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What is the connection between the royalty fees paid to Bft, as described in Item 6, and the franchisee's obligations to maintain system standards, as outlined in Item 8?

Bft Franchise · 2025 FDD

Answer from 2025 FDD Document

nd all other management personnel are in attendance at the Studio during those days.

  • E. Ongoing/Refresher Training. Franchisor may provide, and require that Franchisee, as well as any of its management personnel attend, up to five (5) days of additional training each year at a training facility that Franchisor designates (without charging Franchisee any Training Fee as described in Section 5.5 of this Agreement). Franchisee may also request that Franchisor provide certain additional or refresher training to Franchisee, either at one (1) of Franchisor's designated training facilities or on-site at Franchisee's Studio, but Franchisor reserves the right to charge Franchisee its then-current Training Fee based on the number of days of such training that Franchisor provides at Franchisee's request.

  • F. Remedial Training. If Franchisor determines that Franchisee is operating the Studio in a manner that is not consistent with the terms of this Agreement or the Learning Management System, or if Franchisee is otherwise in material default of this Agreement, Franchisor may also require that Franchisee, its Designated Manager (if applicable) and/or certain Authorized Instructors of the Studio attend and complete up to five (5) additional days of training at (a) Franchisor's designated training facility, (b) the Studio, or (c) other location Franchisor designates, that is designed to address the default or other noncompliance issue (the "Remedial Training"). Franchisor may require Franchisee and its designated trainees to pay Franchisor its then-current Training Fee in connection with attending Remedial Training.

  • 6.3 Learning Management System. During the Term, Franchisor will grant Franchisee access to its confidential online learning management platform, which includes electronic versions of manuals and written policies and procedures related to the development and operation of BFT Studios (collectively, the "Learning Management System"). The Learning Management System is anticipated to codify then-current specifications, standards and operating procedures prescribed or suggested by Franchisor. Franchisee acknowledges that Franchisor may from time to time revise its System Standards as well as the contents of the Learning Management System (including by written memoranda and notices issued to owners of BFT Studios), and Franchisee agrees to comply with each new or changed standard and specification upon notice from Franchisor. The Learning Management System shall remain the sole property of Franchisor and is part of, and subject to the requirements applicable to, Franchisor's Confidential Information (as defined in Section 12.1). If Franchisee, intentionally or otherwise through its gross negligence, compromises the secure access to the Learning Management System (or any printed copies of the contents thereto), including, but not limited to, allowing unauthorized users access to the Learning Management System and its confidential contents or intentionally posting any of the Confidential Information on the Internet, Franchisee acknowledges that it will be required to adequately compensate Franchisor for the breach and related damage to the Marks and System, and that any limitation of remedies provided in Sections 16.4 and 16.7 below shall not limit Franchisor's remedy or relief in the foregoing instance(s).

  • 6.4 Continuing Services. Franchisor will provide such continuing advisory assistance and information to Franchisee in the development and operation of the Studio as Franchisor deems advisable in its discretion. Such assistance may be provided, in Franchisor's discretion, by Franchisor's directives, System bulletins, meetings and seminars, telephone, computer, e-mail, fax, personal visits, newsletters or manuals.

  • 6.5 Approved Lists. Franchisor will provide and from time to time, add to, alter or delete, at Franchisor's discretion, lists of specifications, approved distributors and suppliers, approved services and products, including, but not limited to, fitness equipment and gear, and other materials and supplies used in the operation of the Studio. Franchisor, or an affiliate of Franchisor, may be a designated, approved, or sole supplier of certain equipment, gear, merchandise, apparel and supplies.

  • 6.6 Pricing. The System has developed a reputation that is based in part on affordable prices for fitness classes offered by BFT Studios operating as part of the System.

What This Means (2025 FDD)

Based on the 2025 FDD, Bft franchisees are obligated to maintain specific system standards, and failure to do so can trigger additional fees and training requirements. While Item 6 generally describes the services Bft provides to franchisees, including guidance on studio setup and training programs, it does not explicitly link the payment of royalty fees to the maintenance of system standards. However, the FDD indicates that if Bft determines a franchisee is not operating in accordance with the agreement or the Learning Management System, Bft may require remedial training, potentially at the franchisee's expense. This remedial training is directly tied to addressing non-compliance issues.

Item 8 emphasizes the importance of adhering to Bft's standards for studio appearance and operation to maintain uniformity, increase demand, and protect the brand's reputation. Bft retains the right to inspect studios to ensure compliance. This inspection and the subsequent enforcement of standards are indirectly supported by the royalty fees, as these fees contribute to Bft's ability to oversee and support the franchise system.

Although the royalty fees are not explicitly described as being directly tied to system standards in the provided excerpts, the franchisor has the right to charge a Technology Fee, which may be collected at the same time as the Royalty Fees. Furthermore, franchisees must adhere to the Learning Management System, which codifies the standards and operating procedures prescribed by Bft. Failure to comply with these standards can lead to required remedial training and potential costs for the franchisee. Therefore, while not a direct quid pro quo, the royalty fees support the system that enforces these standards, and non-compliance can result in additional financial burdens for the franchisee.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.