The monthly technology fee of $1,144 is significantly above the typical range for fitness franchises—what specific services and software are included in this fee, and how is it justified compared to competitors?
#1
Can you provide details on the 5 unit transfers that occurred in 2024? Were these internal transfers between existing owners, sales to new franchisees, or transfers back to the franchisor?
#2
What factors contributed to the 148% growth in units over the past year, and is this growth rate expected to continue or stabilize?
#3
How does the franchisor support unit growth and profitability given the rapid expansion from 13 to 77 units in 3 years?
#4
Territory is protected but not exclusive—can you clarify what 'protected' means in practice and provide examples of situations where the franchisor might open competing locations?
#5
The termination causes count is 14, which is below the typical range—does this limit the franchisor's ability to terminate underperforming franchisees, and under what circumstances would termination be permitted?
#6
What happens during the renewal process regarding facility modernization requirements? Can you provide specific examples of what 'modernizing to current standards' entails and the estimated costs involved?
#7
Given the mandatory arbitration clause with venue in Roswell, Georgia, what have been the typical costs and timelines for any disputes that have been resolved through arbitration?
#8
The franchise agreement requires personal guarantees and broad indemnification—can you explain the scope of personal liability and provide examples of claims that franchisees have needed to indemnify the franchisor against?
#9
What is the actual number of units reporting financial performance data in Item 19, and what was the range of performance among reporting units?
#10
Can you provide a breakdown of the 1 closure that occurred in 2024—was it voluntary or franchisor-initiated, and what were the reasons?
#11
How many of the 77 current units were opened within the last 12 months, and what is the failure rate specifically for units opened in the past 2 years?
#12
The non-renewal rate is 0%, which is unusual—have any franchisees chosen not to renew, and if so, what were their stated reasons?
#13
What support and training does Alloy provide to franchisees, particularly given the rapid system expansion and the associated operational challenges?
#14
Are there any restrictions on how franchisees can operate their locations (e.g., pricing, class offerings, equipment brand requirements) that could impact profitability?
#15
What is the financial performance range among units (best, median, worst) to understand the variability in unit economics?
#16
How does the franchisor handle disputes over territory violations or encroachment issues given the non-exclusive territory structure?
#17
What are the specific conditions for renewal beyond the payment of the $5,000 renewal fee, and what percentage of franchisees historically qualify for renewal?
#18
Can you clarify the class action and jury trial waivers in the dispute resolution clause—have these provisions been enforced in any disputes to date?
#19
What happens to franchisees who cannot meet the facility modernization requirements during renewal, and are there any financial assistance programs available to help with upgrades?
#20