What constitutes 'Gross Sales' for the purpose of determining royalties for a Crave franchise?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
For the purposes of determining the royalties to be paid under the Franchise Agreement, "Gross Sales" means the total selling price of all services and products and all income of every other kind and nature related to the Franchised Business, whether for cash or credit and regardless of collection in the case of credit, and including any third-party delivery fees. If a cash shortage occurs, the amount of Gross Sales will be determined based on the records of the point-of-sale system and any cash shortage will not be considered in the determination. Gross Sales expressly excludes taxes collected from your customers and paid to the appropriate taxing authority and customer refunds or adjustments.
Source: Item 6 — OTHER FEES (FDD pages 12–19)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, "Gross Sales" is defined as the total selling price of all services and products, including all income related to the franchised business, whether the sales are for cash or credit. This includes any third-party delivery fees, regardless of whether the payment has been collected for credit sales. However, Gross Sales expressly excludes taxes collected from customers that are then paid to the appropriate taxing authority, as well as customer refunds or adjustments. If a cash shortage occurs, the gross sales will be determined based on the point-of-sale system records, and the cash shortage will not be considered in the determination.
Crave franchisees must report their Gross Sales to Crave by Tuesday of each week for the previous week ending on Sunday. The royalty fee, which is 8% of Gross Sales for Restaurants, Food Trucks, and Express locations, and the brand development fee (2% of Gross Sales for Restaurants only) will be withdrawn from the franchisee's designated bank account by electronic funds transfer (EFT) weekly on Wednesday. This withdrawal is based on the Franchised Business' Gross Sales for the preceding week ending Sunday.
If a franchisee fails to report their Gross Sales, Crave may debit their account for 120% of the last Royalty Fee and brand development fee (for Restaurants only) that was debited. If the debited fees are less than what is actually owed, Crave will debit the account for the balance once the true Gross Sales are determined. Conversely, if the debited fees are greater than what is owed, Crave will credit the excess against the amount that would otherwise be debited from the account during the following week. This ensures accurate royalty payments and provides a mechanism for adjustments in cases of reporting discrepancies.
It's important to note that if a state or local law prohibits or restricts the ability to pay Royalty Fees or other amounts based on Gross Sales derived from the sale of beverage alcohol, the percentage rate for calculating Royalty Fees will be increased, and the definition of Gross Sales will be changed to exclude sales of beverage alcohol. This adjustment ensures that Crave still receives the full Royalty Fee amount, even if alcohol sales are excluded from the calculation due to legal restrictions.