When are Fitstop's merchant payment processing costs payable?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
| Indemnification | The costs and expenses we incur in connection with your breach or default under your Franchise Agreement or otherwise in the ownership and operation of your Franchised Business. | As incurred by you. | You are solely responsible and must indemnify and hold us harmless for all loss, damage, claims or demands arising from your Franchise including, but not limited to, any joint employment claims. |
|---|---|---|---|
| Annual Convention Fee | We expect this amount to be around $1,500 to $2,000 per attendee | Paid monthly by you. | You will also be responsible for covering the costs that attendees incur in connection with attending any such event. |
| Merchant payment processing costs | Then-current amount charged by our Approved Supplier (if applicable) Currently, these fees are estimated to be between 2% and 4% of Gross Revenue generated by your Franchised Business on an ongoing basis | Payable immediately once collected by the Current Billing/POS Provider | These amounts are payable to our third-party Approved Supplier for such services as of the Issue Date. |
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, merchant payment processing costs are payable immediately once collected by the Current Billing/POS Provider. These costs are charged by Fitstop's Approved Supplier, if applicable. Currently, these fees are estimated to be between 2% and 4% of Gross Revenue generated by your Franchised Business on an ongoing basis. These amounts are payable to Fitstop's third-party Approved Supplier for such services as of the Issue Date.
For a prospective Fitstop franchisee, this means that a portion of their gross revenue, specifically 2% to 4%, will be allocated to cover merchant payment processing fees. These fees are collected by the Current Billing/POS Provider and then immediately paid to Fitstop's Approved Supplier. It is important for franchisees to factor this ongoing expense into their financial projections and business planning.
The FDD specifies that these fees are payable to a third-party Approved Supplier, indicating that Fitstop does not directly handle the payment processing but rather outsources it. This arrangement is common in franchising, as it allows the franchisor to leverage the expertise and infrastructure of specialized payment processing companies. The franchisee should ensure they understand which Approved Supplier is being used and the terms of their service agreement.
It's also important to note that the fees are subject to change, as they are based on the then-current amount charged by the Approved Supplier. Fitstop franchisees should stay informed about any potential changes to these fees to accurately manage their expenses and maintain profitability. The FDD also mentions that these fees are applicable 'if applicable' which may mean that franchisees have some flexibility in choosing their own supplier.