What is included in the calculation of 'Gross Sales' for a Lees Famous Recipe restaurant?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
- N. "Gross Sales" means the aggregate amount of sales of all food and beverages, and other goods and services; the sale of any products or services associated with the use of the Marks, including sales from vending machines, deliveries, and catering sales, whether for cash, on credit or otherwise, made or provided at or in connection with the Restaurant, including off-premises sales and monies derived at or away from the Restaurant; insurance proceeds for lost sales covered by business interruption insurance; and agreements to pay or other consideration, whether or not payment is received at the time of sale or any such amounts prove uncollectible.
The term "Gross Sales" does not include: (1) any federal, state, municipal or other sales, value added or retailer's excise taxes paid or accrued by you; and (2) adjustments for net returns on salable goods and discounts allowed to customers on sales; or (3) discounts for meals for Restaurant employees.
Gross Sales will not be adjusted for uncollected accounts.
For purposes of the Royalty Fee described in Section 4(B) below, the sale is made at the earlier of delivery of the product or service, or receipt of payment.
We reserve the right to modify our policies and practices regarding revenue recognition, revenue reporting, and the inclusion or exclusion of certain revenue from "Gross Sales" as circumstances, business practices, and technology change.
Source: Item 22 — CONTRACTS (FDD pages 69–70)
What This Means (2025 FDD)
According to Lees Famous Recipe's 2025 Franchise Disclosure Document, "Gross Sales" encompasses the total revenue from all food, beverages, goods, and services sold at or connected to the restaurant. This includes sales from vending machines, deliveries, and catering, regardless of whether the payment is in cash or credit. Gross Sales also includes off-premises sales, monies derived away from the restaurant, insurance proceeds for lost sales covered by business interruption insurance, and agreements to pay or other consideration, irrespective of whether payment is received at the time of sale or if such amounts prove uncollectible. For royalty fee purposes, a sale is considered made at the earlier of product/service delivery or payment receipt.
However, the calculation of Gross Sales for a Lees Famous Recipe franchise does not include certain items. Specifically excluded are federal, state, municipal, or other sales, value-added, or retailer's excise taxes paid or accrued by the franchisee. Adjustments for net returns on salable goods, discounts allowed to customers, and discounts for employee meals are also excluded from the Gross Sales calculation. It is important to note that Gross Sales will not be adjusted for uncollected accounts.
Lees Famous Recipe retains the right to modify its policies regarding revenue recognition, reporting, and the inclusion or exclusion of certain revenue from "Gross Sales" due to changing circumstances, business practices, and technology. This means that the specific items included or excluded from Gross Sales may change over time, potentially impacting the royalty fees a franchisee owes. Franchisees should stay informed of any such changes to accurately report their Gross Sales and calculate their royalty payments.