What is the connection between the royalty fees paid to Bft, as described in Item 6, and the franchisee's ability to secure financing, as mentioned in Item 10?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
or other legal proceeding involving such third-party. Franchisor shall not be liable for any legal expenses of Franchisee unless (a) pre-approved in writing by Franchisor in its discretion, and (b) the action proceeds or arises out of Franchisee's authorized use of the Marks hereunder.
- 4.4 Modification, Discontinuance or Substitution. Franchisor reserves the right, in its sole judgment, to modify, discontinue or replace any Mark on a national or regional basis, and Franchisee shall, as applicable and at its expense, immediately discontinue use of any Mark and commence using any modified or replacement Mark as directed by Franchisor. Franchisor shall have no liability or obligation whatsoever with respect to Franchisee's discontinuance or change of any Mark.
5. FEES
- 5.1 Initial Franchise Fee. On its signing of this Agreement, Franchisee agrees to pay Franchisor an initial franchise fee in the sum of Sixty Thousand Dollars ($60,000) for the right to operate the Studio pursuant to the terms of this Agreement (the "Initial Franchise Fee"). The Initial Franchise Fee shall be fully earned by Franchisor upon payment and is not refundable under any circumstance.
- 5.2 Royalty Fee. Throughout the Term, Franchisee agrees to pay Franchisor, weekly, without setoff, credit or deduction of any nature, a royalty fee equal to seven percent (7%) of the Gross Sales (as that term is defined in Section 5.3, below) generated by the Studio over the immediately preceding week (the "Royalty" or "Royalty Fee").
- 5.3 Gross Sales. "Gross Sales" means the total revenue, in whatever form, generated by the Studio, whether or not in compliance with this Agreement and regardless of receipt, including all revenue generated from the sale and provision of any and all gift cards and other products and services at or through the Studio and all proceeds from any business interruption insurance related to the non-operation of the Studio. "Gross Sales" does not include (a) any sales tax and equivalent taxes that are collected by Franchisee for or on behalf of any governmental taxing authority and paid thereto, or (b) the value of any allowance issued or granted to any client of the Studio that is credited in good faith by Franchisee in full or partial satisfaction of the price of the Approved Products or Approved Services offered in connection with the Studio.
5.4 Fitness Equipment & Initial FF&E Package; Pre-Sales and Soft Opening Retail Inventory Kit; Pre-Sales Phase Expenditures; POS/Inventory System.
- A. Prior to the Studio's Soft Opening, Franchisee must purchase or lease the Fitness Equipment & Initial FF&E Package (as defined below) and opening retail inventory comprised of certain branded and inventory that may be resold at the Studio (the "Pre-Sales and Soft Opening Retail Inventory Kit") from Franchisor's approved supplier(s). The "Fitness Equipment & Initial FF&E Package" includes: a Studio fixture package (comprised of a millwork bundle (front desk, slatwall, cubbies, boxing glove wall), millwork accessories and other related supplies); (ii) the package of fitness equipment and other operational equipment Franchisor designates to be used in Studios (bag rig, punching bags, benches) and smaller pieces of related exercise equipment (e.g.
What This Means (2025 FDD)
Based on the 2025 FDD, there is no explicit connection described between the royalty fees paid to Bft, as detailed in Item 6, and a franchisee's ability to secure financing, as might be discussed in Item 10. The provided excerpts from Item 23 discuss various fees, including the initial franchise fee of $60,000, royalty fees, technology fees, and music licensing fees, as well as other potential costs like training fees and marketing contributions. These fees represent the franchisee's ongoing financial obligations to Bft.
Item 23 outlines the franchisee's payment responsibilities, including a weekly royalty fee of 7% of gross sales. It also mentions that Bft may collect a Technology Fee at the same time as the Royalty Fees. Franchisees are also responsible for music licensing fees and other amounts due for marketing materials and supplies. These payments are typically collected via automatic debit from the franchisee's point-of-sale operating account on a weekly basis.
While the FDD excerpts detail the various fees a Bft franchisee must pay, they do not directly link these fees to the franchisee's ability to obtain financing. Item 10, which is not provided, would typically discuss financing options and assistance that Bft might offer. A prospective franchisee should carefully review Item 10 of the FDD and discuss with Bft how these royalty and other fees might impact their ability to qualify for financing. Understanding the financial obligations and how they are viewed by lenders is crucial for securing the necessary capital to start and operate a Bft franchise.