What is included in the definition of 'Gross Revenue' for a Fly Fitness franchise?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
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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 is a critical factor, as it determines both the Continuing Royalty Fee and the Brand Fund Contribution. Gross Revenue encompasses all income from any source related to the operation of the franchised business. This includes revenues received through various means such as cash, services, in-kind exchanges, barter, or credit, regardless of whether payment has actually been received. It also includes any and all other revenues received using Fly Fitness's methods, operations and/or trade secrets. Gross Revenue also includes the redemption amount of purchases made by gift card.
However, the definition of Gross Revenue for a Fly Fitness franchise specifically excludes certain items. These exclusions include sales tax or similar taxes collected from customers and remitted to the appropriate governmental authority. Additionally, properly documented refunds to customers, promotional discounts (such as coupons), and employee discounts (limited to 3% of Gross Revenue) are also excluded from the calculation of Gross Revenue. Gross Revenue does not include gift card purchases, at the time of purchase.
For a prospective Fly Fitness franchisee, understanding the precise definition of Gross Revenue is essential for accurate financial reporting and royalty payments. Franchisees must ensure they correctly track and report all revenue streams, while also properly documenting any deductions for sales taxes, refunds, and discounts. Failure to accurately report Gross Revenue can lead to discrepancies in royalty payments and potential penalties from Fly Fitness. The franchisee pays a Continuing Royalty Fee equal to seven percent (7.0%) of the Gross Revenue generated weekly by your Franchised Business and a Brand Fund Contribution of two percent (2%) of weekly Gross Revenue.