When is the initial franchise fee for Fly Fitness due?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
ITEM 5: INITIAL FEES**
We will charge you an initial franchise fee ("Initial Franchise Fee") when you sign the Franchise Agreement. The Initial Franchise Fee is $50,000. This payment is fully earned by us and due in lump sum when you sign the Franchise Agreement. The Initial Franchise Fee is not refundable under any circumstance.
From time to time, we may offer special incentive programs as part of our franchise development activities. We reserve the right to offer, modify or withdraw any incentive program without notice to you. We currently offer a 20% discount from the Initial Franchise Fee for Fly Fitness franchisees in good standing who wish to open 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, the initial franchise fee of $50,000 is due in a lump sum when the Franchise Agreement is signed. This fee is considered fully earned by Fly Fitness upon payment and is non-refundable under any circumstances. This means that a prospective franchisee must have the full $50,000 available at the time of signing to secure the franchise.
It is common practice in the franchise industry for the initial franchise fee to be non-refundable, as it compensates the franchisor for the initial costs of granting the franchise, including evaluating the applicant, providing training, and setting up the franchisee with the necessary resources. The FDD also mentions that Fly Fitness may offer special incentive programs that could include a discount on the initial franchise fee. For example, existing franchisees in good standing receive a 20% discount when opening an additional unit.
For franchisees considering a multi-unit development, a development fee is required upon signing the Multi-Unit Development Agreement. This fee covers the first unit at $50,000, plus 50% of the discounted initial franchise fee for each additional unit. For instance, a three-unit commitment requires a $75,000 development fee, calculated as $50,000 + ((50% x $25,000) x2) = $75,000. The remaining balance of $12,500 per outlet is payable as subsequent sites are approved and franchise agreements are signed. Like the initial franchise fee, the development fee is fully earned upon payment and is non-refundable.