Can you provide detailed information about the 22 unit closures between 2022-2024, including reasons for closure and whether closed unit owners attribute failures to market conditions, operational challenges, or lack of franchisor support?
#1
What is the current performance of remaining 52 units? Can you share unit-level profitability data, average unit volumes, or other financial metrics that would indicate whether closures reflect system-wide struggles or isolated underperformance?
#2
The system contracted 10.34% in the past year alone. What is the franchisor's strategy to stabilize or reverse this decline, and are there plans to open new units or reformat existing locations?
#3
Your Technology Fee of $179 monthly is lower than typical for fitness franchises. What technology services and software are included, and is this fee capped or subject to increases?
#4
Your Franchise Fee of $35,000 is $5,000-$25,000 below the typical range. Does this lower fee reflect reduced initial support, or are there additional startup costs not included in this figure?
#5
The Ad Fund contribution rate is 1.0%, below the typical 2.0%. How is this fund managed, and can you provide details on advertising spend per market and return on ad spend metrics?
#6
Your non-compete clause specifies 100 miles, which is 4-10 times broader than typical for fitness franchises. Can you explain the business rationale for this extended radius, and is this negotiable?
#7
The agreement contains 17 non-curable defaults that trigger termination upon receipt of notice. What are the most common defaults, and how frequently are notices issued for breaches?
#8
All disputes must be arbitrated in Hudson County, New Jersey, with class action and jury trial rights waived. For franchisees outside the Northeast, what are the typical costs and logistics of arbitration in this venue?
#9
The agreement requires personal guarantees from franchisees and spouses. In the event of a franchise closure, are franchisees liable for remaining lease obligations or other debts beyond their investment?
#10
You require all products and supplies be purchased from franchisor-approved distributors. Can you provide a list of approved vendors and pricing comparison data showing competitiveness versus open-market alternatives?
#11
Given the 13.8% closure rate in the past year, what is your franchisee satisfaction score, and do you conduct exit interviews to understand why owners are leaving?
#12
The 2-year, 100-mile non-compete is particularly restrictive. If a franchisee's location underperforms and they decide to exit, can they operate a competing fitness concept nearby, or would they face legal action?
#13
Your renewal fee is $5,000 for a 5-year term. Will the royalty, ad fund, and technology fee rates remain the same upon renewal, or are increases permitted?
#14
What happens to exclusive territory protection if a franchisee is unable to meet performance targets? Can the franchisor encroach by opening nearby units or reallocating territory?
#15
You report zero terminations by the franchisor despite 22 closures. Does this mean franchisees chose not to renew, or did the franchisor allow units to operate below standards without formal termination?
#16
Can you provide a list of all current franchisees and a sample of closed franchisees' contact information so I can conduct independent reference checks on unit performance and franchisor support?
#17
The system contracted 7.17% annually over 3 years. What percentage of recent closures were attributed to COVID-19 impacts versus ongoing business model challenges, and have you opened any new units in the past 12 months?
#18
Your Investment Costs score of 86/100 is above typical, but System Health scores only 14/100. Can you explain what factors drive the low System Health score and what you're doing to improve it?
#19
Are there any pending legal disputes, regulatory investigations, or franchisee complaints that are not reflected in the litigation history, even if not yet formally filed?
#20