Does the definition of Gross Sales for a Body20 franchise include revenue derived from gift cards?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Gross Sales. "Gross Sales" means all revenue that you receive or otherwise derive from operating the Studio, whether from cash, check, credit or debit card, gift card or gift certificate, or other credit transactions, and regardless of collection or when you actually provide the products or services in exchange for the revenue.
If you receive any proceeds from any business interruption insurance applicable to loss of revenue at the Studio, there shall be added to Gross Sales an amount equal to the imputed Gross Sales that the insurer used to calculate those proceeds.
Gross Sales includes promotional allowances or rebates paid to you in connection with your purchase of products or supplies or your referral of customers.
Gross Sales does not include (i) any bona fide returns and credits that are actually provided to customers and (ii) any sales or other taxes that you collect from customers and pay directly to the appropriate taxing authority.
You may not deduct payment provider fees (i.e., bank or credit card company fees and gift card vendor fees) from your Gross Sales calculation.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, Gross Sales includes revenue from gift cards. The Royalty Fee that franchisees must pay is 8% of Gross Sales. Gross Sales is defined as all revenue a franchisee receives from operating their studio. This includes revenue from cash, checks, credit or debit cards, gift cards or gift certificates, or other credit transactions. This definition applies regardless of when the franchisee collects payment or provides the products or services.
In addition to revenue from gift cards, Gross Sales also includes proceeds from business interruption insurance applicable to loss of revenue at the studio, as well as promotional allowances or rebates paid to the franchisee in connection with their purchase of products or supplies or their referral of customers. However, Gross Sales does not include bona fide returns and credits actually provided to customers, or sales and other taxes that the franchisee collects from customers and pays directly to the appropriate taxing authority.
Furthermore, franchisees cannot deduct payment provider fees, such as bank or credit card company fees and gift card vendor fees, from their Gross Sales calculation. This comprehensive definition of Gross Sales ensures that Body20 calculates Royalty Fees on nearly all forms of revenue a franchisee generates, with very few exceptions.