What is excluded from the definition of 'gross revenues' when calculating the Healthsource Chiropractic continuing franchise fee?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree to pay us a continuing franchise fee ("Continuing Franchise Fee") equal to seven percent (7%) of the gross revenues (defined below) of the Franchise. The Continuing Franchise Fee will be payable monthly on the day of the month we specify based on the Franchise's gross revenues for the preceding month. The term "gross revenues" shall, for purposes of this Agreement, mean the total of all revenue and receipts derived from the operation of the Franchise, including all amounts received at or away from the site of the Franchise, or through the business the Franchise conducts (such as fees for chiropractic and/or physical therapy care, fees for the sale of any service or product, gift certificate sales, and revenue derived from products sales, whether in cash or by check, credit card, debit card, barter or exchange, or other credit transactions); and excludes only sales taxes collected from customers and paid to the appropriate taxing authority, and any customer refunds and credits the Franchise 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 continuing franchise fee is 7% of the franchise's gross revenues. Gross revenues are defined as the total of all revenue and receipts derived from the operation of the franchise. This includes all amounts received at or away from the site of the franchise, or through the business the Franchise conducts, such as fees for chiropractic and/or physical therapy care, fees for the sale of any service or product, gift certificate sales, and revenue derived from products sales, whether in cash or by check, credit card, debit card, barter or exchange, or other credit transactions.
However, the calculation of gross revenues for the continuing franchise fee excludes specific items. These exclusions are limited to sales taxes collected from customers and paid to the appropriate taxing authority, and any customer refunds and credits the Franchise actually makes.
For a prospective Healthsource Chiropractic franchisee, this means that the 7% royalty is calculated on nearly all income streams. Only sales tax and actual refunds/credits are subtracted from total revenue when calculating the gross revenue figure used to determine the royalty payment. This is a fairly standard arrangement in franchising, where royalties are almost always tied to top-line revenue rather than profits.