How does Ledgers define 'Gross Revenues' for the franchised business?

According to Ledgers' 2025 Franchise Disclosure Document, Gross Revenues are defined as all revenues that a franchisee derives or receives, directly or indirectly, from operating the franchised business. The only exclusion from this definition is sales and use taxes.

This definition is important because several fees payable to Ledgers are calculated as a percentage of Gross Revenues. For example, the royalty fee is 10% of Gross Revenues, and the advertising fee is 3% of the previous month’s Gross Revenues. Therefore, a clear understanding of what constitutes Gross Revenues is crucial for a prospective franchisee to accurately forecast their expenses and profitability.

It is fairly standard in the franchise industry for royalty fees and other payments to be based on a percentage of gross revenue. Franchisees should carefully review the definition of gross revenue in the FDD and franchise agreement to fully understand what income is subject to these fees. Franchisees should also pay close attention to what deductions, if any, are allowed from gross revenue when calculating royalty payments.