How are payments received by Fitstop from members for a franchisee's services handled?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
13.9 Related Acknowledgements. The parties acknowledge and agree that (i) all payments made by members in respect of Approved Products and/or Approved Services which you provide to members from your Franchise must be processed through our online ordering system via our website or our application; (ii) we may, in our reasonable discretion, allocate discounted or free memberships to members who work at our headquarters, other team members, corporate partners, athletes and ambassadors and sponsors of our brand; (iii) there is no exclusivity of members and members may openly choose to deal with any franchisee, regardless of the member's location; (iv) subject to the below, all payments received by us from members who pay for Approved Products and/or services which you provide from your Franchise through our online ordering system via our website or the application are accepted by us for and on your behalf unless advised otherwise by us in writing at any time during the Term; and (v) all amounts from the sale of the Approved Products and/or services which you provide from your Franchise that we receive from members through our online ordering system via our website or the application are set up to be paid by a third party vendor to you on the third calendar day of each month less:
13.9.1 any merchant fees that we incur upon receipt of the payments referred to within this clause;
13.9.2 any merchant fees that we incur when transferring such payments to you; and
13.9.3 any amount payable by you to us under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, payments from members for Approved Products and Services provided by a franchisee are processed through Fitstop's online ordering system, either via their website or application. These payments are then accepted by Fitstop on behalf of the franchisee, unless Fitstop advises otherwise in writing.
Fitstop arranges for a third-party vendor to pay the franchisee the amounts collected from the sale of Approved Products and Services on the third calendar day of each month. However, certain deductions are made before the franchisee receives the payment. These deductions include any merchant fees that Fitstop incurs upon receiving the payments and when transferring the payments to the franchisee. Additionally, any amounts the franchisee owes to Fitstop under the Franchise Agreement are also deducted from the payment.
This system ensures that Fitstop maintains control over the financial transactions related to its brand, while franchisees receive their due payments regularly. Franchisees need to be aware of the deductions for merchant fees and other obligations to Fitstop, as these will impact the final amount they receive. This arrangement is not uncommon in franchise systems, as it allows the franchisor to manage brand standards, marketing, and customer data more effectively, while also ensuring consistent revenue collection and distribution.