Considering a Fyzical Therapy & Balance Centers Franchise? Don’t Overlook These 19 Important Franchise Fees

If you are considering a Fyzical Therapy & Balance Centers 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 Fyzical’s 2021 FDD).

1.  Initial Franchise Fee:  $20,000 to $49,000

• If you opt to open 1 Center, you will pay Fyzical an initial franchise fee of $49,000 for your Center. However, if you enter into 2 or more Franchise Agreements concurrently to open 2 or more Centers, you will pay Fyzical an initial franchise fee of $49,000 for the first Center, $35,000 for the second Center, and $20,000 for the third and each additional Center.

• Fyzical will fully earn the initial franchise fee when you pay it, and unless otherwise agreed you must pay Fyzical the initial franchise fee in one lump sum when you sign the Franchise Agreement. The initial franchise fee is non-refundable.

• If you are an existing Fyzical franchisee and meet certain credit requirements, Fyzical may finance up to 80% of the initial franchise fee. The annual interest rate is 9.8% and is paid over a 36-month period of time.

• Fyzical is a member of the International Franchise Association (“IFA”) and participates in the IFA’s VetFran program, which provides financial incentives to qualified veterans to help them acquire franchised businesses. In support of this program, Fyzical reduces the initial franchise fee by 10% for qualified veterans.

• The qualified veteran needs to have majority ownership in the franchised business to receive this discount on the initial franchise fee. Fyzical reserves the right to modify this program at any time.

• In addition, Fyzical may reduce or discount the initial franchise fee from time to time, at its discretion, for various promotions and incentive programs and to encourage prospective franchisees to join its System. Fyzical may continue to offer reduced or discounted initial franchise fees for conversions, to existing medical practices, and as it determines appropriate.

2.  Royalty:  year 1: greater of $1,000 per month or 6% of Gross Revenue generated in the preceding month; year 2: greater of $2,000 per month or 6% of Gross Revenue generated in the preceding month; years 3-10: greater of $3,000 per month or 6% of Gross Revenue generated in the preceding month

• Due Date:  5th day of each month, starting on the Royalty Commencement Date.

• If the applicable laws or regulations do not permit payment of Royalty based on Gross Revenue, then you will pay Fyzical monthly Royalty in an amount equal to $800 per Therapist.

• You may be required to pay Royalty and any other fees by electronic funds transfer.

• “Year 1” begins on the Royalty Commencement Date and ends on its first anniversary. Each subsequent year begins at the end of the previous year and ends 12 months later.

3.  Fyzical Business Intelligence Program:  estimated to be $500 per month with an option to receive enhanced services at an additional cost of $150 per user

• Due Date:  5th day of each month.

• Fyzical requires its franchisees to participate in the Fyzical Business Intelligence Program that allows its preferred Electronic Medical Record (“EMR”) partner to securely share data with it. The baseline EMR analytics suite comes at zero cost to you, however Fyzical reserves the right to charge for additional premium services or licenses in excess of one per clinic.

• Fyzical currently does not charge for this service but reserves the right to do so in the future.

4.  Marketing Fund Contribution:  up to 2% of Gross Revenue per month

• Due Date:  5th day of each month.

• Payable once Fyzical initiates the Marketing Fund Contribution.

• If the applicable laws or regulations do not permit payment of Marketing Fund Contribution based on Gross Revenue, then your monthly Marketing Fund Contribution will be $133 per Therapist.

5.  Periodic Training Fee:  currently not charged. Shall not exceed $1,500 per person.

• Due Date:  Before training begins.

• Your Operating Principal, Clinical Director, Licensed Professionals, and/or key employees may be required to attend periodic refresher or additional training courses. If so, you may be required to pay a reasonable fee for each person who attends such training.

• You will also be responsible for all expenses and costs that your trainees incur, including wages, travel, and living expenses. Fyzical may choose to provide such training in person or virtually via live or pre-recorded training modules.

