Does the definition of Gross Revenue for Fly Fitness include revenue from membership fees?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
ou must pay them to us.
1 You must pay us a Continuing Royalty Fee equal to seven percent (7.0%) of the Gross Revenue generated weekly by your Franchised Business. "Gross Revenue" includes all revenues and income from any source derived or received by Franchisee from, through, by or on account of the operation
of the Franchised Business or made pursuant to the rights granted hereunder, including but not limited, any and all other revenues received using Franchisor's methods, operations and/or trade secrets whether received in cash, in services, in kind, from barter and/or exchange, on credit (whether or not payment is actually received) or otherwise. It does not include (i) any sales tax or similar taxes collected from customers and turned over to the governmental authority imposing the tax, (ii) properly documented refunds to customers, (iii) properly documented promotional discounts (i.e., coupons) or (iv) properly documented employee discounts (limited to 3% of Gross Revenue). Gross Revenue does not include gift card purchases, at the time of purchase, but Gross Revenue does include the redemption amount of purchases made by gift card.
Source: Item 6 — OTHER FEES (FDD pages 8–14)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, gross revenue includes all income derived from the operation of the franchised business. The Continuing Royalty Fee is 7% of weekly Gross Revenue. Gross Revenue includes all revenues and income from any source derived or received by Franchisee from, through, by or on account of the operation of the Franchised Business or made pursuant to the rights granted hereunder, including but not limited, any and all other revenues received using Franchisor's methods, operations and/or trade secrets whether received in cash, in services, in kind, from barter and/or exchange, on credit (whether or not payment is actually received) or otherwise.
This definition is very broad, encompassing virtually all forms of revenue a Fly Fitness franchise might generate. This means that revenue from membership fees is included in the calculation of Gross Revenue, on which the 7% royalty is based.
There are some exclusions from Gross Revenue, such as sales taxes, properly documented refunds, promotional discounts (i.e., coupons), and employee discounts (limited to 3% of Gross Revenue). Also, gift card purchases are excluded at the time of purchase, but the redemption amount of purchases made by gift card is included in Gross Revenue.