Is the non-sufficient funds fee charged by Fly Fitness considered a penalty?

According to Fly Fitness's 2024 Franchise Disclosure Document, the non-sufficient funds (NSF) fee is not considered a penalty. Specifically, the FDD states that this fee is reasonably related to Fly Fitness's costs resulting from a delayed or declined payment. This means Fly Fitness views the fee as a way to recoup expenses incurred when a franchisee's payment is rejected due to insufficient funds.

For a prospective Fly Fitness franchisee, this implies that if a payment is returned for NSF, they will be responsible for covering not only the original amount due but also a $100 NSF fee. It is important to note that this fee is in addition to any other remedies available to Fly Fitness under the Franchise Agreement. Therefore, franchisees should ensure they have sufficient funds available when payments are due to avoid incurring this additional cost.

It's worth noting that the Franchise Agreement outlines other fees and charges, such as late fees for overdue Royalty Fees or Brand Fund Contributions, which are also explicitly stated not to be penalties. Interest is also charged on overdue amounts. Understanding these financial obligations and ensuring timely payments is crucial for maintaining a positive financial standing with Fly Fitness and avoiding additional charges.