What is the consequence if a Fly Fitness franchisee underreports Gross Revenue?

According to Fly Fitness's 2024 Franchise Disclosure Document, if a franchisee does not report revenues for the month, Fly Fitness will collect 120% of the last Continuing Royalty Fee collected. The balance will then be settled the next period in which the franchisee reports revenue.

The Continuing Royalty Fee is 7% of the Gross Revenue generated weekly by the Franchised Business. Gross Revenue includes all revenues and income from any source derived or received by Franchisee from, through, by or on account of the operation of the Franchised Business or made pursuant to the rights granted hereunder, including but not limited, any and all other revenues received using Franchisor's methods, operations and/or trade secrets whether received in cash, in services, in kind, from barter and/or exchange, on credit (whether or not payment is actually received) or otherwise.

This policy incentivizes accurate and timely reporting of revenue. Franchisees should maintain meticulous records of all income and ensure they are reported correctly to avoid the penalty of paying 120% of the last royalty fee. Additionally, franchisees are required to set up authorization at their bank to allow Fly Fitness to electronically transfer funds from their bank account to Fly Fitness's bank account. Interest and late fees will apply to any late payments or electronic funds transfer requests denied due to insufficient funds.