What documentation is required for customer refunds to be excluded from Gross Revenue for Fly Fitness?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
ur 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).
Source: Item 6 — OTHER FEES (FDD pages 8–14)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, customer refunds can be excluded from the calculation of Gross Revenue if they are properly documented. Gross Revenue is the basis for calculating the Continuing Royalty Fee, which is 7% of the franchisee's weekly Gross Revenue.
Proper documentation is also required for promotional discounts (i.e., coupons) and employee discounts to be excluded from Gross Revenue. Employee discounts are limited to 3% of Gross Revenue. Gross Revenue includes all revenues and income from any source derived or received by the franchisee from the operation of the Franchised Business.
This means that Fly Fitness franchisees must maintain accurate records of all refunds, promotional discounts, and employee discounts to ensure they are not overpaying on their royalty fees. The FDD does not specify what constitutes 'proper' documentation, so a prospective franchisee should clarify with Fly Fitness what specific records are required to substantiate these deductions from Gross Revenue.