Are sales of prepaid cards included in Gross Sales for a Fly To Fit franchise?

According to Fly To Fit's 2024 Franchise Disclosure Document, the initial sale of prepaid cards is excluded from gross sales. However, the revenue generated when customers redeem these prepaid cards for Fly To Fit's services or products is included in gross sales.

Gross sales are important because Fly To Fit franchisees pay both a royalty fee and a marketing fund contribution based on a percentage of their gross sales. The royalty fee is paid to Fly To Fit, while the marketing fund contribution is used for marketing, advertising, and public relations efforts.

Specifically, the FDD states that Gross Sales means the total dollar amount of all sales generated through the Business for a given period, including, but not limited to, payment for any services or products sold by Franchisee, whether for cash or credit. Gross Sales does not include (i) bona fide refunds to customers, (ii) sales taxes collected by Franchisee, (iii) sales 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).

This definition clarifies that while the initial sale of prepaid cards doesn't contribute to the gross sales figure used to calculate fees, the actual usage of those cards for Fly To Fit's services does count towards gross sales. This distinction is important for franchisees to understand for accurate reporting and fee calculation.