Does the definition of 'Gross Spa Revenue' for an Embassy Suites franchise include revenue from services?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
"Gross Spa Revenue" means all revenue from services and retail sales of products from the eforea spa, less allowances for spa rebates and overcharges, but does not include any sales or other taxes collected directly from spa customers or any revenues from food and beverage sales of the spa.
If there is a fire or other insured casualty at your Hotel that results in a reduction of Gross Rooms Revenue or Gross Spa Revenue, the Monthly Program, and Monthly Royalty Fees will be equal to the Monthly Program, and Monthly Royalty Fees forecasted on the basis of the Gross Rooms Revenue amount and Gross Spa Revenue you agree on with your insurer(s). However, we have the right to participate with you in negotiating the value of your Gross Rooms Revenue claim with your insurer(s).
Source: Item 6 — OTHER FEES (FDD pages 27–41)
What This Means (2025 FDD)
According to Embassy Suites's 2025 Franchise Disclosure Document, Gross Spa Revenue includes revenue from services. Specifically, the FDD defines "Gross Spa Revenue" as encompassing all revenue derived from services and retail sales of products at the eforea spa. However, this figure is calculated after subtracting allowances for spa rebates and overcharges. Importantly, the definition explicitly excludes sales or other taxes collected directly from spa customers, as well as any revenue generated from food and beverage sales within the spa.
For a prospective Embassy Suites franchisee, this definition is crucial because Monthly Program and Royalty Fees are calculated based on Gross Spa Revenue. Understanding what constitutes Gross Spa Revenue ensures accurate calculation and payment of these ongoing fees. The exclusion of taxes and food/beverage revenue from the calculation is beneficial, as it prevents these amounts from being factored into the fees owed to Embassy Suites.
Furthermore, the FDD stipulates that in the event of a fire or other insured casualty that reduces Gross Spa Revenue, the Monthly Program and Royalty Fees will be based on the Gross Spa Revenue amount agreed upon with the insurer(s). Embassy Suites retains the right to participate in negotiating the value of the Gross Rooms Revenue claim with the insurer(s), which could impact the final revenue figure used for fee calculation during the period of business interruption.