Are discounts to customers deducted from Gross Sales for a Gold Star franchise?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.7 Gross Sales. The term "Gross Sales" shall mean the total of all revenues generated by FRANCHISEE from any source, whether from cash sales or charge sales, whether based on activities conducted at the Store or otherwise associated with the Business, and including without limitation any revenues earned offpremises, such as delivery, catering events, food trucks, etc., without reserve or deduction for uncollected credit accounts. "Gross Sales" shall not include sales taxes that are separately stated and collected by FRANCHISEE or refunds, discounts or allowances that are made to customers, in good faith and consistent with the COMPANY's policies prescribed from time to time.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, Gross Sales for a franchisee are calculated as the total revenue from all sources, whether cash or charge sales, related to the business. This includes revenue earned off-premises, such as from delivery, catering, or food trucks.
However, the definition of Gross Sales for a Gold Star franchise specifically excludes certain items. Sales taxes that are separately stated and collected by the franchisee are not included in Gross Sales. Additionally, refunds, discounts, or allowances made to customers in good faith and consistent with Gold Star's policies are also deducted from the total revenue to arrive at Gross Sales.
In practical terms, this means that a Gold Star franchisee only pays royalties and other fees on the net sales amount after deducting sales taxes, refunds, discounts, and allowances. This is a common practice in franchising, as it ensures that franchisees are not paying fees on money that is collected on behalf of the government or returned to customers. Franchisees should ensure that they adhere to Gold Star's policies regarding discounts and allowances to ensure proper calculation of Gross Sales.