What sales are excluded from the definition of Gross Revenue for a Fly Fitness franchise?

According to Fly Fitness's 2024 Franchise Disclosure Document, the definition of Gross Revenue has a specific exclusion. Gross Revenue does not include gift card purchases at the time of purchase. However, the redemption amount of purchases made using a gift card is included in Gross Revenue.

This means that when a Fly Fitness franchisee sells a gift card, the amount collected from the customer is not immediately counted as revenue. Instead, the revenue is recognized when the gift card is used to purchase goods or services at the Fly Fitness location. This accounting method ensures that revenue is only recorded when the actual service or product is provided to the customer.

For a prospective Fly Fitness franchisee, this distinction is important for financial reporting and royalty calculations. The franchisee will need to track both the sale of gift cards and their subsequent redemption to accurately report Gross Revenue to Fly Fitness. This also affects the timing of when royalties and brand fund contributions are calculated and paid, as these are based on Gross Revenue.