What is excluded from the definition of 'Gross Revenue' for a Fitstop franchise?
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.
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' is comprehensive, but it does exclude certain items. For the purposes of calculating royalties and other fees, Gross Revenue does not include refunds given to customers, uncollectible debts, taxes collected and paid to a tax authority, and tuition credits for staff children.
This definition is important for prospective Fitstop franchisees because it directly impacts the amount of royalty fees and fund contributions they will owe to Fitstop. By excluding these items, Fitstop aims to ensure that franchisees are not paying royalties on revenue they did not actually retain.
It is common in the franchise industry to exclude sales tax from gross revenue, as the franchisee is merely collecting this money on behalf of the government. The exclusion of refunds and uncollectible debts is also fairly standard, as it aligns the royalty calculation with the franchisee's actual net revenue. The exclusion of tuition credits for staff children is a specific benefit that Fitstop offers, reducing the royalty burden for franchisees who provide this perk to their employees.