How does the definition of 'Gross Revenues' in Stretch Zone's Item 6 relate to the Royalty Fee calculation?

According to Stretch Zone's 2025 Franchise Disclosure Document, the Royalty Fee is directly calculated as a percentage of Gross Revenues. Specifically, the franchisee pays 7% of Gross Revenues, but no less than a minimum monthly Royalty Fee of $900. This fee is deducted from ClubReady remittances twice weekly. The FDD defines "Gross Revenues" as the entire amount of all revenues generated from the ownership or operation of the Franchise Business, as defined in the Franchise Agreement.

Item 19 of the Stretch Zone FDD further clarifies the definition of Gross Revenues. It includes all revenues from operating the Franchise Business, including proceeds from business interruption insurance, and revenues evidenced by cash, credit, checks, or gift certificates. The fair market value of any services, property, or other means of exchange are also included. Sales taxes collected and paid to the taxing authority are excluded from Gross Revenues.

Stretch Zone allows deductions for cash refunds, credits given to customers, and receivables uncollectible from customers when calculating Gross Revenues, but only if these amounts were previously included in Gross Revenues on which Royalty Fees and Advertising Contributions were paid. Gross Revenues are considered received when the goods, products, merchandise, or services are delivered or rendered, or when the relevant sale takes place, whichever is earlier. This comprehensive definition ensures that all income streams are subject to the royalty calculation, providing Stretch Zone with a percentage of nearly all income generated by the franchise.