Does Fly Fitness provide material benefits based on the use of designated sources?

According to Fly Fitness's 2024 Franchise Disclosure Document, Fly Fitness does not provide any material benefits to franchisees for using designated sources. However, franchisees are required to purchase inventory, equipment, computer systems, and certain software from Fly Fitness's designated suppliers and contractors, or in accordance with their specifications. These restrictions are in place to ensure that the products and services used by franchisees meet Fly Fitness's standards and requirements. Failure to use approved items or designated suppliers and contractors may result in a default under the Franchise Agreement.

Fly Fitness estimates that purchases from approved suppliers will account for approximately 41% to 47% of the initial costs to establish a Fly Fitness franchise and about 9% of the ongoing operational costs. While there are currently no purchasing or distribution cooperatives, Fly Fitness reserves the right to require franchisees to make purchases through a cooperative if one is formed in the future. Fly Fitness may also negotiate purchase arrangements, including price terms, with designated and approved suppliers on behalf of all franchisees.

Although Fly Fitness does not offer material benefits for using designated sources, they retain the right to direct suppliers to withhold products and services if a franchisee defaults under the Franchise Agreement. This underscores the importance of adhering to the approved supplier list and meeting Fly Fitness's standards to avoid potential disruptions to the business. Prospective franchisees should carefully review the list of approved suppliers and understand the financial implications of these requirements.