Given the extremely rapid 3-year CAGR of 44.2%, which exceeds typical franchise growth rates, what factors are driving this growth and is it sustainable moving forward?
#1
With only 3 current units in the system, how does the franchisor plan to scale operations, and what are the minimum unit growth targets for the next 3-5 years?
#2
The technology fee of $125 monthly is notably lower than the typical range of $199-$716 for fitness franchises. What technology services and support are included in this fee, and are there plans to adjust pricing as the system grows?
#3
Can you provide details on the one unit transfer that occurred in 2023? Were there any performance issues, and what were the circumstances surrounding the transfer?
#4
How many franchisees are currently operating at the $1,000 per month minimum royalty threshold versus the 6% of gross sales rate, and what does the average unit volume indicate about profitability?
#5
The renewal conditions require franchisees to execute the then-current franchise agreement. What changes to terms have been made in past renewals, and can you provide examples of how substantially different the terms might be?
#6
With the $5,000 renewal fee and requirement to meet 7 specified conditions, what percentage of franchisees historically renew versus exit at term expiration?
#7
Can you clarify the scope of the personal guarantee requirement that extends to spouses of all stockholders/members? How has this been enforced in the past?
#8
The dispute resolution clause requires binding arbitration in Dallas, Texas with waiver of jury trials. Have there been any disputes that went to arbitration, and can you provide details on outcomes?
#9
Given the requirement to purchase only from franchisor-approved suppliers with franchisor-specified pricing, what percentage of a typical franchisee's monthly costs are controlled by these mandates?
#10
The late payment interest rate of 1.5% monthly (18% annually) is substantial. What is the franchisee default rate, and how frequently are these penalties applied?
#11
How many of the current 3 franchisees are owned by multi-unit operators versus single-unit operators, and what is the typical trajectory for unit expansion per franchisee?
#12
Can you provide the complete Item 19 financial performance statement showing revenues, operating costs, and net income by location to validate the $531,500 average gross sales figure?
#13
What are the specific 7 renewal conditions franchisees must meet, and what percentage of franchisees historically fail to meet one or more conditions?
#14
The non-compete is 2 years/25 miles post-termination. Has this been enforced against any departing franchisees, and are there documented cases or settlements?
#15
What support and training is provided during the initial launch phase, and what are the ongoing training requirements for franchisees to maintain compliance?
#16
How does the franchisor handle encroachment if a new franchisee is approved within the 25-mile territory of an existing franchisee, and what protections exist in the agreement?
#17
Given the system has only 3 units, what is the franchisee acquisition strategy and timeline for expansion, and how will rapid growth be managed operationally?
#18