What revenues are excluded from the definition of 'Gross Revenue' for a Golden Krust Caribbean Restaurant?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
As used in the Franchise Agreement, the term "Gross Revenue" means all revenue you derive from operating the Restaurant, including but not limited to, all amounts you receive at or away from the Premises, and whether from cash, check, credit card or credit transactions, but excluding (1) all federal, state or municipal sales, use or service taxes collected from customers and paid to the appropriate taxing authority and (2) customer refunds, adjustments, credits and allowances actually made by the Restaurant.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 29–32)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, 'Gross Revenue' is defined as all revenue derived from operating the Restaurant. This includes all amounts received at or away from the premises, regardless of whether the payment is made via cash, check, credit card, or credit transactions.
However, the definition of 'Gross Revenue' for a Golden Krust Caribbean Restaurant specifically excludes certain items. These exclusions are (1) all federal, state, or municipal sales, use, or service taxes collected from customers and then paid to the appropriate taxing authority, and (2) customer refunds, adjustments, credits, and allowances actually made by the Restaurant. This means that these amounts are not considered part of the revenue on which royalties or other fees are calculated.
For a prospective franchisee, understanding this definition is crucial because it directly impacts the calculation of royalties and other fees payable to Golden Krust Caribbean Restaurant. By excluding these items from 'Gross Revenue', the franchisee is not paying a percentage on taxes collected or money returned to customers, which is a standard practice in franchising.