The franchise has 9 total litigation cases, well above the typical range of 0-3 for fitness franchises. What are the nature and outcomes of these cases, and how have they been resolved or settled?
#1
What specific issues led to the termination of 2 units over the past 3 years, and were these terminations related to non-compliance with specific franchise requirements?
#2
The termination rate of 2.6% exceeds typical benchmarks. What are the primary reasons franchisees have been terminated, and what cure periods and opportunities were provided?
#3
How does the 1.5% advertising fund rate compare to actual marketing support and national campaigns provided to franchisees?
#4
The franchise identifies 23 non-curable defaults in the termination clause. Can you provide the complete list and clarify which are most commonly cited in terminations?
#5
The contract lists 15 supplier categories under franchisor control. What are the average markups on required purchases, and how much of franchisee revenue is typically spent on franchisor-approved suppliers?
#6
With 1 pending litigation case, what is the nature of this dispute and what is the expected timeline for resolution?
#7
The non-compete restriction is 2 years within 25 miles of the franchisee's facility and all other system locations. How many locations currently exist within a typical franchisee's market, and how would this non-compete impact a franchisee's exit options?
#8
What happens to a franchisee's facility lease and equipment if the franchise is terminated? Are these franchisor-controlled, and are there buyback or transfer options?
#9
The franchise requires personal guarantees from all owners and spouses. What are the specific financial obligations covered, and are there any limitations on franchisor claims against personal assets?
#10
Unit growth was 26.7% from 2022 to 2024 (25 to 38 units), but 3 units closed and 4 were terminated during this period. What is driving new unit development, and are there pipeline or development plans for the next 3 years?
#11
The territory is protected but not exclusive. How is this protection defined operationally, and what circumstances would allow the franchisor to open another Madabolic location near an existing franchisee?
#12
What are the renewal fee costs, if any, for exercising the two 5-year renewal options after the initial 10-year term?
#13
The indemnification clause requires franchisees to indemnify franchisor parties against all losses. What specific claims would this cover, and are there any caps or exclusions for franchisor negligence or breach?
#14
Of the 9 total litigation cases, how many involved franchisee disputes versus regulatory or third-party claims?
#15
The transfer fee is $10,000, but the contract may allow franchisor approval rights. Under what conditions can the franchisor deny a transfer, and what is the typical franchisee resale value?
#16
What training, ongoing support, and operational guidance is provided given the 15 supplier categories and operational controls the franchisor maintains?
#17
Are there any circumstances where the 2-year, 25-mile non-compete could be waived or modified for franchisees who exit voluntarily?
#18
The average gross sales of $476,872 is reported in Item 19. What are the profit margins after royalties, ad fund, technology fees, and required supplier purchases?
#19
Has the franchisor implemented any changes to franchise requirements or operations in response to the 9 litigation cases and elevated termination rate?
#20