Updated January 3, 2019.
If you are considering a Retro Fitness franchise, don’t get blindsided by these 20 important franchise fees (from the initial franchise fee, to the royalty fee, to 18 other fees found in Items 5 and 6 of Retro Fitness’s 2019 FDD).
1. Initial Franchise Fee: $34,500 to $69,000
- You must pay an Initial Franchise Fee in a lump sum of $69,000, or $34,500 for an existing outlet, when you sign the Franchise Agreement.
- All Initial Franchise Fees are payable to Retro Fitness and there are no refunds of any Initial Franchise Fee under any circumstances.
- Retro Fitness reserves the right to negotiate reduced Initial Franchise Fees with franchisees that sign multiple Franchise Agreements simultaneously. The Initial Franchise Fee is otherwise uniform.
2. Opening Inventory: $216
- Before you open, you must order and purchase from Retro Fitness $216 worth of Retro Fitness branded key tags.
- The cost for these items is currently uniform for all franchisees who purchase a franchise under the Disclosure Document, and is not refundable under any circumstances.
3. Lease Review: $2,000 for each lease Retro Fitness (or its authorized representative) reviews for the Retro Fitness Outlet
- After you select a location for your Retro Fitness Outlet, Retro Fitness must approve that location.
- If approved, Retro Fitness (or its authorized representative) will review and may negotiate certain lease provisions for its own benefit. Retro Fitness does not act as your legal counsel or representative in conducting those negotiations, although its interests, as Franchisor, are usually aligned with yours as the Franchisee and tenant.
- Retro Fitness encourages you to consult your own attorney if you need legal assistance in negotiating a lease with which you are satisfied.
- You must pay Retro Fitness (or its authorized representative) a nonrefundable “Lease Review Fee” of $2,000. The Lease Review Fee covers the costs of reviewing and (if applicable) negotiating the first lease Retro Fitness reviews.
- You must pay a Lease Review Fee for each lease Retro Fitness (or its authorized representative) reviews for the Retro Fitness Outlet.
- This fee is currently uniform, and is not refundable under any circumstances.
4. Royalty Fee: 5% of gross sales, with a minimum of $750 per month, per outlet
- Due Date: Payable monthly on the 5th day following the month in which the revenue is received.
- Nonrefundable except in the event gross sales are overcalculated.
- Uniform percentage or minimum royalties are imposed.
5. Local Advertising Deficiency Fee: if you fail to comply with your local advertising expenditure obligations, Retro Fitness has the right to require you to pay it a Local Advertising Fee equal to 5% of gross revenues per month, with a minimum of $5,000 per month
- Due Date: Monthly expenditure required only if you fail to meet your required individual local franchise advertising requirements.
- Non-refundable; uniformly imposed; the Local Advertising Fee will only be imposed if you fail to comply with the Individual Local Franchise Advertising requirement.
- Local Advertising Fees will be spent by Retro Fitness or its designee on advertising for your Retro Fitness Outlet.
6. Advertising Fund: 2% of gross sales per month, payable to Retro Fitness Advertising Fund
- Due Date: Upon commencement of Pre-Sale operations, payable monthly on the 5th day following the month in which the revenue is received.
- Payable to the Ad Fund, nonrefundable, uniformly imposed and collected by Retro Fitness.
7. Initial Training Fees (if you wish to bring more than 20 persons to the initial training program): $500 per person
- Due Date: Prior to attending initial training program.
- You are permitted to bring up to 20 persons (including yourself) to initial training at no additional fee. You must pay $500 per person for any additional persons you bring to initial training. Fees are uniformly based on the number of trainees.
- All travel and living expenses for your travel to Retro Fitness headquarters, and trainer travel for on-site training, are borne by you. Expenses for trainers to travel to your site will vary depending on the distance from Retro Fitness’s corporate headquarters to your site.
8. Additional Training Fee: $500 per person. Will vary under the circumstances.
- Due Date: As Retro Fitness designates. Currently, any additional training fees assessed are due and payable on or before the 5th day of the month following the month in which the additional training was completed. Fees are to be paid via EFT along with payment of your monthly royalty fee.
- Retro Fitness has the right to require you to undergo additional training. If it requires additional training, or if you request additional training and Retro Fitness agrees to provide it, you will be responsible for paying additional training fees.
- The cost of the additional training varies based on the number of people trained and the length of the training.
