Are wholesale sales included in the Gross Revenues calculation for a Southern Steer franchise?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
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 Southern Steer's 2025 Franchise Disclosure Document, Gross Revenues include sales from all products and services, whether for on-site or off-site consumption. This definition specifically includes products and services delivered to customers and those sold wholesale. This means that any revenue generated by a Southern Steer franchisee through wholesale activities is factored into the Gross Revenues calculation. Gross Revenues are used to calculate royalty fees and other contributions.
For a prospective Southern Steer franchisee, this is an important consideration because the royalty fee is based on a percentage of Gross Revenues. The 2025 FDD states that the royalty fee is 6% of annual Gross Revenues from $1.00 to $1,000,000; 5% from $1,000,001 to $2,000,000; and 4% from $2,000,001 and greater. Therefore, if a significant portion of a franchisee's revenue comes from wholesale sales, it will directly impact the amount of royalty fees owed to Southern Steer.
It is also important to note what is excluded from Gross Revenues. The FDD specifies that 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, are excluded from the Gross Revenues calculation. This ensures that franchisees are not paying royalties on taxes collected on behalf of the government or on money refunded to customers.