What deductions are allowed when calculating Gross Revenues for a Stretch Zone franchise?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
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- "Gross Revenues" means the entire amount of all of the revenues from the ownership or operation of the Franchise Business, including the proceeds of any business interruption insurance, whether the revenues are evidenced by cash, credit, checks, or gift certificates (unless exempted by us), and the fair market value of any services, property, or other means of exchange, except the amount of any sales taxes that are collected and paid to the taxing authority (based on the cash method of accounting). We allow the deduction of cash refunded, credit given to customers, and receivables uncollectible from customers in computing Gross Revenues to the extent that the cash, credit or receivables were previously included in Gross Revenues on which Royalty Fees and Advertising Contributions were paid. Gross Revenues are considered received at the time the goods, products, merchandise or services from which Gross Revenues are derived are delivered or rendered, or at the time that the relevant sale takes place, whichever occurs first.
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- These sales figures do not reflect the costs of sales, operating expenses, or other costs or expenses that must be deducted from the Gross Revenues figures to obtain your net income or profit.
Source: Item 19 — ITEM -19 FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 73–76)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, gross revenues are defined as the entire amount of all revenues from the operation of the franchise, including proceeds from business interruption insurance, whether received as cash, credit, checks, or gift certificates. The fair market value of any services, property, or other means of exchange is also included in gross revenues. Gross Revenues are considered received at the time the goods, products, merchandise or services from which Gross Revenues are derived are delivered or rendered, or at the time that the relevant sale takes place, whichever occurs first.
However, Stretch Zone allows franchisees to deduct certain items when calculating gross revenues. Specifically, franchisees can deduct the amount of any sales taxes that are collected and paid to the taxing authority. Additionally, cash refunded to customers, credit given to customers, and receivables uncollectible from customers can be deducted, but only to the extent that these amounts were previously included in gross revenues on which royalty fees and advertising contributions were paid.
It is important to note that the sales figures provided in the Item 19 financial performance representation do not reflect the costs of sales, operating expenses, or other costs that must be deducted to obtain net income or profit. Prospective franchisees should carefully consider these factors and consult with financial advisors to understand the potential profitability of a Stretch Zone franchise.