Can Fly Fitness increase the amount of the internal systems fees?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor reserves the right to impose an internal systems fee upon Franchisee, in an amount that Franchisor reasonably determines, for the development, adoption and/or use of new or improved internal systems technology for the benefit of the System and Franchised Business, including but not limited to, assigned phone numbers and email addresses required for use in the Franchised Business, a franchise portal, benchmarking platform or other operations or communications systems ("Internal Systems Fee").
In Franchisor's sole discretion, Franchisor may (i) increase the amount of the internal systems fees or (ii) replace the technology with different technology, developed by Franchisor or a third-party, and Franchisee shall pay the then-
current fees for the replacement technology and for continuous access thereto. Franchisee shall pay the Internal Systems Fee in the manner and frequency as reasonably determined by Franchisor.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, Fly Fitness retains the right to increase the amount of the internal systems fees. The document states that Fly Fitness, in its sole discretion, may increase the amount of internal systems fees. These fees are related to the development, adoption, or use of new or improved internal systems technology that benefits the Fly Fitness system and franchised businesses.
This clause in the franchise agreement means that franchisees could face increased costs over the term of their agreement if Fly Fitness decides to implement new technologies or improve existing ones. The fees cover items such as assigned phone numbers, email addresses, a franchise portal, benchmarking platform, or other operations or communications systems.
Fly Fitness also has the option to replace the existing technology with different technology, whether developed internally or by a third party. In such cases, franchisees would be required to pay the then-current fees for the replacement technology and for continuous access to it. The frequency and manner of these payments will be determined reasonably by Fly Fitness.
As a prospective franchisee, it is important to understand that these fees can change and to factor in potential increases when assessing the financial viability of the franchise. It would be prudent to inquire about the typical frequency and magnitude of past internal systems fee adjustments to better anticipate future costs.