Are there any penalties for late payment of the Continuing Royalty Fee for a Fly Fitness franchise?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
hem to us.
1 You must pay us a Continuing Royalty Fee equal to seven percent (7.0%) of the Gross Revenue generated weekly by your Franchised Business. "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 (i.e., coupons) 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. If you do not report revenues for the month, then we will collect 120% of the last Continuing Royalty Fee collected and settle the balance the next period in which you report revenue. You are required to set up authorization at your bank to allow us to electronically transfer funds from your bank account to our bank account. Interest and late fees will apply to any late payments or electronic funds transfer requests denied due to insufficient funds.
- 2You must also spend at least $15,000 on local advertising and marketing six (6) weeks prior to and for two (2) months following the opening of your Franchised Business. Thereafter, you must spend a minimum of $500 per month on local advertising and marketing activities.
Source: Item 6 — OTHER FEES (FDD pages 8–14)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, late payments of the Continuing Royalty Fee will incur penalties. The Continuing Royalty Fee is 7% of weekly Gross Revenue, payable weekly on Wednesday for the prior week's revenue (Monday through Sunday). Fly Fitness requires franchisees to authorize electronic fund transfers from their bank account for royalty payments.
Interest and late fees will be applied to any late payments or denied electronic fund transfers due to insufficient funds. This is a fairly standard practice in franchising, as franchisors rely on timely royalty payments to fund their ongoing support and brand development activities.
Furthermore, if a Fly Fitness franchisee fails to report revenues for the month, Fly Fitness will collect 120% of the last Continuing Royalty Fee collected. The balance will then be settled the next period in which the franchisee reports revenue. This policy incentivizes franchisees to report revenues accurately and on time, ensuring that Fly Fitness receives the appropriate royalty payments.