How are credit sales treated when calculating Gross Revenue for a Fitstop franchise?

According to Fitstop's 2024 Franchise Disclosure Document, when calculating Gross Revenue, each credit sale is treated as a sale for the full price during the month the charge or sale is made. This applies regardless of when the franchisee actually receives payment for the sale, whether it's a full or partial payment.

This means that Fitstop franchisees must include the total value of credit sales in their Gross Revenue calculation for the month in which the sale occurred, even if the customer pays the amount later. This is a standard accounting practice that ensures consistent revenue reporting.

For a prospective Fitstop franchisee, this policy has implications for royalty payments, as these are based on Gross Revenue. Franchisees need to have systems in place to accurately track credit sales and report them in the correct month, irrespective of when the payment is received. This could impact cash flow management, as royalties are due on the full credit sale amount even before the franchisee receives the actual cash payment from the customer.