What expenses are included in 'Payroll Expenses' for a Degree Wellness franchise?

According to Degree Wellness's 2025 Franchise Disclosure Document, 'Payroll Expenses' encompass several components related to employee compensation. Specifically, these expenses include all hourly and salaried labor costs, excluding the compensation for general managers and multi-unit managers. The included labor costs consist of base wages, payroll taxes, and employee benefits.

For a prospective Degree Wellness franchisee, understanding this definition is crucial for accurate financial planning. When projecting operating expenses, franchisees must account for all hourly and salaried employee costs, including wages, payroll taxes, and benefits. However, they should exclude the costs associated with a general manager or any multi-unit managers if applicable. This distinction is important because the financial performance representations provided in the FDD may present financials both with and without a general manager to illustrate potential profitability under different management structures (owner-operator vs. investor model).

It's also important to note that the FDD provides financial performance data for affiliate-owned locations, which include specific figures for 'Payroll Expenses'. For example, in 2024, Studio 1 had payroll expenses of $137,648, representing 18.6% of revenue, while Studio 2 had payroll expenses of $93,674, representing 19.4% of revenue. These figures can serve as benchmarks, but franchisees should remember that their actual payroll expenses may vary based on factors such as location, staffing levels, and local wage rates. Therefore, franchisees should conduct thorough market research and consult with financial advisors to develop realistic payroll expense projections for their specific Degree Wellness studio.