Are refunds, discounts, or allowances deducted from '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 a Gold Star franchise does not include deductions for refunds, discounts, or allowances made to customers in good faith, provided these are consistent with Gold Star's policies. The FDD defines 'Gross Sales' as the total revenue generated from all sources, whether from cash or charge sales, activities at the store, or off-premises activities like delivery and catering. This total does not account for uncollected credit accounts.
This definition of 'Gross Sales' is important because it is the base upon which Gold Star calculates several fees, including the continuing franchise fee and the brand building fee. These fees are typically a percentage of gross sales, so a clear understanding of what constitutes 'Gross Sales' is crucial for financial planning. For instance, the continuing franchise fee for a standard franchise is 5% of Gross Sales, while special purpose outlets may have a continuing franchise fee of 4% of Gross Sales.
The exclusion of refunds, discounts, and allowances from 'Gross Sales' is a benefit to the franchisee, as it lowers the base upon which these fees are calculated. However, it is important to adhere to Gold Star's policies regarding these deductions to ensure compliance and avoid any disputes. Franchisees should familiarize themselves with these policies to ensure they are properly accounting for 'Gross Sales' and calculating their fee obligations.