How does Lees Famous Recipe define 'Gross Sales' for the purpose of calculating royalties?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
3. Gross Sales. "Gross Sales" is defined as the total amount of all revenues from whatever source derived (whether in the form of cash, credit, insurance proceeds for lost sales covered by business interruption insurance, agreements to pay or other consideration, and whether or not payment is received at the time of sale or any such amounts prove uncollectible) which arise from or are derived by you or by any other person from business conducted or which originated in, on, from or through your Lee's Famous Recipe Restaurant location, or from the sale of any products or services associated with the use of the Marks, including sales from vending machines, deliveries, and catering sales, but excluding sales tax or any similar taxes which are required by law to be computed separately and paid by a customer.
Source: Item 6 — OTHER FEES (FDD pages 15–21)
What This Means (2025 FDD)
According to Lees Famous Recipe's 2025 Franchise Disclosure Document, Gross Sales are defined as the total revenue from all sources related to the restaurant's operation. This includes cash, credit, insurance proceeds for lost sales covered by business interruption insurance, agreements to pay, or any other form of consideration. It does not matter if payment is received at the time of sale or if any amounts prove uncollectible.
Gross Sales include revenue derived from business conducted at the Lees Famous Recipe Restaurant location or from the sale of any products or services associated with the use of the brand's marks. This encompasses sales from vending machines, deliveries, and catering services.
However, Gross Sales specifically exclude sales tax or any similar taxes that are required by law to be computed separately and paid by the customer. This definition is important for franchisees as it directly impacts the calculation of royalty fees, advertising fees, and other contributions that are based on a percentage of Gross Sales.