Considering a YogaSix Franchise? Don’t Overlook These 29 Important Franchise Fees

Updated December 4, 2019.

If you are considering a YogaSix franchise, don’t get blindsided by these 29 important franchise fees (from the initial franchise fee, to the royalty fee, to 27 other fees found in Items 5 and 6 of YogaSix’s 2019 FDD).

1.  Initial Franchise Fee:  $60,000

• You must pay to YogaSix a lump sum initial franchise fee of $60,000 (the “Initial Franchise Fee”) to establish a single Studio under a Franchise Agreement (whether a start-up or conversion). The Initial Franchise Fee is due upon the signing of the Franchise Agreement.

• The Initial Franchise Fee shall be fully earned by YogaSix upon payment and is not refundable, in whole or in part, under any circumstance.

2.  Initial FFE Package:  $40,000 to $51,600

• You must purchase an initial package of furniture, fixtures, and equipment that is designed to provide you with the majority of the items that you will need in connection with outfitting, equipping, and otherwise building out your Studio (the “Initial FFE Package”), and includes the cost of shipping and installation.

• As of the Issue Date of the current Disclosure Document, YogaSix estimates that you will pay it between $40,000 and $51,600 for your Initial FFE Package that will typically be comprised of (a) yoga mats, yoga blocks, other exercise accessory equipment, and related items for use in connection with the provision of the Approved Services, (b) a Studio fixture package comprised of a desk, displays and display rack, storage cubbies, pedestals, and assorted other fixtures, and (c) a HVAC setup.

• You must currently purchase the Initial FFE Package from YogaSix, but it reserves the right to designate another approved supplier in its sole discretion.

3.  Opening Retail Inventory:  $12,000

• Prior to opening your YogaSix Studio, you must purchase opening inventory from YogaSix at a cost of approximately $12,000 (“Opening Retail Inventory”), which includes apparel and other merchandise that will be available for resale as part of your Approved Products, including t-shirts, towels, exercise clothing, and related accessories.

4.  Development Fee:  depends on the number of Franchised Businesses YogaSix grants you the right to open within the Development Area

• If YogaSix awards you the right to develop multiple Franchised Businesses within a given Development Area, you must pay YogaSix a one-time Development Fee upon execution of your Development Agreement.

• Your Development Fee will depend on the number of Franchised Businesses YogaSix grants you the right to open within the Development Area, and is calculated as follows: (i) $100,000 for the right to open two Franchised Businesses; (ii) $45,000 per Franchised Business if you agree to open and operate between three and five Franchised Business; (iii) $40,000 per Franchised Business if you agree to open and operate between six and nine Franchised Businesses; and (iv) $35,000 per Franchised Business if you agree to open and operate 10 or more Franchised Businesses.

• You will be required to enter into YogaSix’s then-current form of Franchise Agreement for each Franchised Business you wish to open under your Development Agreement, but you will not be required to pay any additional Initial Franchise Fee at the time you execute each of these Franchise Agreements.

• Your Development Fee will be deemed fully earned upon payment, and is not refundable under any circumstances.

5.  Royalty:  7% of the Gross Sales generated by your Franchised Business

• Due Date:  Payable weekly based on the Gross Sales of your Franchised Business during the preceding business week.

6.  Fund:  2% of Gross Sales generated by your franchised Studio

• Due Date:  Payable weekly at the same time and in the same manner as the Royalty.

• YogaSix has established a brand development Fund that is designed to facilitate the promotion and development of the brand, System, Approved Services, and Studios.

• YogaSix requires you to make a contribution to that Fund amounting to 2% of the Gross Sales of your Franchised Business (the “Fund Contribution”), and your obligation to contribute will commence once you have started operating your Franchised Business.

7.  Local Advertising Requirement:  you must expend a minimum of $1,500 per month (the “Local Advertising Requirement”) in connection with the promotion of your Franchise Business within your Designated Territory and as YogaSix otherwise permits.

• Due Date:  As agreed to with suppliers.

8.  Business Management Software Fee:  then-current fee charged by YogaSix’s Approved Supplier, which is currently $269 per month

• Due Date:  Once every 4 weeks, or as otherwise agreed.

9.  Site Selection Expenses:  YogaSix’s costs incurred in performing any franchisee-requested on-site evaluation, including travel, lodging, meals, and wages

• Due Date:  Within 30 days of demand.

• These costs are only payable to YogaSix in connection with your request to have it perform an on-site evaluation.

10.  Technology Fee:  while YogaSix does not currently charge a fee, it reserves the right to charge its then-current technology fee in the future (the “Technology Fee”)

• Due Date:  Payable monthly in the same manner as the Royalty.

• YogaSix reserves the right to collect a Technology Fee in connection with any costs it incurs in establishing and maintaining an intranet, extranet, online portal, website, online advertising tools, mobile application, and/or any other technology for use in connection with the Franchised Business.

11.  Teacher Training Tuition (if and as applicable):  then-current tuition fee; currently, $3,000 per trainee

• Due Date:  Prior to training.

• This fee is only payable to YogaSix in connection with each individual that is not a RYT and therefore needs to complete YogaSix’s Teacher Training Program (along with Bridge Training) in order to become an Authorized Instructor.

12.  Renewal Fee:  $10,000

• Due Date:  At time of renewal.

• You must renovate and reimage the Studio at your expense at the time of renewal to conform to YogaSix’s then-current standards and image.

13.  Transfer Fee Under Franchise Agreement:  $10,000

• Due Date:  Before the transfer.

• Payable when you sell the Studio. No charge if the Studio is transferred to a corporation or other entity that you control.

14.  Transfer Fee Under Development Agreement:  $10,000

• Due Date:  On submitting application for consent to assignment.

