What is the specific definition of 'properly documented' in relation to customer refunds, promotional discounts, and employee discounts 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, the term 'properly documented' is used in the context of calculating Gross Revenue, which directly impacts the Continuing Royalty Fee. Gross Revenue includes all income derived from the operation of the franchised business but excludes certain items if they are 'properly documented'. These exclusions are sales tax, customer refunds, promotional discounts (i.e., coupons), and employee discounts, which are limited to 3% of Gross Revenue.
The FDD does not provide a specific definition of what 'properly documented' entails. This means that while Fly Fitness franchisees can deduct these items from their Gross Revenue when calculating their royalty payments, they must ensure they have adequate documentation to support these deductions. The lack of a clear definition creates some ambiguity, as the franchisor could potentially dispute deductions if they deem the documentation insufficient.
Without a precise definition in the FDD, it is crucial for prospective Fly Fitness franchisees to seek clarification from the franchisor regarding the required documentation for customer refunds, promotional discounts, and employee discounts. Understanding the franchisor's expectations will help franchisees maintain accurate records and avoid potential disputes over royalty payments. Franchisees should inquire about the specific types of records required, such as receipts, customer signatures, or internal tracking systems, to ensure compliance and proper reporting.