For Fitstop franchises, what is included in the definition of 'Gross Revenue'?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- Definition of Gross Revenue. For purposes of this Disclosure Document, 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 6 — OTHER FEES (FDD pages 11–15)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Gross Revenue is defined as the total amount of consideration received for all goods sold and services provided. This includes cash, credit, or payment in kind. It also encompasses all membership fees and other revenue generated from the sale of approved services and products, including barter transactions where tuition is exchanged for services or products. Each credit charge or sale is treated as a sale for the full price in the month it occurs, regardless of when payment is received.
However, certain items are excluded from Gross Revenue. 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, provided the returned goods were previously included in Gross Revenue. Sales tax imposed by any governmental authority and collected from customers is also excluded, as long as it's added to the selling price or absorbed therein and actually paid to the governmental authority.
Understanding the definition of Gross Revenue is crucial for Fitstop franchisees because several fees, such as the Technology Fee and merchant payment processing costs, are calculated as a percentage of Gross Revenue. The Technology Fee is 2% of Gross Revenue, and merchant payment processing costs are estimated to be between 2% and 4% of Gross Revenue. Therefore, accurately tracking and reporting Gross Revenue is essential for compliance and financial management.