What is the purpose of the 'Fees' section in the Punch King Fitness Area Development Agreement?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
The total amount of the Development Fee is listed in Exhibit 2 (the "Development Fee"). The Development Fee will be applied toward the initial franchise fee due under subsequent Franchise Agreements in the manner specified in Exhibit 2. Developer will pay the balance of the initial franchise fee as so stipulated and due under the then Current Franchise Agreement for each Franchised Business at the time the Franchise Agreement for each Franchised Business is executed. The Development Fee will not be refundable, notwithstanding anything to the contrary in this Agreement or any Franchise Agreement.
III. DEVELOPMENT SCHEDULE
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
According to the 2024 Punch King Fitness Franchise Disclosure Document, the 'Fees' section within the Area Development Agreement outlines the financial obligations of the developer to Punch King Fitness. Specifically, it details the Development Fee, which is applied towards the initial franchise fee due under subsequent Franchise Agreements.
The Development Fee, the total amount of which is listed in Exhibit 2, is non-refundable. The developer is required to pay the balance of the initial franchise fee as stipulated in the current Franchise Agreement for each Franchised Business when each Franchise Agreement is executed. This means that while a portion of the initial investment is covered by the Development Fee, the franchisee must be prepared to pay the remaining balance for each location they plan to open.
Exhibit 2 of the Area Development Agreement states that the Development Fee is $30,000 per additional franchise. This fee is payable in two installments: one-half upon signing the Area Developer Agreement and the remaining one-half upon signing the franchise agreement for the additional territory. This arrangement allows Punch King Fitness to secure commitment from the developer while also providing a payment schedule that aligns with the progress of establishing new franchise locations.