Are proceeds from business interruption insurance included in Gross Revenues for a Southern Steer franchise?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
The term "Gross Revenues" also includes the proceeds received or realized by You in connection with any business interruption insurance maintained by You or for Your benefit.
Excluded from the definition of Gross Revenues are sales, use or gross receipts taxes collected from customers and thereafter paid directly to the appropriate taxing authority and any bonafide refunds made to customers.
Source: Item 6 — ITEM. 6 OTHER FEES (FDD pages 11–16)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, proceeds from business interruption insurance are included when calculating Gross Revenues. Specifically, the FDD states that the term "Gross Revenues" includes proceeds received from any business interruption insurance maintained by the franchisee.
This is important because Southern Steer franchisees pay a royalty fee and may be required to pay a Brand Fund contribution and Local Advertising Cooperative contribution, all of which are calculated as a percentage of Gross Revenues. Including business interruption insurance proceeds in Gross Revenues means that a franchisee will owe a percentage of those proceeds to Southern Steer in the form of these fees.
However, the FDD also specifies items that are excluded from Gross Revenues. These exclusions include sales, use, or gross receipts taxes collected from customers and then paid to the appropriate taxing authority, as well as any bonafide refunds made to customers. This distinction clarifies that only actual revenue retained by the franchisee after these deductions is subject to royalty and other percentage-based fees.