The franchise fee of $10,000 is substantially lower than typical fitness franchises ($40,000-$60,000). What is included in the initial franchise fee, and are there additional startup costs not reflected in this figure?
#1
Your royalty rate of 10% exceeds the typical 6-7.5% for fitness franchises. How is this higher royalty justified, and are there any performance thresholds or revenue levels where the rate decreases?
#2
The technology fee is $40/month, significantly lower than the typical $199-$716 range. What technology systems and support are included, and are there additional technology costs franchisees should anticipate?
#3
The system has contracted from 80 units (3 years ago) to 71 units (current), representing a 3.9% annual decline. What is the franchisor's analysis of why 19 units have closed, and what corrective actions are being implemented?
#4
Of the 19 unit exits over 3 years, only 2 were franchisor terminations while 15 were voluntary closures. What reasons have franchisees cited for closing their locations, and what support has the franchisor provided to struggling units?
#5
Your initial term is 5 years with no specified renewal options, compared to the typical 10-year initial term. Why is the contract term shorter, and what are the actual renewal terms and conditions available to franchisees?
#6
The total potential contract term is 5 years versus the typical 15-20 years. If renewal is not guaranteed, how does this impact franchisee ability to recoup their initial investment?
#7
The transfer fee of $3,000 is below typical ranges. What restrictions or conditions apply to unit transfers, and are there any franchisor approval requirements that could delay or prevent a sale?
#8
The non-compete clause specifies 2 years and 15 miles. Are there any carve-outs or exceptions (e.g., for existing equipment, client relationships, or staff), and how is this enforced?
#9
The agreement contains 6 renewal conditions compared to the typical 7-9. What are these specific renewal conditions, and are any tied to minimum performance metrics or sales thresholds?
#10
There are 16 non-curable defaults allowing immediate termination with 5 days notice. Please provide the complete list of these defaults and explain what constitutes each one.
#11
All disputes require mandatory binding arbitration in Maricopa County, Arizona. What are the typical costs and timelines for arbitration disputes, and can franchisees appeal arbitration decisions?
#12
Personal guarantees are required from all entity owners with joint and several liability. Does this personal guarantee extend beyond the franchise term, and what is the franchisor's collection practice?
#13
Six categories of goods and services require purchases from designated or approved suppliers. Can you provide the specific list of required suppliers and typical costs for each category?
#14
There are no minimum performance requirements tied to territorial protection. If a franchisee underperforms significantly, can the franchisor encroach by awarding nearby territory to another franchisee?
#15
Late fees are calculated at 1.5% per month. How does this compare to state usury laws, and does the franchisor enforce late fees consistently?
#16
The support and training score is 72, below the typical 82-93 range for fitness franchises. What specific training is provided at launch, and what ongoing support is available for marketing, operations, and client retention?
#17
Contract terms scored 48 versus the typical 60-65 range. Can you explain which contract provisions scored below typical, and are any of these terms negotiable?
#18
System health scored 42, below the typical 50-75 range. How does the franchisor define system health, and what metrics indicate this lower-than-typical score?
#19
With no Item 19 financial disclosure available, can you provide comparable unit economics (revenue, expenses, and profitability) for existing franchisees at different experience levels and geographic locations?
#20