- All travel and living expenses for your travel to Retro Fitness headquarters, and trainer travel for on-site training, are borne by you. Expenses for trainers to travel to your site will vary depending on the distance from Retro Fitness’s corporate headquarters to your site and are an additional expense.
9. Mandatory Conferences: $500 per person. Will vary under the circumstances.
- Due Date: Payable before attendance at the conference on the date Retro Fitness designates.
- Retro Fitness reserves the right to hold mandatory conferences and to charge you a fee to attend.
10. Penalty Royalty Fee: 1% to 5% of gross sales
- Due Date: Payable monthly on the 5th day following the month in which the revenue is received when you have been in default for thirty days or more.
- Only payable if you are in default and fail to enter your defaults under the Franchise Agreement before the expiration of the requisite cure period.
11. Optional Consulting Charges: $125 per hour, or then-current hourly rate, plus reimbursement of direct costs
- Due Date: 30 days after billing.
- Fees and costs payable to Retro Fitness.
12. Transfer Fee: currently 50% of the then-current Initial Franchise Fee
- Due Date: Prior to consummation of transfer.
- No charge if your franchise is transferred to an entity that you wholly control.
13. Renewal Fee: currently 50% of the then-current Initial Franchise Fee
- Due Date: Upon renewal of franchise.
- Fee payable to Retro Fitness.
14. Alternative Supplier Request Fee: $1,000, nonrefundable
- Due Date: Upon submission of Alternative Supplier Request Form.
- Fee payable to Retro Fitness; nonrefundable.
15. Audit: cost of audit
- Due Date: 30 days after billing if there is a discrepancy of 2% or more with respect to the reporting of gross sales.
- Fees will be payable to Retro Fitness to reimburse auditor, will be imposed and collected by Retro Fitness, and will be nonrefundable.
- Fees will vary depending on the cost of the audit.
16. Interest on Past Due Amounts: 18% per year or the highest amount allowed by applicable law, whichever is less
- Due Date: Upon invoice.
- Charges will be uniformly imposed on a state-by-state basis in conformance with applicable state laws regulating interest rates.
17. Attorneys’ Fees and Costs: total amount of attorneys’ fees incurred by Retro Fitness
- Due Date: Upon invoice.
- If legal action or arbitration is necessary, including any motion to compel arbitration, or action on appeal, to enforce the terms and conditions of the Franchise Agreement or for violation of the Franchise Agreement, Retro Fitness will be entitled to recover reasonable compensation for preparation, investigation costs, court costs, arbitral costs, and reasonable accountants’, attorneys’, attorneys’ assistants’, and expert witness fees incurred by Retro Fitness.
- Further, if Retro Fitness is required to engage legal counsel in connection with any failure by you to comply with the Franchise Agreement, you must reimburse Retro Fitness for any of the above-listed costs and expenses incurred by it.
18. Indemnification: all costs, damages, fees, and obligations incurred by the Indemnified Parties (including Retro Fitness)
- Due Date: Upon invoice.
- You and your Related Parties must indemnify, defend, and hold harmless Retrofitness, LLC and all Indemnified Parties from and against all claims (as defined in the Franchise Agreement) directly or indirectly arising out of or related to your act or omission; the act or omission of any of your Related Parties, employees, agents, or representatives; the operation of the Outlet; the business you conduct; or your breach of the Franchise Agreement.
19. Technology Fee – “Retro-techno” Package: currently $449.99 per month
- Due Date: Upon invoice.
- You must pay Retro Fitness or its designee a fee for access to its Retro-techno software and support. The fee may vary depending on the amount of support you choose and the cost to Retro Fitness.
- This fee may increase.
20. Liquidated Damage Fee: an amount equal to the aggregate Royalty Fees and Advertising Fund contributions due to Retro Fitness during the 36-month period immediately preceding termination
- Due Date: Upon termination, if your Franchise Agreement is terminated as a result of your default.
- If the Franchise Agreement is terminated as a result of a default by you, you must pay Retro Fitness liquidated damages in an amount equal to the aggregate Royalty Fees and Advertising Fund contribution obligations accrued under your Franchise Agreement during the 36 full calendar months during which your Outlet was open and operating immediately before the termination date.
- If the Outlet has not been open and operating for at least 36 months before the termination date, liquidated damages shall be equal to (x) the average monthly Royalty Fees and Advertising Fund contributions owed under the Franchise Agreement for all months during which the Outlet was open and operating, multiplied by (y) 36.