What is excluded from the definition of 'Gross Sales' for a Gold Star franchise?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 1: The term "Gross Sales" means 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 off-premises, 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 Gold Star's policies prescribed from time to time.
Source: Item 6 — OTHER FEES (FDD pages 12–18)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, 'Gross Sales' for the purpose of calculating fees excludes specific items. The term 'Gross Sales' encompasses all revenues generated by the franchisee from any source, including cash sales, charge sales, revenues earned off-premises (such as delivery, catering events, and food trucks), and other business-related activities. This broad definition ensures that all income streams are considered when calculating royalties and other fees.
However, the definition of 'Gross Sales' does not include sales taxes that are separately stated and collected by the franchisee. This means that franchisees do not pay a percentage of their sales tax collections to Gold Star. Additionally, 'Gross Sales' excludes refunds, discounts, or allowances that are made to customers in good faith and consistent with Gold Star's prescribed policies. This ensures that franchisees are not penalized for legitimate customer service actions that reduce their revenue.
In practical terms, this definition allows Gold Star franchisees to deduct sales taxes, refunds, discounts, and allowances from their total revenue before calculating the continuing franchise fee and other percentage-based fees. This is a common practice in franchising, as it ensures that franchisees are only paying fees on their actual net sales rather than on pass-through taxes or customer service adjustments.