What is the relationship between 'Gross Profit' and 'Total Income' on the Stretch Zone Profit & Loss statement?

According to Stretch Zone's 2025 Franchise Disclosure Document, an examination of the Profit & Loss statement reveals the relationship between 'Total Income' and 'Gross Profit'. For the period of January through March 2025, Stretch Zone's 'Total Income' was $2,993,735.28. The 'Cost of Goods Sold' was $32,019.55. When the 'Cost of Goods Sold' is subtracted from the 'Total Income', the result is the 'Gross Profit', which for this period was $2,961,715.73.

In simpler terms, 'Total Income' represents the total revenue generated by Stretch Zone through various sources such as royalties, franchise fees, media fund contributions, rebate income, and technology fees. The 'Cost of Goods Sold' accounts for the direct costs associated with providing these services or products. The 'Gross Profit' then represents the profit Stretch Zone earned after deducting these direct costs from its total revenue.

For a prospective Stretch Zone franchisee, understanding this relationship is crucial. It provides insight into how efficiently Stretch Zone manages its direct costs to generate profit. A higher gross profit margin (Gross Profit / Total Income) indicates better cost management and potentially higher profitability for the franchisee's own operations, assuming a similar cost structure. Franchisees should analyze these figures in conjunction with other expenses to assess the overall financial health and profitability of a Stretch Zone franchise.