What is included in the definition of 'Gross Sales' for Hck Hot Chicken franchisees?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
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).
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- Local and Regional Advertising Cooperatives. We reserve the right to establish a local or regional advertising cooperative. If a local or regional advertising cooperative is established, contribution amounts to the local or regional advertising cooperative will be established by the cooperative members up to 2% of Gross Sales. We anticipate that each HCK Hot Chicken franchisee will have one vote for each HCK Hot Chicken Restaurant operated by the member in the designated market.
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" is comprehensively defined for the purpose of calculating royalties and other fees. Gross Sales includes all revenues received or receivable by the franchisee, whether in cash, credit, barter, or other means of exchange, for any goods, merchandise, services, or products sold in or from the restaurant. This also applies to items promoted or sold under Hck Hot Chicken's trademarks or by using the Hck Hot Chicken system. Gross Sales also specifically includes all proceeds from any business interruption insurance.
However, the definition of Gross Sales also has some exclusions. It does not include sales taxes, value-added tax, excise tax, or other duties charged to customers based on sales at the restaurant. 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 also excluded. Additionally, proceeds from isolated sales of equipment and trade fixtures that are not part of the regular products and services offered for resale, and do not materially affect the ongoing operation of the restaurant, are excluded from Gross Sales.
For items sold using approved coupons or other discounts, Gross Sales excludes the amount discounted from the purchase price. Similarly, sales of prepaid gift cards and certificates are excluded from Gross Sales at the time of sale. However, franchisees must pay Continuing Royalties and Brand Fund Contributions on sales from the redemption of gift cards and/or certificates at their Restaurant(s). This comprehensive definition ensures clarity in calculating the fees owed to Hck Hot Chicken, while also accounting for common business practices such as discounts and employee compensation.