How are Fitstop's Fund Contributions billed and collected?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 13.5 Fund Contribution(s). You shall contribute to our brand development Fund in an amount equal to two percent (2%) of the Gross Revenue generated by the Franchised Business, which shall be billed and collected at the same time and manner as your recurring Royalty Fee under Section 13.4 above (your "Fund Contribution").
We may adminster and use the Fund for any and all activities we determine appropriate to promote, market, advertise and/or otherwise develop the System, Proprietary Marks, System Business locations, Approved Services/Products and/or our brand generally, as we determine appropriate in our discretion.
You acknowledge that we are not required to expend any particular portion of the Fund or your Fund Contributions on marketing or other services that are allocated specifically to your Designated Territory.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, franchisees must contribute to the brand development fund, with the contribution being 2% of the Franchised Business's Gross Revenue. This Fund Contribution is billed and collected in the same manner and at the same time as the recurring Royalty Fee.
Fitstop has the discretion to use the fund for activities that promote, market, advertise, or develop the System, Proprietary Marks, System Business locations, Approved Services/Products, and the brand in general. The FDD clarifies that Fitstop is not obligated to spend any specific portion of the Fund or a franchisee's contributions on marketing or services specifically allocated to their Designated Territory.
Gross Revenue includes the total consideration received for all goods and services, including membership fees and revenue from Approved Services and Products, whether in cash, credit, or payment in kind. Exclusions from Gross Revenue include refunds, uncollectible debts, taxes collected and paid to a tax authority, and tuition credits for staff children. Credit sales are treated as sales for the full price in the month the charge is made, regardless of when payment is received.
Prospective franchisees should be aware that while they contribute to the fund, Fitstop has broad discretion over how the funds are spent and is not required to allocate spending to the franchisee's specific territory. Understanding how the royalty fees are collected is also important, as the fund contributions are tied to this process.