Considering a Farrell’s eXtreme Bodyshaping Franchise? Don’t Overlook These 19 Important Franchise Fees

Updated November 30, 2020.

If you are considering a Farrell’s eXtreme Bodyshaping franchise, don’t get blindsided by these 19 important franchise fees (from the initial franchise fee, to the royalty fee, to 17 other fees found in Items 5 and 6 of Farrell’s eXtreme Bodyshaping’s 2020 FDD).

1.  Initial Franchise Fee:  $49,900

• You will pay Farrell’s a $49,900 initial franchise fee when you sign the Franchise Agreement. The initial franchise fee is nonrefundable upon payment and is uniform for all new franchisees, except that some of Farrell’s existing franchisees have the right to develop additional Farrell’s Centers under existing agreements and on different terms.

2.  Merchandise Royalty:  5% of Merchandise Gross Sale, as may be reduced by the Compliance Rebate

• Due Date:  Monthly.

3.  Service Royalty:  greater of 8½% of Service Gross Sales or Minimum Royalty, as may be reduced by the Compliance
Rebate

• Due Date:  Monthly with annual reconciliation.

• The Minimum Royalty is $11,250 for the first year of operations, $15,000 for the second year of operations, and $18,750 for the third and each additional year of operations.

4.  Marketing Fund Contribution:  amount Farrell’s determines periodically (currently $0), subject to the Marketing Spending Requirement

• Due Date:  Monthly.

• Any amounts contributed to Farrell’s Marketing Fund and any amounts you are required to contribute to an Advertising Cooperative will be credited toward the Marketing Spending Requirement.

5.  Cooperative Contributions:  amount the Cooperative determines, subject to the Marketing Spending Requirement

• Due Date:  As Cooperative specifies.

• Any amounts contributed to Farrell’s Marketing Fund and any amounts you are required to contribute to an Advertising Cooperative will be credited toward the Marketing Spending Requirement.

6.  Successor Franchise Fee:  $7,500

• Due Date:  When signing successor Franchise Agreement.

7.  Transfer:  $10,000

• Due Date:  Upon transfer.

8.  Ongoing Training and Special Assistance:  currently $750 per day, plus out-of-pocket costs and expenses, but could increase if Farrell’s costs increase

• Due Date:  As incurred.

• Farrell’s may charge you for supplemental training courses, programs, and conventions and for additional or special assistance or training you need or request.

9.  Replacement Copy of Operations Manual:  currently $50, but could increase if Farrell’s costs increase

• Due Date:  As incurred.

• Due only if you need a replacement copy.

10.  New Product/Supplier Testing:  costs of testing

• Due Date:  When billed.

• Covers costs of testing new products or inspecting new suppliers you propose.

11.  Relocation:  reasonable costs Farrell’s incurs

• Due Date:  As incurred.

• Due only if you ask to relocate the Center.

12.  Costs to Maintain Center:  reasonable costs Farrell’s incurs

• Due Date:  5 days after billing.

• Due only if you do not maintain or upgrade the Center as required, and Farrell’s chooses to do so.

13.  Administrative Fee:  $250 per enforcement effort (i.e., written or verbal notification and follow up), and $250 per week for each week that the issue remains unresolved

• Due Date:  On demand.

• Farrell’s may assess an administrative fee to compensate it for its time.

14.  Audit:  cost of inspection or audit

• Due Date:  As incurred.

• Due only if you fail to report or understate Royalty by 2% or more.

15.  Interest:  lesser of 1.5% per month or highest commercial contract interest rate law allows

• Due Date:  15 days after billing.

• Due on all overdue amounts more than 7 days late.

16.  Management Fee:  20% of combined Merchandise Gross Sales and Service Gross Sales while Farrell’s manages Center

• Due Date:  As incurred.

• Payable only if Farrell’s or its designee manages Center after your (or your managing owner’s) death or disability, after your default or abandonment, or after termination.

17.  Software License and Technology Fees:  $450 per month

• Due Date:  Monthly, due on or around the 20th of each month.

• Due monthly to Farrell’s; it collects fees from all Centers and pays lump-sum to licensor with the exception of MyZone heart rate tracking system.

18.  Costs and Attorneys’ Fees:  will vary under circumstances

• Due Date:  As incurred.

• Due only if Farrell’s prevails in legal proceeding.

19.  Indemnification:  will vary under circumstances

• Due Date:  As incurred.

• You must reimburse Farrell’s if it is held liable for claims from your Center’s operation, your business, breach of agreement, or non-compliance with any law or regulation.