How is the development fee calculated for a Fly Fitness multi-unit development agreement?
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, a development fee is charged when signing a Multi-Unit Development Agreement. 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 you commit to develop under the Multi-Unit Development Agreement.
For example, the FDD states that for a three-unit commitment, the Development Fee is $75,000, calculated as follows: $50,000 + ((50% x $25,000) x2) = $75,000. The remaining balance of $12,500 per outlet is payable as the developer's subsequent sites are approved and franchise agreements signed.
The Development Fee is fully earned by Fly Fitness and due in lump sum when you sign the Development Agreement, and it is not refundable under any circumstance. This means that Fly Fitness receives the fee upfront, and the franchisee cannot get it back, even if they don't open all the committed locations. This is a common practice in franchising, as the fee compensates the franchisor for granting the development rights and providing initial support.