Are proceeds from business interruption insurance included in the Gross Sales calculation for a Body20 franchise?
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.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, proceeds from business interruption insurance are included in the calculation of Gross Sales. Gross Sales are defined as all revenue a franchisee receives from operating their studio, regardless of the form of payment or when the products or services are provided.
The FDD specifies that if a Body20 franchisee receives proceeds from business interruption insurance due to a loss of revenue, the amount equivalent to the imputed Gross Sales used by the insurer to calculate those proceeds must be added to the franchisee's Gross Sales. This means that Body20 franchisees must include these insurance proceeds when calculating their Royalty Fee, which is 8% of Gross Sales.
This inclusion of business interruption insurance proceeds in Gross Sales is important for prospective Body20 franchisees to understand. It ensures that Body20 receives its Royalty Fee even during periods when the studio's operations are disrupted and revenue is generated through insurance claims rather than direct sales. Franchisees should factor this into their financial planning and understand that their royalty obligations continue even when their studio is not fully operational due to unforeseen circumstances.