SPENGA

The franchisor initiated 3 litigation cases in the past 3 years, all above typical for this category. What was the nature of these cases and were they related to franchise agreement enforcement or other matters?

System units have declined 13.8% in the past year and 25.4% over three years. What percentage of departed franchisees cite specific reasons (profitability, market conditions, operational challenges) and what support is available to existing franchisees to improve retention?

The 18% annual exit rate significantly exceeds the typical 0-9.4% range for fitness franchises. Can you provide detailed P&L data by cohort (franchisees by opening year) to help assess whether newer units are underperforming?

Item 19 financial performance data is included in the disclosure. What was the median unit volume for profitable vs. unprofitable units, and what percentage of franchisees achieved breakeven or profitability in their first 3 years?

Three litigation cases were all initiated by the franchisor. Were any related to franchise agreement violations, non-payment of fees, or other disputes that might indicate systemic issues with franchisee compliance or franchisor policies?

The minimum royalty fee begins upon the earlier of opening or 13 months from agreement date regardless of actual sales. How many franchisees have been subject to minimum royalty payments in their first two years, and what is the typical timeline to exceed the minimum?

20 categories of required suppliers must be used exclusively. Can you provide the current list of designated suppliers, their pricing relative to market alternatives, and whether franchisees have been able to negotiate volume discounts or alternatives?

Renewal requires satisfying 8 conditions including studio modernization. What is the typical cost of modernization required for renewal, and how many franchisees have renewed versus chosen to exit at the end of their initial term?

The non-compete extends 2 years and 15 miles post-termination. Has this restriction been enforced against departing franchisees, and are there any pending cases related to non-compete violations?

Personal guarantees and spouse guarantees are required with comprehensive indemnification. Can you clarify what specific scenarios trigger indemnification claims, and have personal guarantees been called upon in any litigated cases?

System Health score is 6/100, significantly below the typical 50-75 range. What specific operational or support metrics contribute to this low score and what improvements are planned?

Risk Factors score is 47/100, below the typical 58-80 range. What are the primary risk factors assessed, and how is the franchisor addressing them?

The potential contract term of 30 years is above the typical 15-20 year range. Were any departing franchisees surprised by renewal conditions or costs, and are renewal terms negotiable?

18% annual interest charges apply to late payments. What is the average payment delinquency rate among current franchisees and what remedies are available beyond interest charges?

Support & Training score is 100/100, above the typical 82-93 range. What specific support services and training programs does this score reflect, and how do they compare to providing financial management coaching or site selection support?

Territory score is 100/100, above the typical 75-85 range. Are departing franchisees citing territory encroachment or insufficient customer density as reasons for closure?

Investment score of 66/100 is below the typical 73-77 range. Beyond the stated $49,500 franchise fee, what are the typical total startup costs and cash flow assumptions provided to prospective franchisees?

Four units closed or ceased in 2022, 17 in 2023, then 9 in 2024. Was there a specific event (operational policy change, economic factor, supply chain issue) in late 2022/early 2023 that triggered the spike in closures?

Zero units have been terminated by the franchisor despite the high exit rate. Does the franchise agreement allow the franchisor to terminate for underperformance or low sales, and if so, why hasn't this option been exercised?