What is the connection between the royalty fees paid to Bft, as described in Item 6, and the estimated initial investment required, as detailed in Item 7?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
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ITEM 6 OTHER FEES
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty | 7% of Gross Sales generated by your Studio over the relevant reporting period 1 | Payable weekly via electronic funds transfer (“EFT”) based on the Gross Sales of your Studio during the preceding business week | You will be required to start paying your Royalty once your Studio begins collecting revenue from operations. We may collect your Royalty on a different interval (for example, monthly). |
| Contributions to Brand Development Fund 2 | Currently, 2% of Gross Sales 1 | Payable weekly around the same time and in the same manner as the Royalty | Your contributions (the “Fund Contributions”) to the Brand Development Fund (the “Fund”) will begin when your Studio begins generating revenue from operations. We may, on notice to you, adjust the amount of your required Fund Contributions, subject to the Marketing Expenditure Cap. 3 |
| Regional or Local Advertising Co-Op | As the Co-Op determines (not currently charged) | As the Co-Op determines | We may establish regional cooperatives comprised of Studios that are within a given geographical area (each, a “Co-Op”). If a Co-Op is established where your Studio is located, you will be required to participate in that Co-Op and contribute to that Co-Op in the amounts the Co-Op determines. We may, on notice to you, adjust the amount of your required contributions to the Co-Op, subject to the Marketing Expenditure Cap. 3 |
| Local Advertising Requirement | The greater of (a) $1,500 or (b) 2% of the prior month’s Gross Sales 1 | Payable monthly with your 1st Royalty payment each month | This is a spending requirement, but we reserve the right to have you pay this amount to us rather than spending it yourself. We may, on notice to you, adjust the amount of your required spending, subject to the Marketing Expenditure Cap. 3 |
| Type of Fee | Amount | Due Date | Remarks |
| --- | --- | --- | --- |
| Music Licensing Fee 4 | Amounts charged by the providers and/or applicable performing rights organizations (PROs) for such music licensing | As invoiced or otherwise agreed | We may require that the music licensing fee (the “Music Licensing Fee”) amount be paid directly to performing rights organizations (PROs) or to our then-current Approved Supplier (which may be us or our affiliate) that handles and manages these licenses for System franchisees. |
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, while Item 7 details the estimated initial investment required to open a Bft studio, and Item 6 outlines the various fees franchisees will be responsible for, there is no direct connection made between the royalty fees and the initial investment. Item 7 provides a comprehensive breakdown of the costs associated with establishing a Bft studio, ranging from $509,836 to $1,204,045, including expenses like the initial franchise fee ($60,000), sourcing fees (up to $28,000), real estate and lease costs ($37,000 to $75,500), leasehold improvements ($72,000 to $560,500), and fitness equipment ($198,500 to $236,000). These initial investments are generally paid to Bft, landlords, approved third-party suppliers, architects, and contractors.
Item 6 specifies that the royalty fee is 7% of gross sales, payable weekly via electronic funds transfer. This fee is ongoing and is not part of the initial investment. Other fees outlined in Item 6 include a brand development fund contribution (currently 2% of gross sales), regional or local advertising co-op fees (amount determined by the co-op), and a local advertising requirement (the greater of $1,500 or 2% of the prior month’s gross sales). These fees, like the royalty, are related to the ongoing operation of the franchise rather than the initial setup.
While the initial investment covers the costs of launching the Bft studio, the royalty fees and other ongoing fees are designed to support the Bft brand and provide continued services and support to the franchisee. The FDD does not state that the initial investment impacts the royalty fees. A prospective franchisee should carefully consider both the initial investment and the ongoing fees to determine the overall financial viability of the Bft franchise.