6.  On-Site Training Fee:  estimated to be $800 to $1,600 per trainer per day, plus reimbursement of all reasonable travel, meals, lodging, and other expenses that Fyzical’s training personnel incur

• Due Date:  10 days after invoicing.

• Payable only if Fyzical provides additional reasonable on-site training or assistance at a mutually convenient time for unscheduled, on-site training or assistance (i.e. continuing educational courses on demand, not budgeted).

• As of the issuance date of the current disclosure document, Fyzical does not provide in-person training. However, it intends to resume in-person training once state and local authorities lift or relax their quarantine restrictions related to the COVID-19 pandemic.

7.  Website Development/Hosting Fees:  currently not charged

• Due Date:  5th day of each month.

• If Fyzical or its designee provides website development, hosting, and/or search engine optimization services that it or its designee provides for the www.fyzical.com website or other website that Fyzical maintains or permits you to maintain for your Center, then Fyzical may charge you a reasonable fee.

8.  Telephone/Call Center Support Fees:  currently not charged

• Due Date:  5th day of each month.

• Fyzical reserves the right to charge this fee upon 30 days’ prior written notice to you.

9.  Renewal Fee:  10% of then-current initial franchise fee for your Protected Area

• Due Date:  Not less than 90 days nor more than 180 days prior to the expiration of the Term.

• There are other conditions for the grant of a successor franchise.

10.  Transfer Fee:  10% of then-current initial franchise fee for your Protected Area

• Due Date:  Before transfer.

• Payable when you transfer or sell your franchise.

• No charge if franchise transferred to an entity that you control or for certain transfers of ownership interests between existing owners.

11.  Audit Fee:  actual cost of the audit or inspection

• Due Date:  10 days after invoice.

• If you fail to timely furnish any reports or records that Fyzical requires.

12.  Late Fee:  lesser of 12% of amount past due or highest rate allowed by applicable law

• Due Date:  10 days after invoice.

• Payable on all overdue amounts.

13.  Supplier Testing Costs:  reasonable fees and reimbursement of Fyzical’s costs and expenses for inspection and testing

• Due Date:  On demand.

• Payable only if you request approval of a new supplier.

14.  Insufficient Funds Fee:  $35 per occurrence

• Due Date:  Upon demand.

• If there are insufficient funds in your account to cover all amounts that you owe Fyzical.

15.  Indemnification:  will vary with circumstances

• Due Date:  10 days after invoice.

• If Fyzical is sued for claims relating to the operation of your Center or for damages that Fyzical incurs due to your breach of the Franchise Agreement, then you will reimburse Fyzical.

16.  Insurance:  amount of unpaid premiums, plus an administrative fee

• Due Date:  10 days after invoice.

• Payable only if you do not maintain required insurance coverage and Fyzical elects to obtain coverage for you.

17.  Relocation:  Fyzical’s costs and expenses

• Due Date:  10 days after invoice.

• You will reimburse Fyzical for any costs and expenses that it incurs in connection with the relocation of your Center.

18.  Conversion Center – Optional Exit Payment (Post-Term Competitive Restrictions):  amount equal to aggregate Royalty for trailing 24-month period preceding date of expiration, termination, or transfer

• Due Date:  Upon expiration, termination, or transfer.

• If you are a Conversion Center franchisee, you will have the option, upon expiration, termination, or transfer of the Franchise Agreement, to pay Fyzical an amount equal to the aggregate Royalty for the trailing 24-month period, in which case the post-term competitive restrictions will not apply and will be cancelled.

19.  New Center and ENT Affiliate Center – Optional Exit Payment (Post-Term Competitive Restrictions):  amount equal to aggregate Royalty for trailing 24-month period preceding expiration of Franchise Agreement

• Due Date:  Upon expiration.

• If you are not a Conversion Center franchisee and fully comply with your Franchise Agreement during the Term, you will have the option, upon expiration (but not termination), to pay Fyzical an amount equal to the aggregate Royalty for the trailing 24-month period, in which case the post-term competitive restrictions will not apply and will be cancelled.

• This option does not apply if the Franchise Agreement is terminated prior to expiration.