What are the ongoing financial obligations for a Fly Fitness franchisee, considering both the royalty fees (Item 6) and the potential need to upgrade equipment from approved suppliers (Item 8)?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
As a Franchisee you will face Royalty fees of 7% of Gross Revenue and a Brand Fund Contribution Fee of up to 2% of Gross Revenue.
Maintain sufficient inventories of equipment and products as prescribed by Franchisor and employ sufficient employees as prescribed by Franchisor to operate the Franchised Business at its maximum capacity and efficiency as required by Franchisor.
Franchisee acknowledges that Franchisor or Franchisor's affiliate(s) may be the sole approved supplier(s) of certain products and services that Franchisee is required to purchase to operate the Franchised Business.
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, franchisees will face ongoing financial obligations that include royalty fees and brand fund contributions. Specifically, Fly Fitness franchisees must pay a royalty fee of 7% of gross revenue. In addition to the royalty fee, franchisees are also required to contribute up to 2% of gross revenue to the Brand Fund. These fees are calculated based on the total revenue generated by the Fly Fitness studio.
Beyond the explicitly stated royalty and brand fund fees, the FDD states that franchisees must maintain sufficient inventories of equipment as prescribed by Fly Fitness. This implies that franchisees may need to purchase new or upgraded equipment from time to time to meet Fly Fitness's standards. The FDD also mentions that Fly Fitness will make available a list of approved and/or recommended suppliers of products and services, and that Fly Fitness or its affiliates may be the sole approved suppliers for certain products and services.
While the FDD specifies the royalty and brand fund contribution percentages, it does not provide specific details on how often equipment upgrades might be necessary or the potential costs associated with those upgrades. A prospective franchisee should discuss with Fly Fitness the typical lifecycle of fitness equipment, the expected frequency and cost of upgrades, and whether there are any financing options available for these purchases. Understanding these potential capital expenditures is crucial for accurately forecasting the ongoing financial obligations of operating a Fly Fitness franchise.