Are tuition credits for staff children included in the Gross Revenue calculation 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, tuition credits for staff children are explicitly excluded from the calculation of Gross Revenue. Gross Revenue is defined as the total amount of consideration received for goods and services, including membership fees and revenue from approved products and services, whether in cash, credit, or payment in kind. Bartering, which is the exchange of tuition for services or products, is included in the calculation of Gross Revenue.
However, the definition specifically excludes refunds, uncollectible debts, taxes collected and paid to a tax authority, and tuition credits for staff children. This means that if a Fitstop franchisee offers tuition credits to their staff's children as a benefit, the value of those credits is not counted as part of the revenue on which royalties and other fees are based.
This exclusion can be beneficial for franchisees as it reduces the amount of revenue subject to percentage-based fees like the Technology Fee, which is 2% of Gross Revenue. It also aligns with standard accounting practices where employee benefits are not typically included in revenue calculations. This ensures that franchisees are not penalized for providing benefits to their staff, which can help with employee retention and satisfaction.