factual

Does the Fly Fitness franchise agreement include a section on 'Advertising, Promotions and Related Fees'?

Fly_Fitness Franchise · 2024 FDD

Answer from 2024 FDD Document

s Franchised Business. Franchisor reserves the right to collect some or all of Franchisee's grand opening funds and implement grand opening campaign activities on Franchisee's behalf.

13.3. Brand Fund.

  • 13.3.1. Franchisor has established a national fund on behalf of the System for national advertising, marketing, and brand development (the "Brand Fund"). Franchisee is required to contribute to the Brand Fund two percent (2%) of the weekly Gross Revenue generated by the Franchised Business ("Brand Fund Contribution"). Payments will be made in the same manner and time as the Royalty Fees. If Franchisee fails to timely report Gross Revenue, then, in addition to a late fee and interest pursuant to Sections 6.2 and 6.3 hereof, Franchisor shall collect one hundred twenty percent (120%) of the last Brand Fund Contribution payable. Franchisor shall reconcile amounts when Gross Revenue are reported.
  • 13.3.2. Franchisor shall direct the Brand Fund and shall have sole discretion to approve or disapprove the creative concepts, materials and media used in such programs and the placement and allocation thereof. Franchisee agrees and acknowledges that the Brand Fund is intended to maximize general public recognition and acceptance of

  • the Marks and enhance the collective success of all Franchised Businesses operating under the System.
  • 13.3.3. Franchisor may, but has no obligation to, contribute to the Brand Fund on the same basis as Franchisee with respect to Fly Fitness outlets operated by Franchisor or Franchisor's affiliates.
  • 13.3.4. Franchisor may use the Brand Fund to satisfy any and all costs of developing, preparing, producing, directing, administering, conducting, maintaining and disseminating advertising, marketing, promotional and public relations materials, programs, campaigns, sales and marketing seminars and training programs of every kind and nature, through media now existing or hereafter developed (including, without limitation, the cost of television, radio, magazine, social media, newspaper and electronic advertising campaigns; direct mail and outdoor billboard advertising; public relations activities; conducting marketing research, employing advertising agencies to assist therein; developing, enhancing and maintaining the Website; and personnel and other departmental costs for advertising that Franchisor internally administers or prepares).
  • 13.3.5. The Brand Fund will not be used to defray any of Franchisor's general operating expenses, except for reasonable administrative costs and overhead that Franchisor may incur in activities related to the administration and direction of the Brand Fund and such costs and expenses pursuant Section 13.3.4. The Brand Fund and its earnings shall not otherwise inure to Franchisor's benefit except that any resulting technology and intellectual property shall be deemed the property of Franchisor.
  • 13.3.6. Franchisor will prepare an unaudited annual statement of the Brand Fund's operations and will make it available to Franchisee upon request. In administering the Brand Fund, Franchisor undertakes no obligation to make expenditures for Franchisee that are equivalent or proportionate to Franchisee's contribution or to ensure that any particular franchisee benefits directly or pro rata from the production or placement of advertising.
  • 13.3.7. Although the Brand Fund is intended to be of perpetual duration, Franchisor may terminate it at any time and for any reason or no reason. Franchisor will not terminate the Brand Fund, however, until all monies in the Brand Fund have been spent for advertising or promotional purposes or returned to contributors, without interest, on the basis of their respective contributions.
  • 13.4. Advertising Cooperative. Franchisor reserves the right to establish, in Franchisor's sole discretion, a local or regional advertising cooperative. If such cooperative is established during the term of this Agreement, Franchisee agrees to sign all documents Franchisor requests to become a member of the cooperative according to the terms of the documents. If Franchisor establishes a cooperative, Franchisee agrees to contribute amounts Franchisor requires, in addition to required Brand Fund Contributions.

  • 13.5. Directory Listings. At Franchisee's sole cost and expense, Franchisee must list the Franchised Business in local business directories, including, but not limited to, listings on Internet search engines. If feasible, and with Franchisor's prior written approval, Franchisee may do cooperative listings with other System franchisees.

Source: Item 22 — CONTRACTS (FDD pages 44–45)

What This Means (2024 FDD)

According to Fly Fitness's 2024 Franchise Disclosure Document, the franchise agreement does address advertising, promotions, and related fees. Specifically, Fly Fitness franchisees are required to contribute to a Brand Fund, which is used for national advertising, marketing, and brand development. This contribution is 2% of the weekly Gross Revenue generated by the Franchised Business. Payments are made in the same manner and time as the Royalty Fees. If a franchisee fails to report Gross Revenue on time, Fly Fitness can collect 120% of the last Brand Fund Contribution payable, in addition to late fees and interest. Fly Fitness has the discretion to approve or disapprove the creative concepts, materials, and media used in advertising programs. The Brand Fund aims to maximize public recognition and acceptance of the Fly Fitness brand. Fly Fitness may also contribute to the Brand Fund. The Brand Fund can be used for various advertising and marketing costs, including television, radio, magazine, social media, newspaper, and electronic advertising campaigns, as well as direct mail, outdoor billboard advertising, public relations activities, marketing research, website development, and personnel costs. Franchisees are also required to list their Franchised Business in local business directories, including Internet search engines, at their own cost. All advertising and promotion by the franchisee must be conducted professionally and conform to Fly Fitness's standards. Franchisees must submit all advertising materials to Fly Fitness for approval, and Fly Fitness has ten business days to approve or disapprove the materials. Failure to respond within ten business days results in disapproval. Franchisees cannot use unapproved materials and must discontinue use of any materials upon notice from Fly Fitness. Any advertising concepts developed by the franchisee and approved by Fly Fitness may be used by other franchisees without compensation to the originating franchisee. If Fly Fitness establishes a cooperative, the franchisee agrees to contribute amounts Fly Fitness requires, in addition to required Brand Fund Contributions.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.