Under what circumstances is the Fly Fitness Development Fee refundable?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
t and all rights granted by Franchisor under this Agreement shall expire on the date on which Developer successfully and in a timely manner has complied with all of Developer's obligations hereunder and has completed the development obligations in accordance with the Development Schedule.
4. DEVELOPMENT AND FRANCHISE FEES.
- 4.1 Multi-Unit Development Fee. In consideration of the rights granted under this Agreement, Developer shall pay Franchisor a development fee ("Development Fee") equal to Fifty Thousand Dollars ($50,000) for your first Fly Fitness Franchised Business and fifty percent (50%) of the discounted initial franchise fee of Twenty Five Thousand Dollars ($25,000) for each Franchised Business thereafter Developer agrees to develop as set forth on the Mandatory Development Schedule.
- The Development Fee is fully earned at the time this Multi-Unit Development Agreement is signed and is not refundable under any circumstances. Developer shall pay the full amount of the Development Fee to Franchisor upon Developer's execution of this Agreement.
- 4.2 Application of Development Fee. Contemporaneous with the execution of this Agreement, Developer shall execute the initial Franchise Agreement for the first Franchised Business to be established pursuant to the Mandatory Development Schedule. Developer shall receive the applicable credit from the Development Fee, which shall be applied to the Initial Franchise Fee due under the initial Franchise Agreement. Provided that Developer is in compliance with the Mandatory Development Schedule and is not otherwise in breach of this Agreement, upon the execution each of additional Franchise Agreement for a Franchised Business to be developed hereunder, Developer shall receive the applicable credit from the Development Fee, which shall be applied to the Initial Franchise Fee payable pursuant to each such additional Franchise Agreement. Upon Franchisor's approval, Developer may enter into the initial Franchise Agreement or any su
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the Development Fee is generally non-refundable. The document explicitly states that the Development Fee is fully earned upon signing the Multi-Unit Development Agreement and is not refundable under any circumstances. This means that once a developer signs the agreement, they are obligated to pay the fee, and they cannot get it back, regardless of whether they successfully develop the Fly Fitness franchises as planned.
The Development Fee structure involves an initial payment of $50,000 for the first Fly Fitness Franchised Business. For each subsequent franchise the developer commits to developing, they pay 50% of the initial franchise fee, which amounts to $25,000. This fee secures the developer's rights to expand within a specific territory according to an agreed-upon development schedule. The Development Fee is applied as a credit towards the Initial Franchise Fee due for each franchise agreement executed under the Multi-Unit Development Agreement, provided the developer adheres to the Mandatory Development Schedule and is not in breach of the agreement.
This non-refundable policy is a significant consideration for potential Fly Fitness developers. It means that the developer bears the risk of losing the Development Fee if they fail to meet their development obligations or if the agreement is terminated for any reason. Prospective developers should carefully evaluate their ability to meet the development schedule and their financial capacity to absorb the loss of the Development Fee before entering into a Multi-Unit Development Agreement with Fly Fitness. It is crucial to fully understand the terms and conditions of the agreement and to seek legal and financial advice before making a commitment.