Can Fitstop change the timing of when Fund Contributions are remitted?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 6.5 Brand Development Fund.
We have established or expect to establish a brand development fund (the "Fund") designed to promote, advertise, market and/or otherwise develop the System, Proprietary Marks, System Business(es), Approved Services/Products and/or our brand generally.
You will be required to contribute to the Fund an amount equal to two percent (2%) of the Gross Revenue of the Franchised Business ("Fund Contributions"), which shall be remitted to us at the same time and in the same manner as your Royalty Fees (unless we designate another method upon at least 30 days' prior written notice via the Manual(s) or otherwise).
All Fund Contributions are non-refundable upon payment, and we will account separately for all sums paid to the Fund.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop can designate a different method and timing for remitting Fund Contributions with 30 days' prior written notice. The standard arrangement is that Fund Contributions, which are 2% of Gross Revenue, are remitted at the same time and in the same manner as Royalty Fees.
This means that while the default is for Fund Contributions to align with Royalty Fee payments, Fitstop retains the right to alter this arrangement. This gives Fitstop flexibility in managing the Fund and potentially aligning contributions with specific marketing initiatives or operational needs.
For a prospective franchisee, this implies that the timing of Fund Contribution payments could change during the franchise term. It is important to stay informed of any notices from Fitstop regarding changes to payment methods or schedules to avoid late fees or other penalties. Franchisees should pay close attention to communications from Fitstop, whether through the manual or other written notices, to remain compliant with the franchise agreement.