How does the initial franchise fee for Bft in Item 5 compare to the potential costs associated with restrictions on suppliers, as described in Item 8?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
lowing receipt of our notice, you may not place any new orders for the revoked product, or with the revoked supplier.
Right to Receive Compensation and Negotiated Prices
We may, when appropriate, negotiate purchase arrangements, including price terms, with designated and Approved Suppliers on behalf of the System. We may establish strategic alliances or preferred vendor programs with suppliers that are willing to supply some products, equipment, or services to some or all of the Studios in our System. If we do establish those types of alliances or programs, we may: (i) limit the number of Approved Suppliers with whom you may deal; (ii) designate sources that you must use for some or all products, equipment and services; and (iii) refuse to approve proposals from franchisees to add new suppliers if we believe that approval would not be in the best interests of the System.
We and/or our affiliates may receive payments or other compensation from Approved Suppliers or any other suppliers on account of these suppliers' dealings with us, you, or other Studios in the System, such as rebates, commissions or other forms of compensation, which may comprise of fixed payments and/or percentages of overall sales transactions. During the fiscal year 2024, we received $154,772 in allowances, rebates, or other consideration from vendors in connection with purchases by franchisees, which constituted 6.3% of our total revenue of $2,447,103 during the year, and our Predecessor received $594,663 in similar allowances, rebates, and other consideration. Additionally, Xponential received $6,837,252 in allowances, rebates, or other consideration from vendors in connection with purchases by franchisees of all Xponential Brands in the United States and Canada. We may use any amounts that we receive from suppliers for any purpose that we deem appropriate. We and/or our affiliates may negotiate supply contracts with our suppliers under which we are able to purchase products, equipment, supplies, services and other items at a price that will benefit us and our franchisees.
Cooperatives
No purchasing or distribution cooperatives have been formed.
Franchisee Compliance
When determining whether to grant new or additional Franchises, we consider many factors, including your compliance with the requirements describe
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the initial franchise fee is a lump sum of $60,000. This fee grants the franchisee the right to establish a single Bft studio. The initial franchise fee is non-refundable and is due upon signing the Franchise Agreement. However, this fee can be reduced to $50,000 for a second franchise and $40,000 for a third or subsequent franchise, provided the franchisee is in compliance with all agreements.
Item 8 of the FDD outlines Bft's right to negotiate purchase arrangements with designated and approved suppliers. Bft may establish strategic alliances or preferred vendor programs, potentially limiting the number of approved suppliers, designating mandatory sources for products and services, and refusing new supplier proposals if they are not in the best interest of the Bft system. Bft and its affiliates may receive compensation from these approved suppliers in the form of rebates, commissions, or other forms of compensation.
While Item 8 describes the potential for Bft to receive compensation from suppliers based on franchisee purchases, it does not explicitly state the potential costs to franchisees due to these restrictions. The FDD mentions that during the fiscal year 2024, Bft received $154,772 in allowances, rebates, or other consideration from vendors in connection with purchases by franchisees, which constituted 6.3% of their total revenue. The FDD does not provide a direct comparison of the initial franchise fee to potential costs associated with supplier restrictions, but it does highlight that Bft benefits financially from these arrangements. A prospective franchisee should consider that while the initial franchise fee is a fixed cost, the ongoing costs associated with mandatory suppliers could fluctuate and potentially impact their profitability.
In summary, the initial franchise fee for Bft is a one-time, upfront cost of $60,000 (subject to reductions for multi-unit owners), while the costs associated with supplier restrictions are not explicitly quantified in the FDD. The restrictions on suppliers could potentially lead to higher costs for products and services compared to what a franchisee might find on the open market. It is important for a prospective franchisee to further investigate the potential financial impact of these supplier restrictions and understand how they might affect the overall cost of operating a Bft franchise.