Are there any deductions from Gross Revenue for Fitstop other than refunds, uncollectible debts, and taxes?
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.
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" includes all consideration received for goods and services, including membership fees and revenue from approved services and products, as well as barter transactions. However, there are specific deductions allowed from this total.
For Fitstop franchisees, the primary deductions from Gross Revenue are refunds, uncollectible debts, and taxes collected and paid to a tax authority. Additionally, the price of goods returned by customers for exchange can be deducted, provided the returned goods were previously included in Gross Revenue and the replacement goods' sales price is included in Gross Revenue. Sales tax imposed by any governmental authority directly on sales and collected from customers is also excluded from Gross Revenue, provided it is added to the selling price or absorbed therein and actually paid to the governmental authority.
This definition is important because the royalty fee and brand development fund contributions are calculated as a percentage of Gross Revenue. By clearly defining what can be deducted, Fitstop ensures transparency in calculating these fees. Franchisees should pay close attention to these deductions to accurately report their Gross Revenue and avoid discrepancies in their payments to Fitstop.
In summary, beyond refunds, uncollectible debts, and taxes, Fitstop franchisees can also deduct the price of exchanged goods from their Gross Revenue calculation, provided specific conditions are met. Understanding these deductions is crucial for accurate financial reporting and royalty payments.