The termination rate of 23.7% is exceptionally high compared to the typical range of 0.0-1.68% for fitness franchises. Can you provide specific reasons for the 68 franchisee terminations in 2023 and 66 in 2024?
#1
The system lost 171 units (46.1%) over 3 years. Beyond terminations and closures, what percentage of the unit loss is attributable to franchisees choosing not to renew their agreements?
#2
The non-compete clause restricts activity for 18 years compared to the typical 2-year standard. Can you explain the rationale for this unusually long restriction and its enforceability?
#3
What specific conditions are included in the 10 renewal requirements, and how many franchisees have successfully renewed their agreements under these conditions?
#4
The franchise fee of $24,900 is significantly lower than the typical $40,000-$60,000 range. Does this lower initial investment correlate with the higher-than-typical exit rates?
#5
Can you provide details on the 'Ceased Other' category (36 units in 2022, 21 in 2023, 2 in 2024)? What circumstances caused these closures?
#6
What is the membership growth requirement regarding the 45 minimum memberships over rolling 3-month periods, and how many franchisees are terminated annually for failing to meet this obligation?
#7
The agreement includes a $10,000 transfer fee. How frequently are units transferred between franchisees, and what are the typical conditions that franchisees must meet to qualify for a transfer?
#8
The spouse guarantee provision requires spouses to personally guarantee financial obligations. Has this provision been enforced against spouses of defaulting franchisees, and what legal challenges have arisen?
#9
Can you clarify the interest rate of 12% on late payments and provide examples of how frequently franchisees incur late payment penalties?
#10
Regarding the Operational Control clause limiting purchases to approved suppliers with no spending caps—what is the typical annual cost of these required purchases relative to franchisee revenue?
#11
The renewal fee is described as 25% of then-current franchise fee. If the franchise fee increases during your ownership, could your renewal fee be substantially higher than your initial $24,900?
#12
What is 9Round's target franchisee profile, and has this profile changed as the system contracted from 371 to 200 units?
#13
Are there any pending litigation cases or regulatory investigations not disclosed in the disclosure document that prospective franchisees should be aware of?
#14
How does 9Round calculate the 'protected territory' if it is not exclusive? What protections prevent franchisee encroachment in your defined area?
#15
Given the System Health score of 0/100, what metrics are included in this assessment, and what remedial actions is 9Round taking to improve system performance?
#16
Can you provide Item 19 financial performance data showing average unit volumes, profitability, and success rates for franchisees at different locations?
#17
What support and training does 9Round provide to help franchisees meet the 45-membership quarterly growth requirement, given the high termination rate?
#18
If you wanted to exit the franchise before the end of your initial 10-year term, what are the financial and legal consequences, and does the transfer fee apply to franchisor-initiated exits?
#19
The Technology Fee of $499 per month totals approximately $6,000 annually. What specific technology and systems are included, and can this fee increase during your franchise term?
#20