Do the sales figures provided for Stretch Zone franchises reflect net income or profit?
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.
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- We calculated the figures in the table in this financial performance representation using financial reports submitted by our franchisees.
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, the sales figures presented do not represent net income or profit. The FDD clarifies that the figures provided are 'Gross Revenues,' which means the entire amount of revenues from operating the franchise, including proceeds from business interruption insurance. Gross revenues are considered received when the goods, products, merchandise, or services are delivered or rendered, or when the sale takes place, whichever is first. Deductions are allowed for cash refunds, credit given to customers, and uncollectible receivables, provided these were previously included in gross revenues on which royalty and advertising fees were paid.
It is important to note that these gross revenue figures do not account for costs of sales, operating expenses, or other costs that a franchisee would need to deduct to determine their actual net income or profit. The financial performance representation in Item 19 is based on financial reports submitted by Stretch Zone franchisees.
Prospective franchisees should understand that the initial investment and ongoing operational costs can significantly impact profitability. Therefore, it is crucial to conduct thorough due diligence, including reviewing the complete Item 19 financial performance representation in the FDD and consulting with existing franchisees, to gain a comprehensive understanding of the potential financial outcomes. Additionally, prospective franchisees should seek professional financial advice to project potential earnings accurately after accounting for all expenses.