What is included in the definition of 'Gross Sales' for a Body20 franchise, and what is specifically excluded from this 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, 'Gross Sales' encompasses all revenue a franchisee receives from operating their studio. This includes revenue from various payment methods such as cash, checks, credit or debit cards, gift cards, and other credit transactions, regardless of when the products or services are provided or when the revenue is collected. Furthermore, any proceeds from business interruption insurance related to revenue loss at the studio are added to Gross Sales, calculated based on the imputed Gross Sales used by the insurer. Promotional allowances or rebates received in connection with product or supply purchases or customer referrals are also included in Gross Sales.
However, the definition of Gross Sales for a Body20 franchise specifically excludes certain items. Bona fide returns and credits actually provided to customers are not included in the calculation. Additionally, sales or other taxes collected from customers and directly paid to the appropriate taxing authority are excluded from Gross Sales.
It is important to note that 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 crucial because it directly impacts the calculation of royalty fees and other financial obligations to Body20. Franchisees must accurately track and report all revenue sources to ensure compliance with the Franchise Agreement and avoid potential disputes or penalties.
Understanding what constitutes Gross Sales is vital for a prospective Body20 franchisee, as it forms the basis for calculating royalties and other fees payable to the franchisor. By clearly defining what is included and excluded, Body20 aims to provide transparency and avoid ambiguity in financial reporting, ensuring a fair and consistent application of the franchise agreement terms.