Sky Zone
Sky Zone operates indoor trampoline parks offering sports, recreational activities, and active entertainment. Known for bungee run, dodgeball, and other fun attractions, it's a part of the growing adventure and entertainment park franchise sector.
About Sky Zone
Sky Zone is an indoor trampoline park operator company based in Dallas, TX, often credited with opening the first indoor trampoline park in 2004.
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Sky Zone franchise FAQ
How much does it cost to open one — the total initial investment?
The total estimated initial investment required to open the first Park under a Multi-Unit Development Agreement ranges from $3,348,260 to $4,884,310. This includes $878,960 to $1,192,960 that must be paid to the franchisor or its affiliates [p.36].
What is the initial franchise fee?
The initial franchise fee is $75,000 and it is nonrecurring and nonrefundable [p.14, p.31, p.105]. This fee is generally paid in a lump sum upon commencement of the franchise agreement [p.284].
What are the ongoing royalty and advertising fees?
The ongoing royalty fee is 6% of Gross Sales, while the advertising fee is 3% of Gross Sales. Both fees are payable via EFT on the third day after the preceding month ends, with adjustments to business days if necessary [p.105, p.96]. The advertising fee can be increased or decreased by the company but will not exceed 4% during the term of the agreement [p.105].
How long is the initial franchise agreement, and can I renew it?
The term of the initial franchise agreement expires on the earlier of: (i) the execution of the Franchise Agreement for the final Business required to be developed pursuant to the Development Schedule; or (ii) the last day of the last Development Deadline set forth in Appendix A. There is no right to renew this Agreement [p.187].
Can I sell or transfer my franchise, and what does that require?
You can sell or transfer your franchise, but it requires payment of a transfer fee. If you sell or transfer ownership to another party, you must pay a transfer fee equal to fifty percent of the current initial franchise fee for new franchises [p.19]. Alternatively, if the transfer is among existing owners or does not involve transfers in the Franchise Agreement, Park, or controlling interest, you must instead pay $2,500 for administrative costs and expenses [p.19].
On what grounds can the franchisor terminate the agreement?
The franchisor may terminate the franchise agreement on any grounds available by law [p.228]. Additionally, the franchisor has the right to terminate the agreement if it terminates any other agreement between you or your affiliates and it or its affiliates [p.141]. This isn't specified in the excerpts for other specific grounds of termination by the franchisor.
What financial requirements — net worth and liquid capital — do I need to qualify?
The franchisor does not specify exact net worth or liquid capital requirements for franchisees. However, the franchisor expects you to maintain sufficient liquidity and working capital reserves throughout the term of the agreement [p.184]. Additionally, if the franchisor's most recent financial statements are unaudited and show a net worth of less than $100,000.00, they may require escrow of your initial investment until obligations are fulfilled [p.7].
Do I get an exclusive or protected territory?
You do not receive an exclusive territory under either the Franchise Agreement [p.54] or the Multi-Unit Development Agreement [p.55]. However, with the Multi-Unit Development Agreement, if you comply with all terms and conditions, the Company will not own and operate, or license a third party to own and operate, a Park within your Development Area while the agreement remains in effect [p.55]. This protection can be overridden if multiple maps are attached as your Development Area, and once you develop a specified number of Parks within a specific map, the Company may establish or license others to establish new Parks within such map but not within the Protected Territories specified in the Franchise Agreements for your Parks [p.55].
What training and ongoing support does the franchisor provide?
The franchisor provides initial training programs conducted by their training team under the supervision of Kara Willis and Christine Stohr [p.53]. Additionally, they may require periodic refresher training courses at designated times and locations, which can include electronic training, trade shows, webinars, or third-party courses [p.107]. This isn't specified in the excerpts for ongoing detailed support beyond initial obligations.
How many franchised outlets are there, and how many have closed or been terminated?
This isn't specified in the excerpts.
Does the franchisor share any financial performance or earnings information?
The franchisor does not make any financial performance representations other than the ones specified in Item 19. However, if you are purchasing an existing Sky Zone Park, the franchisor may provide actual records of that park's performance [p.74]. Additionally, the franchisor is required to provide written substantiation upon reasonable request for the data used in preparing financial performance representations [p.74].
What am I restricted to selling, and where must I buy supplies?
You are not specifically restricted to selling any particular items; however, the franchise agreement may prohibit you from operating a similar business during the term of the franchise [p.4]. As for supplies, you may have to purchase or lease certain items from the franchisor or a limited group of suppliers designated by them, which might be more expensive than other options [p.4]. Additionally, as of the date of this Disclosure Document, you must purchase specific items from the franchisor, their affiliate, or an approved third-party vendor [p.37].