Is the non-compliance fee charged by Fly To Fit considered a penalty?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
program after opening, Fly To Fit Franchise may charge its then-current training fee. As of the date of this Agreement, the training fee is $350 per day.
- 4.5 Non-Compliance Fee. Fly To Fit Franchise may charge Franchisee $500 for any instance of non-compliance with the System Standards or this Agreement (other than Franchisee's nonpayment of a fee owed to Fly To Fit Franchise) which Franchisee fails to cure after 30 days' notice. Thereafter, Fly To Fit Franchise may charge Franchisee $250 per week until Franchisee ceases such non-compliance. This fee is a reasonable estimate of Fly To Fit Franchise's internal cost of personnel time attributable to addressing the non-compliance, and it is not a penalty or estimate of all damages arising from Franchisee's br
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, the non-compliance fee is not considered a penalty. Fly To Fit may charge a franchisee $500 for each instance of failing to comply with the System Standards or the Franchise Agreement. This fee applies if the franchisee does not correct the issue after receiving 30 days' notice. After this initial fee, Fly To Fit can charge $250 per week until the franchisee resolves the non-compliance.
The FDD states that this fee is designed to cover Fly To Fit's internal costs related to addressing the non-compliance, specifically the personnel time spent on the issue. It is important to note that this fee is in addition to any other rights and remedies Fly To Fit has, including default and termination of the agreement.
This means that if a Fly To Fit franchisee fails to meet the brand's standards or violates the agreement terms, they will incur these fees in addition to any other financial or legal repercussions. Franchisees should ensure they understand and adhere to all System Standards and agreement terms to avoid these non-compliance fees.