Does Fly Fitness anticipate any significant tax positions that would not be sustained under examination by taxing authorities?

According to Fly Fitness's 2024 Franchise Disclosure Document, Fly Fitness Franchise LLC, as a limited liability company, is treated as a partnership for income tax purposes, meaning it is not subject to income taxes at the company level. Instead, any income or loss is taxed to the individual members. The company assesses its tax positions to determine if they would be sustained under examination by taxing authorities. As of the end of 2023, Fly Fitness has not identified any significant tax positions that it believes would not be sustained under examination.

For a prospective Fly Fitness franchisee, this means that the company believes it has taken reasonable and supportable positions on its tax returns. However, it is important to note that the company's income tax returns for 2021, 2022, and 2023 remain subject to possible examination by the Internal Revenue Service (IRS), generally for three years after they are filed. This is a standard audit window, and the IRS could potentially challenge tax positions taken during those years.

This disclosure provides some comfort that Fly Fitness is not aware of any aggressive tax strategies that could lead to future tax liabilities. However, franchisees should still consult with their own tax advisors to understand the tax implications of investing in a Fly Fitness franchise and to ensure they are in compliance with all applicable tax laws. Franchisees should also be aware that their individual tax situations may differ from that of the company, and they should not rely solely on the company's assessment of its tax positions.