For Hardees franchisees, what is included in Gross Sales for the purpose of calculating the royalty fee?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Gross Sales shall include all revenue from the sale of all services and products (except HR approved promotional items) and all other income of every kind and nature (excluding revenue from the sale of stored value gift cards or gift certificates but including revenue when gift certificates are redeemed or stored value gift cards are debited) related to the Franchised Restaurant, whether for cash or credit and regardless of collection in the case of credit; provided, however, that Gross Sales shall not include any sales taxes or other taxes collected from customers by Franchisee for transmittal to the appropriate taxing authority.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Gross Sales for royalty fee calculation includes all revenue from the sale of all services and products, except Hardees approved promotional items. It also encompasses all other income of every kind and nature related to the franchised restaurant, whether for cash or credit, and regardless of collection in the case of credit. Revenue from the sale of stored value gift cards or gift certificates is excluded, but revenue is included when gift certificates are redeemed or stored value gift cards are debited.
However, Gross Sales does not include any sales taxes or other taxes collected from customers by the franchisee for transmittal to the appropriate taxing authority. This definition is important for Hardees franchisees as it directly impacts the royalty fees they must pay to Hardees.
Understanding what constitutes Gross Sales ensures accurate royalty payments and compliance with the franchise agreement. Franchisees should pay close attention to the inclusions and exclusions to properly calculate and remit their royalty fees to Hardees. This is a fairly standard definition of Gross Sales for the purpose of calculating royalty fees in the franchise industry.