For Monicals Pizza, what is included in the definition of 'gross sales' for the franchised restaurant?

According to Monicals Pizza's 2025 Franchise Disclosure Document, gross sales are defined as all revenue from the franchised restaurant, but specifically exclude sales tax or use tax. This definition is important because Monicals Pizza calculates the royalty fee, which is 4% of gross sales, based on this figure. Franchisees must pay the royalty fee by the 10th day of each month.

Understanding what constitutes gross sales is crucial for franchisees to accurately calculate and remit their royalty fees. By excluding sales tax and use tax from the gross sales calculation, Monicals Pizza ensures that franchisees are not paying royalties on taxes collected on behalf of the government. This is a standard practice in the franchise industry, as royalty fees are typically based on the revenue the franchisee retains.

Prospective Monicals Pizza franchisees should carefully note this definition and ensure their accounting practices align with it to avoid discrepancies or potential audit issues. The FDD also mentions that audit expenses will be payable if an audit shows underreported amounts owed to Monicals Pizza by 3% or more, so accurate reporting of gross sales is essential for maintaining compliance and avoiding additional costs.