Does the definition of Gross Revenue for Fitstop include barter transactions?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 13.2 Definition of "Gross Revenue". For the purposes of this Agreement, the term "Gross Revenue" shall mean the total amount of consideration, whether cash, credit, or payment in kind, received by you for all goods sold and services (including all membership fees and other revenue generated from the sale of Approved Services and Approved Products), including barter (exchange of tuition for services or products), and excluding refunds, uncollectible debts, taxes collected and paid to a tax authority, and tuition credits for staff children.
There shall be deducted from Gross Revenue the price of goods returned by customers for exchange, provided that such returned goods shall have been previously included in Gross Revenue, and provided that the sales price of goods delivered to the customer in exchange shall be included in Gross Revenue.
Gross Revenue shall not include the amount of any sales tax imposed by any federal, state, municipal, or other governmental authority directly on sales and collected from customers, provided that the amount thereof is added to the selling price or absorbed therein and actually paid by you to such governmental authority.
Each charge or sale upon credit shall be treated as a sale for the full price in the month during which such charge or sale shall be made, irrespective of the time when you shall receive payment (whether full or partial) therefor.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, the definition of Gross Revenue includes consideration received through barter transactions. Gross Revenue encompasses the total amount of consideration, whether in cash, credit, or payment in kind, for all goods and services sold. This includes revenue from membership fees, the sale of approved services and products, and specifically mentions barter transactions, which are defined as the exchange of tuition for services or products.
However, the definition of Gross Revenue also specifies certain exclusions. These exclusions include refunds, uncollectible debts, taxes collected and paid to a tax authority, and tuition credits for staff children. Additionally, the price of goods returned by customers for exchange can be deducted from Gross Revenue, provided that the returned goods were previously included in Gross Revenue, and the sales price of the replacement goods is included in Gross Revenue.
For a prospective Fitstop franchisee, this means that any revenue generated through barter transactions must be included when calculating Gross Revenue, which is used to determine royalty fees and other contributions to Fitstop. It is important for franchisees to accurately track and report all forms of consideration received, including cash, credit, and barter, to ensure compliance with the franchise agreement. Understanding these inclusions and exclusions is crucial for accurate financial reporting and avoiding potential disputes with Fitstop.