How does Fly Fitness require franchisees to pay the Royalty Fee and Brand Fund Contribution?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
s Franchised Business. Franchisor reserves the right to collect some or all of Franchisee's grand opening funds and implement grand opening campaign activities on Franchisee's behalf.
13.3. Brand Fund.
- 13.3.1. Franchisor has established a national fund on behalf of the System for national advertising, marketing, and brand development (the "Brand Fund"). Franchisee is required to contribute to the Brand Fund two percent (2%) of the weekly Gross Revenue generated by the Franchised Business ("Brand Fund Contribution"). Payments will be made in the same manner and time as the Royalty Fees. If Franchisee fails to timely report Gross Revenue, then, in addition to a late fee and interest pursuant to Sections 6.2 and 6.3 hereof, Franchisor shall collect one hundred twenty percent (120%) of the last Brand Fund Contribution payable. Franchisor shall reconcile amounts when Gross Revenue are reported.
- 13.3.2. Franchisor shall direct the Brand Fund and shall have sole discretion to approve or disapprove the creative concepts, materials and media used in such programs and the placement and allocation thereof. Franchisee agrees and acknowledges that the Brand Fund is intended to maximize general public recognition and acceptance of
- the Marks and enhance the collective success of all Franchised Businesses operating under the System.
- 13.3.3. Franchisor may, but has no obligation to, contribute to the Brand Fund on the same basis as Franchisee with respect to Fly Fitness outlets operated by Franchisor or Franchisor's affiliates.
- 13.3.4. Franchisor may use the Brand Fund to satisfy any and all costs of developing, preparing, producing, directing, administering, conducting, maintaining and disseminating advertising, marketing, promotional and public relations materials, programs, campaigns, sales and marketing seminars and training programs of every kind and nature, through media now existing or hereafter developed (including, without limitation, the cost of television, radio, magazine, social media, newspaper and electronic advertising campaigns; direct mail and outdoor billboard advertising; public relations activities; conducting marketing research, employing advertising agencies to assist therein; developing, enhancing and maintaining the Website;
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the Brand Fund Contribution is two percent (2%) of the weekly Gross Revenue generated by the Franchised Business. The Brand Fund Contribution payments are to be made in the same manner and time as the Royalty Fees. If a Fly Fitness franchisee fails to report Gross Revenue on time, Fly Fitness will collect one hundred twenty percent (120%) of the last Brand Fund Contribution payable, in addition to a late fee and interest. Fly Fitness will reconcile amounts when Gross Revenue is reported.
If the Royalty Fee, Brand Fund Contribution, or any Gross Revenue Reports are not received by Fly Fitness as required by the Franchise Agreement, the franchisee will pay Fly Fitness a late fee of Seventy-Five Dollars ($75.00), in addition to the overdue amount. This late fee is not a penalty, but is related to Fly Fitness's costs resulting from the delay in payment and/or receipt of any report, and is in addition to any other remedy available to Fly Fitness under the Franchise Agreement.
Any amounts due from the franchisee to Fly Fitness will bear interest from the date due until paid at a rate of 18% per annum, or at the highest rate permitted by law, whichever is lower. If any of the franchisee's checks are returned, or an electronic funds transfer from the franchisee's bank account is denied, for insufficient funds, the franchisee will pay Fly Fitness a non-sufficient funds fee of One Hundred Dollars ($100.00) per occurrence, in addition to the amount due. If any sales, excise, use, or privilege tax is imposed on Fly Fitness for any Royalty Fee, Brand Fund Contribution, or other fees due, the franchisee will pay Fly Fitness a sum equal to the amount of such tax.