How does Alloy define 'Gross Sales' for the purpose of the franchise agreement?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of this Agreement, the terms below have the following definitions:
- A. "Business" or "Facility" means the ALLOY Facility you develop and operate pursuant to this Agreement.
- B. "Gross Sales" means the total gross revenue from the provision of all products and services sold or performed in, at, from or away from the Facility, or through or by means of the Business, whether from cash, check, credit card, debit card, barter or exchange, or other credit transactions, and regardless of collection, and including (a) class fees, membership fees, initiation fees, enrollment fees, processing fees, paid-in-full dues, renewal fees, corporate/third party payer fees, monthly dues and any fees or revenue generated and derived during any pre-sales; (b) fees and charges for optional services such as personal training, small group training and other optional programs we design; (c) fees charged to non-members using the Facility's services; and (d) revenue derived from merchandise and product sales. Sales taxes, use taxes, and other similar taxes added to the sales price and collected from the customer and paid to the appropriate taxing authority are deducted from Gross Sales.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, 'Gross Sales' is comprehensively defined for the purpose of calculating royalties and assessing performance. It encompasses the total gross revenue generated from all products and services provided at, from, or through the Alloy facility. This includes all transactions, whether they are cash, check, credit card, debit card, barter, exchange, or other credit arrangements, irrespective of whether the revenue has been collected.
The definition specifically includes various types of fees such as class fees, membership fees, initiation fees, enrollment fees, processing fees, paid-in-full dues, renewal fees, corporate/third party payer fees, monthly dues, and any revenue generated during pre-sales activities. It also covers fees and charges for optional services like personal training, small group training, and other programs designed by Alloy, as well as fees charged to non-members using the facility's services. Revenue from merchandise and product sales is also included in the calculation of Gross Sales.
However, the definition provides a specific exclusion: sales taxes, use taxes, and other similar taxes that are added to the sales price, collected from customers, and remitted to the appropriate taxing authority are deducted from Gross Sales. This distinction is important for franchisees as it ensures that they are not paying royalties on tax revenue that is simply being passed through to government entities. Understanding this definition is crucial for Alloy franchisees to accurately track their revenue and calculate royalty payments, as well as to assess their performance against any minimum sales requirements set by the franchise agreement.