Does Fly Fitness receive revenue from franchisee required purchases or leases?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
product testing and evaluation.
We and our affiliates currently do not receive any revenue, rebates, discounts, or other material consideration from any other suppliers based on your required purchases of products, supplies or equipment; however, we may do so in the future, and any rebates or discounts we receive may be kept by us in our sole discretion. We and our affiliates have not received any revenue from franchisees required purchases or leases as of the date of this Disclosure Document.
We require you to purchase computer systems and software meeting our minimum specifications for use at your Franchised Business. This includes entry-area computer hardware that operates our current required POS system and additional laptop computer or smart device that can operate other required software.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 18–20)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, as of the date of the document, Fly Fitness and its affiliates have not received any revenue from franchisee-required purchases or leases. However, the document indicates that while Fly Fitness and its affiliates do not currently receive any revenue, rebates, discounts, or other material consideration from any other suppliers based on franchisee required purchases of products, supplies, or equipment, they may do so in the future. Any rebates or discounts Fly Fitness receives in the future may be kept by them at their sole discretion.
Fly Fitness requires franchisees to purchase various items from approved suppliers, including inventory, equipment, computer systems, and certain software. The estimated cost of these purchases or leases from approved suppliers represents a significant portion of a franchisee's expenses. Specifically, the FDD states that these purchases account for approximately 41% to 47% of the costs to establish the Franchised Business and about 9% of the costs for ongoing operations.
This arrangement is fairly common in franchising, where franchisors often designate specific suppliers to maintain quality control and brand consistency. While Fly Fitness does not currently benefit financially from these required purchases, the possibility exists for them to do so in the future. Prospective franchisees should consider this potential change and its possible impact on their operating costs and profitability. It would be prudent to inquire with Fly Fitness about their long-term plans regarding supplier revenue and how any future rebates or discounts might be shared or used to benefit franchisees.