What does the FTC's Franchise Rule permit Fly Fitness to do regarding financial performance?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
figures to promote our franchise.
ITEM 19: FINANCIAL PERFORMANCE REPRESENTATIONS
The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances.
This Item contains a historic financial performance representation showing the combined Net Income, Expenses, Gross Profit, EBITDA, and EBITDAR for our two affiliate owned Fly Fitness outlets located in Lincoln, Nebraska. The first outlet opened in November of 2015 and the second in November of 2019. Our affiliates are a similar size as expected franchisee outlets and represents the sale of products and services that will be available for franchisees to sell.
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Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 41–42)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the FTC's Franchise Rule allows Fly Fitness to provide information about the actual or potential financial performance of its franchised and/or company-owned outlets under certain conditions. This is permissible if Fly Fitness has a reasonable basis for the information and includes it in the disclosure document.
Specifically, Fly Fitness can offer financial performance information that differs from what is included in Item 19 of the FDD only in two scenarios. First, if Fly Fitness provides the actual records of an existing Fly Fitness outlet that a prospective franchisee is considering buying. Second, Fly Fitness can supplement the information provided in Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances.
Fly Fitness states that they do not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets, and they do not authorize their employees or representatives to make such representations either orally or in writing. However, if a prospective franchisee is purchasing an existing outlet, Fly Fitness may provide the actual records of that outlet. The FDD advises that if a prospective franchisee receives any other financial performance information or projections of future income, they should report it to Fly Fitness's management, the Federal Trade Commission, and the appropriate state regulatory agencies.