Are delivery fees included in the calculation of Gross Sales for a Fat Shack restaurant?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
"Gross Sales" shall be defined as sales of any kind for all services or products from or through the FAT SHACK Restaurant, including any such sale of services or products made for cash or upon credit, or partly for cash and partly for credit, regardless of collection of charges for which credit is given, regardless of whether such sale is conducted in compliance with or in violation of the terms of this Agreement and regardless of whether such sale is at the Restaurant Location or off-site, but exclusive of discounts, sales taxes or other similar taxes and credits. "Gross Sales" shall include delivery fees and revenue from the redemption of FAT SHACK gift certificates, customer loyalty cards, gift cards and other prepaid cards. "Gross Sales" shall also include the fair market value of any services or products received by Franchisee in barter or exchange for its services and products.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, delivery fees are included when calculating Gross Sales. Gross Sales are defined as sales of any kind for all services or products from or through the Fat Shack Restaurant, including sales made for cash or credit, regardless of collection. Gross Sales include delivery fees and revenue from the redemption of Fat Shack gift certificates, customer loyalty cards, gift cards, and other prepaid cards. Gross Sales also include the fair market value of any services or products received by the franchisee in barter or exchange for its services and products. However, Gross Sales do not include discounts, sales taxes, or other similar taxes and credits.
This definition of Gross Sales is important because Fat Shack franchisees pay both a royalty fee and a marketing and promotion fee based on a percentage of Gross Sales. Therefore, including delivery fees in the calculation of Gross Sales will increase the amount of these fees paid to Fat Shack.
Prospective franchisees should be aware of this when projecting their potential revenue and expenses. It is important to factor in delivery fees when estimating Gross Sales and calculating the associated royalty and marketing fees. Understanding what constitutes Gross Sales ensures accurate financial planning and compliance with the franchise agreement.