Are sales taxes included in the calculation of Gross Revenues for a Southern Steer franchise?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
Gross Revenues is defined in the Franchise Agreement as sales from all products and services sold from, thru, at or in connection with Your Southern Steer Business, whether cash, credit (regardless of collection), barter or otherwise, exclusive of applicable sales, use or service taxes.
Gross Revenues includes sales from all products and services sold for on-Site or off-Site consumption, including without limitation products and services delivered to customers and products and services sold wholesale, if any.
Source: Item 6 — ITEM. 6 OTHER FEES (FDD pages 11–16)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, sales taxes are excluded from the calculation of Gross Revenues. Gross Revenues include sales from all products and services, whether sold on-site or off-site, including deliveries and wholesale sales. However, sales, use, or gross receipts taxes collected from customers and then paid to the appropriate taxing authority are specifically excluded from Gross Revenues. Bonafide refunds made to customers are also excluded.
This definition of Gross Revenues is important because several fees payable to Southern Steer are calculated as a percentage of Gross Revenues. These include the royalty fee, which ranges from 4% to 6% depending on annual Gross Revenues, and the Brand Fund contribution, which is 1% of weekly Gross Revenues. If a Local Advertising Cooperative is established, a contribution of up to 1% of monthly Gross Revenues may also be required.
For a prospective Southern Steer franchisee, understanding what constitutes Gross Revenues is crucial for accurately calculating these ongoing fees. By excluding sales taxes, the franchisee is not paying a percentage on money that is simply being passed through to the government. This exclusion is a common practice in franchising, as it ensures that franchisees are only paying royalties and other fees on their actual revenue.