When are gift card redemptions included in Gross Revenue for a Fly Fitness franchise?

According to Fly Fitness's 2024 Franchise Disclosure Document, the purchase of gift cards is not included in gross revenue at the time of purchase. However, the redemption amount of purchases made using gift cards is included in gross revenue. This means that Fly Fitness franchisees do not pay royalties or brand fund contributions on gift cards when they are sold, but they do pay these fees when the gift cards are used to make purchases at the Fly Fitness studio. This is a common practice in franchising, as it prevents franchisees from having to pay fees on money that has not yet been earned. It also aligns the payment of fees with the actual use of the gift card at the Fly Fitness location.

Fly Fitness requires franchisees to report their gross revenue weekly, every Wednesday, for the previous week (Monday through Sunday). This report must be in a format prescribed by Fly Fitness and contain the information the franchisor requires. Fly Fitness also reserves the right to implement a point-of-sale (POS) system that franchisees must use. At Fly Fitness's discretion, franchisees must submit the Gross Revenue Report electronically through the POS system.

Franchisees must submit royalty and brand fund contribution payments along with the Gross Revenue Report. Fly Fitness can also request franchisees to authorize electronic fund transfers for these payments. Failure to allow electronic fund transfers is considered a material breach of the Franchise Agreement. Fly Fitness retains the right to change the payment method and frequency with 90 days' notice to the franchisee. If a franchisee fails to submit the Gross Revenue Reports or payments on time, Fly Fitness will charge a $75 late fee in addition to the overdue amount.