What items are excluded from 'Gross Revenues' when calculating the Royalty Fee for a Basecamp Fitness franchise?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
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- "Gross Revenues," shall mean the total amount of revenues generated from all business activities taking place by, through or at the Basecamp Studio, in the form of cash or credit, plus the fair market value of products delivered and services rendered to you, or to your designee, in consideration for products and services provided in, from, or in conjunction with your Basecamp Studio. There will be excluded from "Gross Revenues" bona fide refunds, credits given or allowed to members and other customers for the return of merchandise and amounts collected from members and other customers and remitted by you to any governmental taxing authority in satisfaction of sales taxes, however, chargebacks are not deducted from the calculation of Gross Revenues.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Basecamp Fitness's 2025 Franchise Disclosure Document, the Royalty Fee is calculated as a percentage of Gross Revenues, but certain items are excluded from this calculation. Specifically, bona fide refunds and credits given to members or customers for returned merchandise are excluded. Additionally, amounts collected from members and customers that are remitted to governmental taxing authorities for sales taxes are also excluded from Gross Revenues. However, chargebacks are not deducted when calculating Gross Revenues for the Royalty Fee.
For a prospective Basecamp Fitness franchisee, this means that when calculating the 8% Royalty Fee, they do not have to include money that was genuinely refunded to customers, or sales tax collected on behalf of the government. This can reduce the amount of the royalty fee owed to Basecamp Fitness. However, it is important to note that chargebacks (disputed charges that are returned to the customer by the bank) are not deducted from gross revenues, meaning the franchisee still pays royalty fees on those amounts.
This is a fairly standard practice in franchising, where royalty fees are based on a percentage of revenue. Franchisors typically allow franchisees to deduct refunds and sales taxes from gross revenue to avoid overstating the royalty fee. The exclusion of these items provides a more accurate reflection of the actual revenue generated by the Basecamp Fitness studio.