What items are specifically excluded from the calculation of 'Gross Revenue' for a Fitstop franchise?
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 a crucial figure used to calculate various fees and financial obligations for franchisees. The document specifies several items that are excluded from this calculation.
Specifically, the following items are not included when calculating a Fitstop franchise's Gross Revenue: refunds issued to customers, uncollectible debts, taxes collected from customers and paid to a tax authority, and tuition credits for staff children. Additionally, the amount of any sales tax imposed by a governmental authority directly on sales and collected from customers is excluded, provided that the amount is added to the selling price or absorbed therein and actually paid to such governmental authority.
It's important to note that the price of goods returned by customers for exchange can be deducted from Gross Revenue, but only if those returned goods were previously included in Gross Revenue. Furthermore, the sales price of the goods delivered to the customer in exchange must be included in Gross Revenue. This ensures that exchanges are properly accounted for in the revenue calculation.
Understanding these exclusions is essential for Fitstop franchisees to accurately report their Gross Revenue, which directly impacts royalty fees and other financial obligations to the franchisor. Franchisees should carefully track these exclusions and ensure compliance with the definitions provided in the Franchise Agreement to avoid any discrepancies or disputes.