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

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