What is included in the Body20 Gross Sales calculation regarding business interruption insurance proceeds?
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 specific considerations for business interruption insurance proceeds. Gross Sales encompasses all revenue received from operating the Body20 studio, irrespective of the payment method (cash, credit, etc.) or when services are rendered. This broad definition ensures that all income streams are accounted for when calculating royalties and other fees payable to Body20.
Specifically, if a Body20 franchisee receives proceeds from business interruption insurance due to a loss of revenue at their studio, the Gross Sales calculation will include an amount equal to the imputed Gross Sales that the insurer used to determine those proceeds. This means that the amount the insurance company estimated the studio would have made, had the interruption not occurred, is added to the Gross Sales figure. This inclusion ensures that Body20 receives its share of revenue even during periods when the studio's operations are disrupted.
However, the Gross Sales calculation for Body20 excludes certain items. It does not include bona fide returns and credits actually provided to customers, nor does it include sales or other taxes collected from customers and remitted to the appropriate taxing authority. Additionally, franchisees cannot deduct payment provider fees, such as bank or credit card company fees, from their Gross Sales calculation. This clear definition of Gross Sales is important for franchisees to accurately report their revenue and fulfill their financial obligations to Body20.