What is included in the definition of 'Gross Sales' for an Hck Hot Chicken franchise?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
"Gross Sales" includes all revenues received or receivable by you as payment, whether in cash or for credit or barter, or other means of exchange (and, if for credit or barter, whether or not payment is received), on account of any and all goods, merchandise, services, or products sold in or from your Restaurant, or which are promoted or sold under any of the trademarks or by using the System.
Gross Sales includes all proceeds from any business interruption insurance.
Gross Sales excludes: (i) sales taxes, value added or other tax, excise or duty charged to customers, based on sales at or from your Restaurant; (ii) tips, gratuities or service charges paid directly by customers to your employees or paid to you and promptly turned over to your employees in lieu of direct tips or gratuities; and (iii) proceeds from isolated sales of equipment and trade fixtures that are not part of your products and services offered for resale at your Restaurant nor having any material effect upon the ongoing operation of your Restaurant.
For items sold using coupons or other discounts (which we must approve), Gross Sales also excludes the amount discounted from the purchase price of such item and from sales of prepaid gift cards and certificates, but franchisees must pay Continuing Royalties and Brand Fund Contributions on sales from the redemption of gift cards and/or certificates at their Restaurant(s).
Source: Item 6 — OTHER FEES (FDD pages 13–19)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, "Gross Sales" encompasses all revenues a franchisee receives or is entitled to receive. This includes payments made in cash, credit, barter, or any other form of exchange for all goods, merchandise, services, or products sold in or from the Hck Hot Chicken restaurant. This definition extends to items promoted or sold under Hck Hot Chicken's trademarks or by using their system, regardless of whether payment has been received for credit or barter transactions. Gross Sales also includes proceeds from business interruption insurance.
However, the definition of Gross Sales for Hck Hot Chicken excludes certain items. These exclusions include sales taxes, value-added tax, excise tax, or any other duty charged to customers based on sales at the restaurant. Additionally, tips, gratuities, or service charges paid directly by customers to employees, or paid to the franchisee and promptly turned over to employees in lieu of direct tips, are excluded from Gross Sales. Proceeds from isolated sales of equipment and trade fixtures that are not part of the regular products and services offered at the restaurant, and which do not materially affect the restaurant's ongoing operation, are also excluded.
Furthermore, for items sold using approved coupons or other discounts, Gross Sales excludes the amount discounted from the purchase price. Sales of prepaid gift cards and certificates are also excluded from Gross Sales. However, Hck Hot Chicken franchisees are required to pay Continuing Royalties and Brand Fund Contributions on sales resulting from the redemption of these gift cards and/or certificates at their restaurants. This comprehensive definition of Gross Sales is important because it directly impacts the calculation of royalties and other fees payable to Hck Hot Chicken.