What is the formula for calculating the transfer fee for Fly Fitness development rights?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
s prior to a closing of the proposed Transfer; and
- 6.3.8 If Developer, through Developer or any entity, finances any part of the sale price of the Transfer, Developer agrees that all obligations of the transferee under any notes, agreements or security interests to Developer or Developer's entity will be subordinate to the transferee's obligations to Franchisor.
- 6.4 Transfer Fee. As a condition to any Transfer, Developer shall pay Franchisor a transfer fee equal to
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, a transfer fee is required when a developer transfers their development rights. The transfer fee is calculated by multiplying $10,000 by the number of remaining Fly Fitness Franchised Businesses yet to be developed under the agreement.
However, there are exceptions to this fee. No transfer fee is payable (i) for transfers among the individuals named as the Developer in the introductory paragraph of the agreement, and (ii) for a transfer to a spouse upon the death or permanent disability of a Developer.
This fee is a condition of the transfer, meaning the transfer cannot proceed without it. This could significantly impact the financial aspects of selling development rights, especially if the developer has a large number of remaining businesses to develop. Prospective developers should consider this potential cost when evaluating the franchise opportunity and planning their long-term business strategy.