If a Body20 franchisee receives proceeds from business interruption insurance, how does this affect the Gross Sales calculation?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
"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 6 — OTHER FEES (FDD pages 19–26)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, the calculation of Gross Sales includes revenue from various sources. Gross Sales encompasses all revenue received from operating the studio, whether it's from cash, checks, credit or debit cards, gift cards, gift certificates, or other credit transactions. This applies regardless of when the revenue is collected or when the products or services are provided.
Specifically, if a Body20 franchisee receives proceeds from business interruption insurance due to a loss of revenue at the studio, the amount used by the insurer to calculate those proceeds is added to the Gross Sales. This means that the imputed Gross Sales figure, as determined by the insurance company, becomes part of the franchisee's total Gross Sales calculation. Gross Sales also includes promotional allowances or rebates paid to the franchisee for purchasing products or supplies or for customer referrals.
However, Gross Sales does not include bona fide returns and credits actually provided to customers or any sales or other taxes collected from customers and paid directly to the appropriate taxing authority. Furthermore, Body20 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 is important because it affects various financial obligations, including royalty payments to Body20, which are typically calculated as a percentage of Gross Sales.