What are the primary components of franchise revenue for Basecamp Fitness?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchise revenues consist primarily of franchise royalties, franchise fees, advertising fund contributions, and consumer fitness, health, and wellness applications. Franchise fees consist of initial franchise fees, area development agreement ("ADA") fees, master franchise fees, area representative fees, and transfer and renewal fees.
Franchise royalties, consumer fitness, health, and wellness application fees, and advertising fund contributions are collected as defined in the terms of the franchise agreements. Under the Company's franchise agreements, advertising fund contributions paid by franchisees must be spent on advertising, marketing, and related activities. Initial, ADA, master, and renewal franchise fees are payable by the franchisee upon signing a new franchise agreement, and transfer fees are paid to the Company when one franchisee transfers a franchise agreement to a different franchisee.
The Company recognizes vendor rebate income from franchisees' use of certain preferred vendor arrangements. Vendor rebates are recognized when franchisees purchase services or equipment from preferred vendors and the collectability from the vendor is reasonably assured.
Members are offered multiple membership choices varying in length. Membership dues are earned and recognized over the membership term on a straight-line basis. Personal training and class package revenue is recognized at the time the service is performed or class used, respectively. Revenue from prepayments of personal training or packages of sessions are deferred until the sessions are used or expire. Corporate-owned fitness center sales is included within sales on the consolidated statements of comprehensive income.
Source: Item 23 — RECEIPTS (FDD pages 62–248)
What This Means (2025 FDD)
According to Basecamp Fitness's 2025 Franchise Disclosure Document, franchise revenues primarily come from several sources. These include franchise royalties, initial franchise fees, advertising fund contributions, and fees from consumer fitness, health, and wellness applications. The franchise fees themselves are further broken down into initial franchise fees, area development agreement (ADA) fees, master franchise fees, area representative fees, and transfer and renewal fees. Royalties, advertising fund contributions, and application fees are collected as defined in the franchise agreements. Advertising fund contributions are specifically earmarked for advertising, marketing, and related activities. Initial, ADA, master, and renewal franchise fees are paid upon signing a new franchise agreement, while transfer fees are paid when a franchise agreement is transferred to a new franchisee.
In addition to franchise-related fees, Basecamp Fitness also recognizes vendor rebate income. This income is derived from franchisees using preferred vendor arrangements. Vendor rebates are recognized when franchisees purchase services or equipment from these preferred vendors, and the collection of these rebates is reasonably assured.
For corporate-owned fitness centers, Basecamp Fitness generates revenue through membership dues, personal training, and class packages. Membership dues are recognized over the membership term, while revenue from personal training and class packages is recognized when the service is performed or the class is used. Prepayments for personal training or packages are deferred until the sessions are used or expire. This revenue from corporate-owned centers is included within sales on the consolidated statements of comprehensive income.