Does the Fitstop definition of Gross Revenue include barter transactions, such as exchanging tuition for services?

According to Fitstop's 2024 Franchise Disclosure Document, Gross Revenue includes consideration received through barter transactions. Specifically, the definition includes the exchange of tuition for services or products. This means that if a Fitstop franchisee provides training or services in exchange for goods or other services, the value of those goods or services must be included when calculating Gross Revenue.

This is important for franchisees because many fees payable to Fitstop, such as the Technology Fee, are calculated as a percentage of Gross Revenue. The Technology Fee is currently 2% of Gross Revenue. Therefore, accurately calculating and reporting Gross Revenue, including any barter transactions, is essential for compliance with the Franchise Agreement and to avoid underpayment of fees.

However, the definition of Gross Revenue also excludes certain items. 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 is deducted from Gross Revenue, provided that such returned goods were previously included in Gross Revenue, and the sales price of goods delivered to the customer in exchange is included in Gross Revenue. Sales taxes imposed by a governmental authority and collected from customers are also excluded, provided that the amount is added to the selling price or absorbed therein and actually paid to the governmental authority.

Finally, the FDD clarifies that each charge or sale upon credit is treated as a sale for the full price in the month during which the charge or sale is made, regardless of when payment is received. This comprehensive definition ensures that all forms of revenue are accounted for when calculating fees owed to Fitstop.