved for sale. This includes sales made both at and away from the restaurant, and can be in the form of cash, credit, or other electronic payment methods.
However, the definition of Net Sales does exclude certain items. Specifically, it excludes all federal, state, or municipal sales, use, or service taxes collected from customers and paid to the appropriate taxing authority. It also excludes declared tips, gratuities, or service charges paid directly by customers to employees or paid to the franchisee and promptly turned over to employees in lieu of direct tips or gratuities.
Furthermore, for items sold using coupons or other discounts approved by Costa Vida Fresh Mexican Grill, Net Sales excludes the amount discounted from the purchase price. Similarly, the initial sales of pre-paid gift cards or certificates are excluded from Net Sales. However, franchisees must pay royalties on revenues received when these gift cards or certificates are redeemed at their restaurants. This comprehensive definition of Net Sales is crucial because several fees, including royalty fees and advertising fees, are calculated as a percentage of Net Sales, impacting the franchisee's financial obligations to Costa Vida Fresh Mexican Grill.