How often must a Fly Fitness franchisee pay the royalty fee?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
anchise Agreement is signed and is not refundable under any circumstances.** Franchise shall pay the full amount of the Initial Fee to Franchisor upon Franchisee's execution of this Agreement.
- 6.1.2 Royalty Fee. Franchisee agrees to pay Franchisor, weekly throughout the Term, a royalty fee equal to seven percent (7%) of the Gross Revenue, as hereinafter defined, realized from the Franchised Business and from any other revenues received using Franchisor's methods, operations and/or trade secrets (the "Royalty Fee"). The term "Gross Revenue" includes all revenues and income from any source derived or received by Franchisee from, through, by or on account of the operation of the Franchised Business or made pursuant to the rights granted hereunder, including but not limited, any and all other revenues received using Franchisor's methods, operations and/or trade secrets whether received in cash, in services, in kind, from barter and/or exchange, on credit (whether or not payment is actually received) or otherwise. It does not include (i) any sales tax or similar taxes collected from customers and turned over to the governmental authority imposing the tax, (ii) properly documented refunds to customers, (iii) properly documented promotional discounts or (iv) properly documented employee discounts (limited to 3% of Gross Revenue). Gross Revenue does not include gift card purchases, at the time of purchase, but Gross Revenue does include the redemption amount of purchases made by gift card.
- 6.1.3 Gross Revenue Reports. Franchisee shall, every Wednesday for the week prior (Monday through Sunday), furnish Franchisor with a report showing Franchisee's Gross Revenue at or from the Franchised Business and/or made pursuant to the rights granted hereunder during such period (the "Gross Revenue Report"). The Gross Revenue Report shall be in such form and shall contain such information as Franchisor may from time to time prescribe. Franchisor reserves the right to establish a point-of-sale system ("POS System") that Franchisor may require Franchisee to use in the operation of the Franchised Business.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, franchisees are required to pay a royalty fee on a weekly basis throughout the term of the agreement. This royalty fee is calculated as seven percent (7%) of the Gross Revenue, which includes all revenues and income derived from the operation of the franchised business or from using Fly Fitness's methods, operations, and trade secrets. These revenues can be received in various forms, such as cash, services, or credit, regardless of whether payment is actually received.
Gross Revenue, however, does not include certain items such as sales tax collected from customers and remitted to the government, properly documented refunds to customers, promotional discounts, and employee discounts (limited to 3% of Gross Revenue). Additionally, the purchase of gift cards is excluded from Gross Revenue at the time of purchase, but the redemption amount of purchases made with gift cards is included.
In addition to the royalty fee, Fly Fitness franchisees must also contribute to the Brand Fund, which is set at two percent (2%) of weekly Gross Revenue. These Brand Fund contributions are to be made in the same manner and at the same 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, along with late fees and interest. The amounts will be reconciled once the Gross Revenue is reported.