Are sales taxes included in the 'Gross Sales' calculation 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, the calculation of 'Gross Sales' for the purpose of determining fees excludes sales taxes under specific conditions. 'Gross Sales' encompasses all revenues generated by the franchisee from any source, including cash sales, charge sales, activities at the store, off-premises activities like delivery and catering, and food trucks, without any deductions for uncollected credit accounts.
However, the definition explicitly excludes sales taxes that are separately stated and collected by the franchisee. This means that if a Gold Star franchisee properly identifies and collects sales taxes, these amounts are not included when calculating the gross sales figure used to determine franchise fees or other payments to Gold Star. The definition also excludes refunds, discounts, and allowances made to customers in good faith and consistent with Gold Star's policies.
This exclusion of sales taxes from 'Gross Sales' is a common practice in franchising, as it ensures that franchisees are not paying franchise fees on money that is simply being collected on behalf of the government. It is important for prospective Gold Star franchisees to understand this definition, as it directly impacts the amount of continuing franchise fees and other fees based on gross sales that they will be required to pay. Franchisees must ensure accurate accounting practices to properly separate and report sales taxes to take advantage of this exclusion.