What sources of income are included in the definition of 'Gross Revenue' for a Bath Tune Up franchise?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
The term "Gross Revenue" means the aggregate of all revenues, sales and other income of Franchisee from whatever source derived, including Gray Area, regardless of whether collected by Franchisee, arising out of, in connection with or relating to the Franchised Business including, without limitation, (a) income from the sale of any products or other items; (b) income from any services provided; and (c) all proceeds from any business interruption insurance, but excluding (i) all refunds and discounts made in good faith to a customer; (ii) any sales, use, retail sales and equivalent taxes which are collected by Franchisee for or on behalf of any governmental or other public body and actually remitted to such body; and (iii) the value of any coupon, voucher or other allowance authorized by Franchisor and issued or granted to customers of Franchised Business which is received or credited by Franchisee in full or partial satisfaction of the price of any product or service offered in connection with the Franchised Business. Franchisor reserves the right to institute policies in the Manual or otherwise in writing and from time to time, regarding the inclusion in Gross Revenue of any pre-paid goods and services (including, without limitation, gift cards and gift certificates) and delivery and redemption thereof.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, "Gross Revenue" is comprehensively defined to include nearly all income streams related to the Franchised Business. Specifically, it encompasses the aggregate of all revenues, sales, and other income, irrespective of the source. This includes income derived from sales of products or other items, income from services provided, and all proceeds from any business interruption insurance. Notably, this definition extends to revenue generated from the Gray Area, which is defined as an area adjoining the Territory that is not part of any other franchisee's territory, nor an area served by the Company-Owned Operation.
However, the definition of Gross Revenue also specifies certain exclusions. These exclusions include all refunds and discounts made in good faith to a customer, any sales, use, retail sales, and equivalent taxes collected by the franchisee on behalf of a governmental or public body and actually remitted to that body, and the value of any coupon, voucher, or other allowance authorized by Bath Tune Up and issued or granted to customers, which is received or credited by the franchisee in full or partial satisfaction of the price of any product or service offered in connection with the Franchised Business.
Bath Tune Up retains the right to institute policies in the Manual or otherwise in writing and from time to time, regarding the inclusion in Gross Revenue of any pre-paid goods and services (including, without limitation, gift cards and gift certificates) and delivery and redemption thereof. This provision grants Bath Tune Up the flexibility to modify the scope of Gross Revenue based on evolving business practices or specific circumstances. For a prospective franchisee, this comprehensive definition of Gross Revenue is important because it forms the basis for calculating royalty fees and advertising fees payable to Bath Tune Up. Understanding what constitutes Gross Revenue, and what is excluded, is essential for accurate financial reporting and compliance with the franchise agreement.