The royalty rate of 15% is significantly higher than the typical range of 6.0-7.5% for fitness franchises. What specific services, support, or benefits justify this higher royalty rate?
#1
Your technology fee of $100 monthly is substantially lower than the typical range of $199-$716. What technology systems and digital tools are included in this fee, and are there additional technology costs not listed?
#2
The transfer fee of $30,000 exceeds typical range by approximately 75%. How does this fee compare to the initial franchise fee of $40,000, and what is included in the transfer process that justifies this cost?
#3
With only 1 unit currently operating, how long has the franchise system been actively franchising, and what is your growth trajectory for the next 3-5 years?
#4
The non-compete restriction of 1 year / 10 miles is shorter than the typical 2 years for fitness franchises. Why did you choose a shorter non-compete period, and how does this protect the franchisor's interests?
#5
Can you provide examples of franchisees who have successfully renewed their agreements, and what percentage of franchisees have renewed since the system's inception?
#6
The franchise agreement requires binding arbitration with waived jury trial rights. Under what circumstances would a franchisee dispute be most likely to arise, and what is the typical cost and timeline for arbitration?
#7
What are the 13 non-curable defaults listed in the franchise agreement, and how frequently have any of these defaults occurred among your existing or former franchisees?
#8
The post-term non-compete restricts franchisees from operating strength/fitness training services for 18 months within 10 miles. How is compliance monitored, and have there been any violations?
#9
Personal guaranties are required from all principal owners, and spouses may be required to guarantee. What percentage of franchisees are required to obtain spouse guaranties, and under what specific conditions?
#10
What are the 7 renewal conditions franchisees must satisfy, and have any franchisees failed to meet these conditions in the past?
#11
The renewal fee equals 10% of the then-current initial franchise fee. If the initial franchise fee increases to $50,000, would the renewal fee be $5,000, and how frequently do you adjust the initial franchise fee?
#12
You maintain control through 4 categories of supplier restrictions. Can you detail which suppliers are approved, what percentage of operating costs typically goes to approved suppliers, and are there volume discounts available?
#13
Cure periods range from 3 days for health code violations to 30 days for other defaults. How do you define and enforce health code violations, and what appeals process exists if a franchisee disputes the violation?
#14
With zero litigation cases to date, is this because the system is very new, or have there been disputes resolved outside of formal litigation that we should understand?
#15
What does 'operational control' entail beyond supplier restrictions, including pricing, staffing, scheduling, and facility modifications?
#16
Can you provide the Item 19 financial performance data or explain why it is not being disclosed, and what average unit volumes are franchisees achieving?
#17
What training and ongoing support does the Support & Training score of 95 (above typical range) represent, and how many hours of initial training and ongoing support are provided annually?
#18