What is excluded from the definition of 'Net Sales' for a Del Taco restaurant?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.3.1 "Net Sales" means all revenue from the sale of all products, including all Menu Items and all other products or services offered at or from the Restaurant, and all other income of every kind and nature related to, derived from, or originating from the Restaurant, including proceeds from stored value gift cards and gift certificates when redeemed but not when purchased and proceeds of any business interruption insurance policies, whether at retail, delivery, catering, or wholesale (whether such sales are permitted or not), whether for cash, check, or credit, and regardless of collection in the case of check or credit, and including all revenue from the operating or conduct of electric vehicle charging at the Restaurant; provided, however, that "Net Sales" excludes any customer refunds, discounts from coupon sales, sales taxes, and/or other taxes collected from customers by Franchisee and actually transmitted to the appropriate taxing authorities.
Net Sales does not include Net Sales from Games and Devices.
Del Taco reserves the right to modify its policies and practices regarding revenue recognition, revenue reporting, and the inclusion or exclusion of certain revenue from "Net Sales" as circumstances, business practices, and technology change.
Source: Item 22 — CONTRACTS (FDD pages 58–59)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, 'Net Sales' is a crucial figure, as it is the base for calculating both the marketing fee and royalty fees franchisees must pay. The standard royalty fee is 5% of Net Sales, while the marketing fee is 4%. However, sales from games and devices are subject to a much higher 40% royalty fee.
For a Del Taco restaurant, 'Net Sales' includes all revenue from the sale of products and services at the restaurant, including menu items, proceeds from redeemed gift cards, and proceeds from business interruption insurance policies. This encompasses sales through various channels like retail, delivery, catering, and wholesale, regardless of whether they are paid via cash, check, or credit. It also includes revenue from electric vehicle charging at the restaurant.
However, the definition of 'Net Sales' specifically excludes certain items. These exclusions are customer refunds, discounts from coupon sales, sales taxes, and other taxes collected from customers that the franchisee then transmits to the appropriate taxing authorities. Additionally, Net Sales does not include Net Sales from Games and Devices.
Del Taco retains the right to modify its policies regarding revenue recognition and the inclusion or exclusion of certain revenue from 'Net Sales' as business practices and technology evolve. This means that the specific items included or excluded from 'Net Sales' could change over time, potentially impacting the fees franchisees are required to pay.