Franchise Costs: Detailed Estimates of Fit36 Franchise Costs (2015 FDD)

Detailed Estimates of Fit36 Franchise Costs Based on Item 7 (Estimated Initial Investment) of Fit36’s 2015 Franchise Disclosure Document

1.  Initial Franchise Fee:  $29,900

• If this is your second or subsequent Franchise Agreement, you must pay the franchisor an initial franchise fee of $24,900.

2.  Real Property and Utility Security Deposits:  $4,250 to $9,800

• Studios are typically located in upscale retail areas, and require approximately 2,400 to 3,200 square feet.

• Estimated monthly lease payments range from $4,000 to $9,300 (including common area maintenance payments), depending on the size, condition, and location of the leased premises.

• Your landlord may require a security deposit before leasing the premises to you, which is typically equal to 1 month’s rent.

• Some utility companies also may require a security deposit before commencing services. The franchisor estimates the total amount of utility security deposits to be approximately $250 to $500.

3.  Leasehold Improvements (net of landlord tenant allowances):  $24,000 to $121,600

• Typically, costs are higher in larger metropolitan areas or if you choose premises with square footage in excess of the high range of 3,200 square feet.

• The range disclosed in the chart includes the construction management fee you must pay the franchisor in the event it approves an exception to the requirement that you use one of the Approved Suppliers for construction.

• In addition, the range disclosed in the chart is the range of costs after deducting any landlord allowances (tenant improvements, rent deduction, and the like), which may or may not be granted by your landlord.

4.  Fitness Equipment and Supplies:  $15,800 to $26,300

• You must purchase from the franchisor’s Approved Suppliers specific fitness equipment for the operation of the Studio as detailed in the Operations Manual. This equipment includes a chest strap and monitoring system that transmits heart rate, calories, and effort in real time to a live display.

• The range of estimated costs represents the minimum equipment required to the maximum equipment recommended (depending on the square footage of your Studio and the equipment selected).

• The estimate includes freight and assumes a 5% sales tax rate.

5.  Furniture, Decor, and Other Equipment:  $3,600 to $4,400

• You must purchase furniture and decor items for your Studio as specified by the franchisor in the Operations Manual or otherwise. These items include items for your Studio’s front desk and bathrooms, phone systems, and wall art.

• The cost will depend on supplier financing terms (if available), the brands purchased, the quality of the items purchased, and other factors. The estimate assumes a 5% sales tax rate.

6.  Computer Hardware and Software:  $7,300 to $9,400

• Before opening your Studio, the franchisor typically requires you to purchase 2 computer workstations, 2 iPads for client check-in, 3 televisions, and an input device (e.g. Apple TV), a printer and related equipment, and the franchisor’s designated and other software programs.

• You must pay the franchisor a $499 set-up fee for the set-up of certain required software programs and the technology fee for the 2 months before opening ($250 per month), each of which is included in the estimated range stated in the Table.

• The estimate includes freight and assumes a 5% sales tax rate.

7.  Initial Training Expenses:  $1,400 to $4,200

• You must pay your own transportation, meals, lodging, and any other living expenses for you and any other persons attending the Initial Training.

• The low estimate contemplates attendance by just you traveling to the Support Center office in Colorado for 5 days. The high estimate contemplates attendance by you and 2 other people traveling to the Support Center office in Colorado for 5 days.

• For each additional person above 3 designated by you to attend Initial Training, you must pay the franchisor a $500 fee, and pay for the additional person’s transportation, meals, lodging, and other living expenses.

• The estimates do not include any wages or salary you may choose to pay yourself or others while attending Initial Training.

8.  Initial Marketing Spend Requirement:  $15,000

• During the period beginning at least 60 days before you open your Studio and continuing through the first 90 days of your Studio operations, you must spend at least $15,000 to advertise, market, and promote your Studio.

9.  Signs:  $6,000 to $12,000

• The estimate includes the required interior signs and 1 exterior sign which bear the Marks. If you want additional exterior signs, your cost will be higher.

10.  Business Licenses and Permits:  $100 to $1,000

• The cost includes the licenses and permits required to operate a Studio in your location. Certain states may require that you file and post a bond for pre-opening membership sales, the estimated cost of which is not included in the table.

11.  Insurance:  $1,900 to $2,300

• You must obtain insurance coverage from the franchisor’s Approved Supplier, with the limits required by the franchisor as described in Item 8 of the Disclosure Document. The estimate is the annual premium amount.

12.  Miscellaneous Opening Costs:  $600 to $1,300

• This cost includes other start-up costs and expenses (including reasonable pre-opening salary for one employee) but does not include any advisor fees or bank financing costs you may incur.

13.  Lease Review Fee:  $1,500

• When you enter into a letter of intent for the lease of your Studio premises, you will be required to pay the franchisor or its Approved Supplier (which may be an affiliate of the franchisor) this fee.

• The franchisor will only charge you one lease review fee, unless you refuse to sign a lease that the franchisor has approved and it is then required to review other leases for the Studio location.

14.  Additional Funds (3 months):  $9,900 to $25,600

• The range of estimated costs represents your estimated initial start-up expenses (other than the amounts separately identified in the table), which include payroll costs (excluding a draw or salary for you or your manager if you are not the manager), lease payments, advertising and marketing expenses, uniform expenses, the costs of supplies, and other operating expenses.

15.  Total:  $121,250 to $264,300

• The franchisor has relied on its and its affiliates’ many years of business experience in selling and supporting Elements and Fitness Together franchises to compile these estimates.