What is the definition of the 'Development Fee' for Fly Fitness?
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 Development Fee is charged when a franchisee signs a Multi-Unit Development Agreement. This fee covers the right to develop multiple Fly Fitness locations. The Development Fee is calculated as $50,000 for the first unit, plus 50% of the discounted initial franchise fee for each additional Fly Fitness outlet the franchisee commits to develop under the agreement. The initial franchise fee is discounted by 20% for existing franchisees in good standing.
For example, the FDD states that for a three-unit commitment, the Development Fee totals $75,000. This is calculated as $50,000 for the first unit, plus $12,500 for each of the two additional units (50% x $25,000 x 2 = $25,000). The remaining balance of $12,500 per outlet is payable as the developer's subsequent sites are approved and franchise agreements are signed.
The Development Fee is fully earned by Fly Fitness when the Development Agreement is signed and is due in a lump sum at that time. The FDD explicitly states that the Development Fee is not refundable under any circumstances. This means that if a multi-unit developer is unable to open all of the committed locations, they will not receive a refund of the development fees already paid to Fly Fitness.