In determining Gross Sales for Crave royalties, are taxes collected from customers included?
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.
You must report your Gross Sales to us by Tuesday each week for the previous week ending Sunday. The Royalty Fee and brand development fee (for Restaurants only) will be withdrawn from your designated bank account by electronic funds transfer ("EFT") weekly on Wednesday based on the Franchised Business' Gross Sales for the preceding week ending Sunday. If you do not report the Franchised Business' Gross Sales, we may debit your account for 120% of the last Royalty Fee and brand development fee (for Restaurants only) that we debited. If the fees we debit are less than the fees you actually owe us, once we have been able to determine the true and correct Gross Sales, we will debit your account for the balance on a day we specify. If the fees we debit are greater than the fees you actually owe us, we will credit the excess against the amount we otherwise would debit from your account during the following week.
Source: Item 6 — OTHER FEES (FDD pages 12–19)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, taxes collected from customers are expressly excluded from the calculation of Gross Sales for royalty fee purposes. Gross Sales are defined as the total selling price of all services and products, including all income related to the franchised business, whether in cash or credit, and including third-party delivery fees. This means Crave franchisees will not pay royalties on the tax portion of their sales, which is a common practice in franchising to avoid franchisees paying royalties on money they simply pass through to taxing authorities.
Crave requires franchisees to report their Gross Sales weekly by each Tuesday for the previous week ending on Sunday. The royalty fee, which is 8% of Gross Sales for Restaurants, Food Trucks, and Express locations, and brand development fee (2% of Gross Sales for Restaurants only) will be withdrawn from the franchisee's bank account via electronic funds transfer each Wednesday.
It is important for prospective Crave franchisees to understand how Gross Sales are defined, as this figure directly impacts the royalty and brand development fees paid to Crave. Franchisees should also note that failure to report Gross Sales may result in Crave debiting 120% of the last known royalty and brand development fee from their account. The FDD specifies that Gross Sales will be reported through the Abreeze Reporting App available through the Clover point-of-sale system.