What costs are subtracted from Gross Revenues to calculate the Management Fee for a Healthsource Chiropractic clinic?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
- 5.1 In consideration for Management Company's performance of the Management Company Services and the grant of the licenses and sub-license set forth in Section 4, Licensed Provider hereby agrees to pay Management Company a management fee (herein called the "Management Fee"), which shall be the amount equal to the Gross Revenues of the Clinic Management Business remaining after subtracting costs associated with Licensed Provider's salary and fringe benefits (and, if applicable, the Clinic's employees' salary and wages and fringe benefits) as approved by Management Company, the Clinic's payroll taxes and other withholding items, and any other Clinic operating costs incurred by the Clinic in accordance with this Agreement.
- (a) As used herein "Gross Revenues" shall mean the total of all revenue and receipts derived from the operation of the Clinic, including all amounts received at or away from the site of the Clinic or through the business the Clinic conducts (such as fees for Clinical Services, fees for the sale of any other services, gift certificate sales, and revenue derived from products sales, whether paid in cash or by check, credit card, or debit card, or other credit transactions); and excludes only sales taxes collected from patients and paid to the appropriate taxing authority, and any patient refunds and credits the Clinic actually makes.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, the Management Fee is calculated based on the clinic's Gross Revenues after certain deductions. Specifically, the Management Fee is determined by subtracting costs associated with the Licensed Provider's (franchisee's) salary and fringe benefits, as well as the salaries, wages, and fringe benefits of the clinic's employees, provided these are approved by the Management Company.
In addition to personnel costs, the calculation also deducts the clinic's payroll taxes, any other withholding items, and any other clinic operating costs incurred in accordance with the Management Agreement. This means that Healthsource Chiropractic franchisees will pay the Management Fee on the remaining revenue after covering essential operational and personnel expenses.
Gross Revenues are defined as the total revenue and receipts derived from the clinic's operation, including fees for clinical services, sales of other services, gift certificate sales, and revenue from product sales, whether paid in cash, check, credit card, debit card, or other credit transactions. The only exclusions from Gross Revenues are sales taxes collected from patients and remitted to the appropriate taxing authority, and any patient refunds and credits actually made by the clinic. This comprehensive definition of Gross Revenues ensures that all income streams are considered before deductions are applied to calculate the Management Fee for Healthsource Chiropractic.