For Monicals Pizza, what is included in gross sales, and what is specifically excluded from gross sales?

According to Monicals Pizza's 2025 Franchise Disclosure Document, gross sales are a crucial factor in determining royalty fees. The document specifies that "gross sales" means all revenue from the franchised restaurant. However, it explicitly excludes sales tax or use tax from this definition. This distinction is important for franchisees as it directly impacts the calculation of the 4% royalty fee they must pay to Monicals Pizza.

For a prospective Monicals Pizza franchisee, understanding this definition is essential for accurate financial planning and reporting. By excluding sales tax and use tax from gross sales, the franchisee only pays royalties on the actual revenue generated from the sale of food and beverages. This exclusion can lead to a slightly lower royalty payment compared to a scenario where these taxes are included in the gross sales calculation.

It is common practice in the franchise industry to define gross sales in this manner, as it ensures that franchisees are not paying royalties on taxes collected on behalf of the government. Franchisees should carefully review the definition of gross sales in the Franchise Agreement and consult with a financial advisor to fully understand its implications for their business.