Highlights of Crunch’s Item 19 Financial Performance Representations (2012 FDD) – Part 3

Revenue

• The principal source of revenue for a Crunch franchise club is its membership revenue. Membership revenue includes any initial enrollment fees, prepaid dues, first month’s membership fees, the member’s monthly dues, as well as annual and prorated fees.

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  In addition to its membership revenue, Crunch franchised facilities also earn a significant percentage of their income through the sale of personal training services to individual members. Fees for this service, which are provided by professional and certified trainers, are incremental to the member’s monthly membership expense and there is no limit on the amount of training that may be purchased by individual members.

• Clubs also receive additional revenue from the sale of retail products such as beverages, nutritional products and supplements, headphones, tanning goggles, lotions, and other over-the-counter items.

• With the exception of prepaid activity, membership fees are paid monthly, while fees for professional training programs can range from an “a la carte” point of sale offering to a monthly obligation for packaged services or ongoing training.

• Crunch currently offers two membership programs. The Base membership package is priced at $9.95/month, with a $29 annual fee billed periodically throughout the year. The Peak membership option is priced at $19.95/month, with a $29 annual fee also billed periodically throughout the year.

• Promotional packages will vary at different times during the year and franchisees have the ability to tailor the clubs offering, and the club’s membership pricing, to their particular market.

• The performance of your club and your ability to sell memberships will vary based upon a variety of factors including, but not limited to, the demographics of the market, the location and condition of your club, the capabilities of your staff and club management, the competitive nature of the market, and how much time and effort you dedicate to advertising, sales, and community outreach.

Expenses

• The expense information contained in the operating statements includes the fixed and variable expenses necessary to operate a club. This information will differ on a market by market basis and may be higher or lower than information contained in these statements.

• You may also incur expenses not listed in the two previous posts; however, all of these expenses will be based upon factors within your control and which can be researched prior to making your investment.

• In comparing the information in the two previous posts, you should note that some of the expenses are fixed and will not change with increases or decreases in membership, while other expenses will increase as membership levels increase.

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