For Degree Wellness, what is specifically excluded from 'Gross Revenues' when calculating the management fee?

According to Degree Wellness's 2025 Franchise Disclosure Document, the management fee is calculated based on the Studio's Gross Revenues. Gross Revenues include all revenue and receipts derived from the operation of the Studio. This encompasses all amounts received at or away from the Studio site, or through the business the Studio conducts, such as fees for Studio Services, fees for the sale of any other services, gift certificate sales, and revenue derived from product sales. This includes payments made in cash, check, credit card, debit card, or other credit transactions.

However, there are specific exclusions from Gross Revenues when calculating the management fee. These exclusions are limited to sales taxes collected from patients and paid to the appropriate taxing authority, and any patient refunds and credits the Studio actually makes. This means that the franchisee does not pay a management fee on the sales tax they collect and remit, nor on any refunds or credits issued to patients.

For a prospective Degree Wellness franchisee, this definition of Gross Revenues and its exclusions is important for understanding how the management fee is calculated. It clarifies what revenue streams are subject to the fee and what amounts can be deducted before calculating the fee. This ensures transparency in the financial relationship between the franchisee and the franchisor. Franchisees should ensure they accurately track and report these exclusions to avoid overpayment of the management fee.

It is fairly typical in the franchise industry for franchisors to exclude sales tax from gross revenue calculations. This is because the franchisee is merely acting as a collection agent for the taxing authority and does not retain this money as profit. Similarly, deducting refunds and credits is a standard practice, as these represent amounts returned to customers and not actual revenue earned by the business.