Are employee discounts deductible from Gross Sales at a Golden Krust Caribbean Restaurant?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
As used in this Agreement, the term "Gross Sales" means the aggregate amount of all revenues generated from the sale of all products and services sold and all other income of every kind related to the Restaurant, whether for cash or credit (and regardless of collection in the case of credit), whether from sales on the Premises, by delivery, from catering, or other sales methods (whether the sales method is permitted or not). You may not reduce Gross Sales by the amount of any discounts provided to employees, family members and other businesses that you control. Gross Sales do not include sales taxes or other taxes collected from guests for transmittal to the appropriate taxing authority, proceeds from the sale of gift cards or stored value cards, and guest refunds made in good faith. We reserve the right to modify our policies consistent with restaurant industry practices regarding revenue recognition, revenue reporting, and the inclusion in or exclusion of certain revenue from "Gross Sales" as circumstances, business practices, and technology change. A current list of exclusions can be found in the Brand Standards Manual.
Source: Item 22 — CONTRACTS (FDD page 35)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, employee discounts are not deductible from gross sales. The document defines "Gross Sales" as the total revenue from all products and services, including cash and credit transactions, sales on the premises, deliveries, catering, and other sales methods.
The agreement explicitly states that franchisees cannot reduce Gross Sales by the amount of any discounts provided to employees, family members, or other businesses they control. This means that even if a franchisee offers discounted prices to their employees, the full, undiscounted value of those sales must be included when calculating Gross Sales for royalty payments.
Gross Sales only exclude sales taxes collected for remittance, proceeds from gift cards or stored value cards, and guest refunds made in good faith. Golden Krust Caribbean Restaurant retains the right to modify these policies in line with restaurant industry practices regarding revenue recognition and reporting, with a current list of exclusions available in the Brand Standards Manual. Franchisees should consult this manual for the most up-to-date information on what can be excluded from Gross Sales.