• Payable when you want to sell/transfer the rights under your Development Agreement.

15.  Training Fee:  then-current training fee (YogaSix’s “Training Fee”); currently, $500 per day per trainer

• Due Date:  Prior to training.

• This fee is paid in connection with training/instruction that YogaSix may provide on an ongoing basis in connection with the overall operation and development of your Studio.

• In addition to YogaSix’s then-current training fee, you will always be responsible for the costs and expenses that are incurred in connection with you and your personnel (and/or YogaSix’s trainer) attending training.

16.  Master Trainer Summit Fee:  YogaSix reserves the right to charge its then-current attendance fee in connection with any annual summit it determines to conduct in connection with continued education for Master Trainers (the “Summit Fee”). Currently, YogaSix expects that the Summit Fee will be between $1,200 and $1,500.

• Due Date:  As incurred.

• YogaSix may schedule and hold an annual summit, as it deems advisable in its sole discretion, and require that any Master Trainers attend such conference in order to maintain their status as a Master Trainer.

• You or the Master Trainer will be responsible for the costs and expenses you incur in connection with any annual summit/conference (lodging, travel, meals, etc.) to send one of your Master Trainers to the summit, and it reserves the right to charge you its then-current attendance/registration fee.

17.  Insurance Policies:  amount of unpaid premium

• Due Date:  Must have the policies within 60 calendar days after signing the Franchise Agreement, but no later than the time that you acquire an interest in the real property from which you will operate the Studio.

• Payable only if you fail to maintain required insurance coverage and YogaSix elects to obtain coverage for you.

18.  Audit Fees:  $500 to $2,500

• Due Date:  Within 15 calendar days after receipt of audit report.

• Payable only if audit shows an understatement of Gross Revenue for the audited or reviewed period of 2% or more.

19.  Mystery Shopper and Other Quality Control Programs:  currently, YogaSix does not require franchisees to contribute to these programs, but it reserves the right to do so in the future

• Due Date:  Within 30 days of demand.

• Payable only if YogaSix establishes a mystery shopper program or other quality control mechanism/program, in which case it reserves the right to require a franchisee to contribute up to $500/year to help defray the costs of such programs that are designed to preserve the goodwill and brand image.

20.  Management Fee:  the costs/expenses YogaSix incurs in connection with taking over operations, including manager’s salary, room and board, travel expenses, and all other related expenses

• Due Date:  When incurred.

• You will incur this fee in the event of franchisee’s death or disability, YogaSix exercises its right to appoint a manager and commences operating the Studio.

21.  Late Fees:  the greater of the highest applicable legal rate for open account business credit, or 1.5% per month

• Due Date:  Upon demand.

• Applies to all amounts not paid when due, until paid in full.

• YogaSix may also require you to pay an administrative fee of $50 for each late payment or late report.

22.  Penalty Fee:  then-current fee charged by YogaSix; currently, $100 for each day of non-compliance

• Due Date:  Upon demand.

• Payable only in the event you fail to comply with your material obligations under your Franchise Agreement by (a) permitting anyone other than an Approved Instructor at your Studio to provide any fitness instruction or other Approved Services, or (b) offering or selling any unauthorized products or services at your Studio, including provision of the Teacher Training Program without an approved Master Trainer.

• The Penalty Fee will be incurred during each day of non-compliance.

23.  Cost of Enforcement or Defense:  all costs, including attorneys’ fees

• Due Date:  Upon settlement or conclusion of claim or action.

• You will reimburse YogaSix for all costs in enforcing your obligations concerning the Franchise Agreement if it prevails.

24.  Indemnification:  all costs, including attorneys’ fees

• Due Date:  Upon settlement or conclusion of claim or action.

• You will defend suits at your own cost and hold YogaSix harmless against suits involving damages resulting from your operation of the Studio.

25.  Alternative Supplier Approval:  $500 per day for personnel engaged in evaluating a supplier

• Due Date:  At time of request.

• Additionally, you must reimburse YogaSix for any travel, accommodations, and meal expenses.

26.  Regional Cooperative:  as the Cooperative determines

• Due Date:  As the Cooperative determines.

• YogaSix may establish regional cooperatives comprised of Studios that are within a given geographical area (each, a “Cooperative”). If a Cooperative is established where your Studio is located, you will be required to participate in that Cooperative and contribute to that Cooperative in the amounts the Cooperative determines.

27.  Liquidated Damages for Compromising Secure Access to Manual:  $10,000

• Due Date:  As incurred.

• If you in any way compromise the secure access to the online version of the Manual, including, but not limited to, allowing unauthorized users access to the Manual and its confidential contents, you will be required to pay YogaSix liquidated damages in the amount of $10,000, to compensate it for the breach and related damage to the System.

28.  Liquidated Damages in Event of Early Termination:  the sum of the Royalties paid to YogaSix for the 24 months prior to the termination of the Franchise Agreement

• Due Date:  Within 30 days of demand.

• In the event of a premature termination, if YogaSix does not exercise its right to take over the Franchised Business, franchisee shall pay YogaSix liquidated damages.

29.  Relocation Fee:  $5,000

• Due Date:  At the time of relocation request.

• You will not be permitted to relocate your Studio without YogaSix’s prior written approval, which may be withheld in its discretion.

• You will be assessed a relocation fee of $5,000 at the time you submit the proposed location for your relocated Studio.

• Generally, YogaSix does not approve requests to relocate your Studio after a site selection has been made and you have opened for business unless (a) it is due to extreme or unusual events beyond your control, and (b) you are not in default of your Franchise Agreement.

• If YogaSix approves your relocation request, it retains the right to approve your new site location in the same manner and under the same terms that are applied to your first site selection.