How does Fly To Fit define 'Gross Sales' in the franchise agreement?

According to Fly To Fit's 2024 Franchise Disclosure Document, "Gross Sales" is a critical term that determines royalty fees, marketing contributions, and other financial obligations for franchisees. Fly To Fit defines "Gross Sales" as the total dollar amount of all sales generated through the franchisee's business for a given period. This includes payments for any services or products sold, whether the payment is in cash or credit. This broad definition ensures that all revenue streams are included when calculating fees owed to Fly To Fit.

However, the definition of "Gross Sales" also specifies several exclusions. These exclusions include bona fide refunds to customers, sales taxes collected, sales of used equipment not in the ordinary 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 from gross sales, the redemption of these cards is included. This distinction is important for franchisees to understand, as it affects how and when revenue from prepaid cards is accounted for.

Understanding the definition of "Gross Sales" is crucial for prospective Fly To Fit franchisees. It directly impacts the amount of royalty fees (6% of gross sales) and marketing fund contributions (1% of gross sales) that franchisees must pay. Accurately tracking and reporting gross sales is essential for compliance with the franchise agreement and for managing the financial aspects of the business. Franchisees should carefully review this definition and seek clarification from Fly To Fit if they have any questions about what is included or excluded from gross sales.