Can you provide details on the specific reasons for the 2 terminated units in 2022 and 2024? Were these franchisor-initiated terminations or owner-initiated closures?
#1
Why is the royalty rate of 8.0% higher than the typical range of 6.0-7.5% for fitness franchises? What additional value or services justify this above-average rate?
#2
The technology fee of $799 monthly is above the typical range. What specific services and systems does this fee cover, and is there a breakdown of how this fee is allocated?
#3
The transfer rate of 8.7% is significantly above the typical range of 0.0-5.93%. What is driving the high number of unit transfers, and does this indicate owner dissatisfaction?
#4
Given the termination rate of 4.3%, can you explain what specific operational or financial issues led to the terminations? What is the distribution of reasons?
#5
The initial term of 6 years is below the typical 10-year term. What was the rationale for this shorter term, and does it reflect uncertainty about the business model?
#6
With a total potential term of only 11 years versus the typical 15-20 years, how does this shorter commitment period affect long-term unit planning and franchisee investment justification?
#7
The franchise agreement contains 12 non-curable defaults versus only 5 curable defaults. Can you provide the complete list of these non-curable defaults and examples of how they are enforced?
#8
The agreement requires personal guarantees from individual owners and their spouses. Has this broad liability provision led to any disputes or franchise exits?
#9
What specific renovations and re-equipping does the franchisor deem necessary during renewal, and what is the typical cost for these required improvements?
#10
Can you explain the restrictions on purchasing equipment and supplies? Are there instances where franchisees must purchase exclusively from the franchisor rather than approved suppliers?
#11
How are the 2 historical litigation cases related to the franchise, and what were the outcomes? Were these cases resolved favorably for franchisees or the franchisor?
#12
What support and training do you provide to help franchisees achieve the median gross sales of $424,000? How many locations are achieving or exceeding this benchmark?
#13
The transfer fee is $7,500, which is below typical range. Is there a reason for the lower transfer fee, and does this encourage more unit transfers?
#14
Can you provide a unit-by-unit breakdown of which locations transferred or terminated in the past 3 years, including their performance metrics prior to exit?
#15
What is the average tenure of owners who transferred their units, and what were their stated reasons for exiting?
#16
How does the franchisor handle encroachment, and are there specific geographic or demographic criteria used to assign territories?
#17
Given that territory is protected but not exclusive, what restrictions exist on the franchisor operating company-owned locations in franchisee territories?
#18
What is the expected timeline and cost for a new franchisee to reach the median gross sales of $424,000 after opening?
#19
Can you provide references from at least 5 franchisees who have transferred their units and 5 who have been terminated, so I can understand their experiences?
#20