Are delivery fees included in the Net Sales calculation for a Moes Southwest Grill franchise?
Moes_Southwest_Grill Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Net Sales. "Net Sales" means all revenues generated by your Franchised Business or conducted from or with respect to the Franchised Business, whether the sales are evidenced by cash, check, credit, charge, account, barter or exchange. Net Sales includes monies, gift card redemptions, or credit generated by or received from (i) the sale of Approved Products or tangible property of every kind and nature, promotional or otherwise, anywhere and (ii) services performed from, at, or in connection with the Franchised Business, including (x) offpremises services (such as catering and delivery), (y) on-premises services (such as games, gambling machines, or third-party advertising within the Franchised Business), or (z) any other services or activities that use either the System, the Marks, or products that are the same as or similar to the Approved Products. The foregoing list is not intended to provide approval for such activities, which may be conducted only if approved. Unless we specify otherwise in writing, Net Sales shall include all ancillary charges or fees, including delivery fees and other service charges,
Source: Item 22 — Contracts (FDD page 92)
What This Means (2025 FDD)
According to Moe's Southwest Grill's 2025 Franchise Disclosure Document, Net Sales include all revenues from the Franchised Business, covering all transactions whether they are cash, credit, or other forms of exchange. Net Sales include monies, gift card redemptions, or credit generated or received from the sale of approved products or tangible property and services performed in connection with the Franchised Business, including off-premises services like catering and delivery. Unless otherwise specified in writing by Moe's Southwest Grill, Net Sales will include all ancillary charges or fees, including delivery fees and other service charges.
For a prospective franchisee, this means that delivery fees collected from customers are part of the revenue on which royalties and other fees are calculated. This inclusion increases the gross sales figure, which in turn affects the amount due to the franchisor. It is important for franchisees to understand that all revenue streams, including delivery fees, contribute to the overall financial obligations to Moe's Southwest Grill.
This policy is fairly standard in the franchise industry, where franchisors typically base royalties on gross sales to ensure a consistent and transparent method for calculating fees. Franchisees should carefully track all sales and fees to accurately report Net Sales and avoid discrepancies with the franchisor. Understanding the components of Net Sales is crucial for managing the financial performance of the franchise and maintaining compliance with the franchise agreement.