What is included in the definition of 'Gross Sales' for a Lees Famous Recipe restaurant?
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. This includes cash, credit, insurance proceeds for lost sales covered by business interruption insurance, agreements to pay, or other forms of consideration. It does not matter if payment is received at the time of sale or if the amounts later prove uncollectible; they are still included in Gross Sales.
Gross Sales specifically 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 trademarks. This encompasses sales from vending machines, deliveries, and catering services. However, the definition explicitly excludes sales tax or any similar taxes that are required by law to be computed separately and paid by the customer.
For a prospective franchisee, understanding this definition is crucial because several fees, such as the royalty fee (5%), Brand Cooperative Advertising Fund Fee (up to 4%), and potential local advertising expenditures (up to 1%), are calculated as a percentage of Gross Sales. Accurate reporting of Gross Sales is therefore essential for compliance with the franchise agreement and to avoid potential audit fees if underreporting exceeds 1%.