What conditions trigger the payment of the remaining balance of the Fly Fitness development fee?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
n an additional unit.
We will charge you a development fee ("Development Fee") when you sign the Multi-Unit Development Agreement. The Development Fee is an amount equal to $50,000 for the first unit, plus 50% of the discounted initial franchise fee for each additional Fly Fitness outlet you commit to develop under the Multi-Unit Development Agreement. For a three-unit commitment, the Development Fee is $75,000 and is calculated as follows, $50,000 + ((50% x $25,000) x2) = $75,000. The remaining balance of $12,500 per outlet shall be payable as the developer's subsequent sites are approved and franchise agreements signed. The Development Fee is fully earned by us and due in lump sum when you sign the Development Agreement. The Development Fee is not refundable u
Source: Item 5 — INITIAL FEES (FDD page 8)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the remaining balance of the development fee is payable as the developer's subsequent sites are approved and franchise agreements are signed. For example, with a three-unit commitment where the Development Fee is $75,000, the initial payment is $50,000 + ((50% x $25,000) x2) = $75,000. The remaining balance of $12,500 per outlet is due as subsequent sites are approved and franchise agreements are signed.
This means that a portion of the development fee is deferred and paid incrementally as the franchisee progresses with opening additional Fly Fitness locations under the multi-unit development agreement. This arrangement could ease the initial financial burden on the franchisee, aligning payments with the progress of their expansion.
It is important for prospective franchisees to understand the specific schedule and conditions for site approval and franchise agreement signing, as these trigger the payment of the remaining development fees. Franchisees should also clarify with Fly Fitness what criteria are used for site approval to ensure they can meet the requirements and avoid delays in their development schedule.