How does Fly To Fit define 'Gross Sales' in its franchise agreement?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
- "Gross Sales" is defined in our franchise agreement as the total dollar amount of all sales generated through your business for a given period, including, but not limited to, payment for any services or products sold by you, whether for cash or credit. Gross Sales does not include (i) bona fide refunds to customers, (ii) sales taxes collected, (iii) sale of used equipment not in the ordinary course of business, or (iv) sales of prepaid cards or similar products (but the redemption of any such card or product will be included in Gross Sales).
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, "Gross Sales" is defined within the franchise agreement as the total revenue generated by the franchisee's business over a specific period. This includes all sales of services and products, whether paid for in cash or credit. This is a standard definition used by franchisors.
However, the definition also specifies certain exclusions from Gross Sales. These exclusions include bona fide refunds given to customers, sales taxes collected by the franchisee, revenue from the sale of used equipment outside the normal course of business, and sales of prepaid cards or similar products. It is important to note that while the sale of prepaid cards is excluded, the revenue generated when those cards are redeemed is included in Gross Sales.
Understanding this definition is crucial for Fly To Fit franchisees because several fees, including the royalty fee (6% of gross sales), the marketing fund contribution (1% of gross sales), and the local marketing/required spending (5% of gross sales), are calculated as a percentage of Gross Sales. Accurate calculation and reporting of Gross Sales are therefore essential for compliance with the franchise agreement and to avoid potential disputes with Fly To Fit.