FDD Talk Daily: Average Net Revenue, Expenses, and Operating Profits of Franchised Crunch Health Clubs (Lowest Reporting Club)

Highlights of Crunch’s Item 19 Financial Performance Representations (2012 FDD) – Part 1

• The franchise offered is for the operation of a Crunch health club. The franchisor also offers multi-unit development rights and area development rights to develop and operate multiple Crunch health clubs within a specific development area under individual franchise agreements.

• The total investment necessary to begin operation of a Crunch health club franchise is $304,500 to $1,395,500. This includes $61,500 to $211,500 that must be paid to the franchisor or an affiliate.

• There are no incremental initial investment costs if you become a multi-unit developer or area developer, but you will pay the franchisor a multi-unit development fee of $25,000 for each of the 5 Crunch health club franchises you are required to develop, or $125,000, if you sign a Multi-Unit Development Agreement; or a development fee equal to $25,000 for each Crunch health club required to be developed pursuant to your development schedule, if you sign an Area Development Agreement.

Statement of Operating Income for 3 Franchised Crunch Locations

• As of December 31, 2011, 10 Crunch franchised locations were open or engaged in pre-sale activities. Of those locations, 7 were open a minimum of 9 months, and 5 of those locations were affiliate locations operating in facilities that were not previously related to another fitness center. All 5 of those facilities were included in this analysis.

• The following section provides a summary of the historic financial performance for 3 Crunch franchised locations during the 2011 fiscal year.

• Of the 7 locations that were opened a minimum of 9 months, the 3 included in the table below represent the clubs with the (1) lowest annual revenue, (2) the median annual revenue, and (3) the highest annual revenue.

• Because several of the clubs actually opened during the 2011 year, only the highest performing club reported a full 12 months of operations for the 2011 fiscal period.

• Results for the median and low reporting clubs reflect only 10 and 11 months of actual performance, respectively, since they did not yet have 12 full months of operating history.

• All of these clubs are considered to still be in their development stages and do not reflect the results of mature operations.

Lowest Annual Revenue