How is 'Gross Revenue' defined 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.
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, Gross Revenue is defined as the total income a franchisee receives. This includes cash, credit, or any form of payment for goods and services. Specifically, it encompasses all membership fees and revenue from approved services and products, including barter transactions where tuition is exchanged for services or products.
However, certain items are excluded from the Gross Revenue calculation. 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, provided these goods were previously included in Gross Revenue and the replacement goods' sales price is included.
Sales taxes collected from customers and remitted to governmental authorities are also excluded from Gross Revenue, provided the tax amount is either added to the selling price or absorbed within it. Each credit sale is treated as a sale for the full price in the month it occurs, regardless of when the franchisee actually receives payment. This definition is important because Fitstop calculates royalty fees and fund contributions based on a percentage of Gross Revenue.