What does 'COGS' mean for a Degree Wellness franchise?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
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- COGS means all variable cost inputs to facilitate customer sales, including equipmentrelated consumables, medical supplies and other usage-based costs.
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- Gross Profit means Gross Sales less COGS.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, COGS, or Cost of Goods Sold, represents all variable cost inputs required to facilitate customer sales. This includes equipment-related consumables, medical supplies, and other usage-based costs. Understanding COGS is crucial for a prospective franchisee as it directly impacts the calculation of gross profit, which is determined by subtracting COGS from gross sales.
For a Degree Wellness franchisee, effectively managing COGS is essential for maintaining profitability. By carefully monitoring and controlling these variable costs, franchisees can optimize their gross profit margins. This involves efficient inventory management, negotiating favorable pricing with suppliers for medical supplies and consumables, and minimizing waste of equipment-related items.
The FDD also indicates that gross sales less COGS equals gross profit. Gross profit is then used to calculate net income adjusted for both owner-operator and investor models. Therefore, a clear understanding of what constitutes COGS is essential for a Degree Wellness franchisee to accurately forecast and manage their studio's financial performance.