The franchise fee of $80,000 is 33% above the typical range for fitness and wellness franchises. What specific inclusions justify this higher fee compared to competitor offerings?
#1
Your royalty rate of 9.0% exceeds the typical range of 6.0-7.5%. How does this compare to comparable fitness and wellness franchises, and is there flexibility to negotiate this rate based on unit performance?
#2
The advertising fund rate is 1.0%, below the typical 2.0% for your category. How is the advertising fund utilized, and what measurable marketing benefits do franchisees receive for this contribution?
#3
Financial performance data shows all units reporting gross sales between $3.1 million and $5.7 million, significantly above category norms. Can you provide Item 19 statements showing the specific revenue breakdowns by service line and occupancy rates?
#4
With only 5 units in the system, how many units reported financial data in Item 19? Were all 5 units included in these performance metrics?
#5
The system has never reported a terminated, closed, or transferred unit. How long has Next Health been franchising, and how many franchises have you awarded historically?
#6
Given the strict non-compete clause (2 years/10 miles), what specific territorial restrictions apply if a franchisee chooses not to renew after the first 10-year term?
#7
The renewal clause requires franchisees to bring the center into 'full compliance with then-current standards.' What is the estimated cost range franchisees should budget for facility upgrades or equipment replacements to achieve this compliance?
#8
Your franchise agreement requires purchasing all operating assets from franchisor-approved suppliers. Can you provide a list of required suppliers and typical annual costs for equipment, technology, and supplies?
#9
The binding arbitration clause specifies disputes must be resolved within 50 miles of West Hollywood, CA. What is the typical cost and timeline for arbitration disputes under your franchise agreements?
#10
Personal guarantees are required from all owners and their non-owner spouses. Are there any circumstances under which the franchisor would waive or modify this requirement for multi-member LLCs or corporate structures?
#11
What specific 'operational defaults' trigger the 30-day cure period versus the 5 non-curable defaults that allow immediate termination? Can you provide examples?
#12
The technology fee is $700/month. What systems, software, and digital services does this include, and are there additional technology costs or platform requirements beyond this fee?
#13
With 19 non-curable defaults in the agreement, what are the 5 most frequently cited reasons for franchise terminations, if any, across your current franchise base?
#14
Has the franchisor ever initiated termination proceedings against any franchisee? If not, what specific breaches would trigger immediate termination without a cure period?
#15
The agreement allows the franchisor to set maximum or minimum pricing for franchisor-supplied products. What products or services are subject to price controls, and how frequently are prices adjusted?
#16
Can you provide contact information for at least 5 current or former franchisees, including those who have not renewed, to discuss their actual financial performance and franchisor relationship experience?
#17
The initial term is 10 years with no apparent early exit options. What are the financial obligations if a franchisee needs to exit the business before the 10-year term expires?
#18
Item 19 shows identical median and average gross sales at $4,008,240. Does this indicate all reporting units have virtually identical revenue, or is this a data reporting issue?
#19
What percentage of franchisees achieve the reported sales figures in Item 19, and what is the range of performance outcomes (highest to lowest performing units) among your 5 current franchises?
#20