Franchise Costs: Detailed Estimates of 9Round Franchise Costs (2020 FDD)

Updated June 28, 2020.

Detailed Estimates of 9Round Franchise Costs Based on Item 7 (Estimated Initial Investment) of 9Round’s 2020 Franchise Disclosure Document

• If you purchase franchise rights for multiple Centers under one of 9Round’s Market Accelerator Programs, you will incur these expenses for each Center you develop, less the applicable initial franchise fee discount.

• In preparing your budget, you should also consider the potential effect of inflation on future costs.

1.  Initial Franchise Fee:  $5,000 to $30,000

• A $5,000 Franchise Fee will be utilized for existing franchisees purchasing an existing franchise location with a new Franchise Agreement that has a 10-year term. A $7,500 Franchise Fee will be utilized for new franchisees purchasing an existing location with a new Franchise Agreement that has a 10-year term. A Franchise Fee of $30,000 will be utilized for new franchisees opening a new location.

2.  Opening Field Visit Fee:  $2,500

• Opening Field Visit will take place as soon as practical following the opening of a new gym, or as soon as practical after new owners take over an existing gym.

3.  Computer, Technology System, Sound System, and Security System:  $2,500 to $3,000

• The range includes the estimated cost for computers, software, printers, high-speed internet connection, sound system, television, scanner for membership cards, surveillance system, telephone(s) with answering system, and 9Round radio subscription.

4.  Lease Deposits, Utilities, and Insurance:  $2,000 to $5,500

• These estimates are based on leasing a 1,200 to 1,500 square foot facility in vanilla shell condition located in a strip center in the Greenville, South Carolina area, and include your first month’s rent, security deposit, utility deposits, and insurance.

• The space must be enclosed and separate from other businesses with its own locking door.

• Except for the security deposit, lease payments generally are not refundable.

• The estimated deposits for utilities include electric, gas, and water, but your deposit may vary due to policies of local utility companies.

• This estimate includes premium for three months of the insurance plan from 9Round’s designated supplier.

• If you need additional insurance for your Center (for example, state workers’ compensation or a surety bond), you may have additional costs. A surety bond may range from $100 to $500 per year, depending on the state. Workers’ compensation coverage may range from $450 to $1,000 and may be more depending on the number of employees and your state requirements.

5.  Leasehold Improvements:  $0 to $15,000

• These figures include the estimated cost of interior alterations and improvements to a location in vanilla shell condition. 9Round recommends that you find a location that needs minimal leasehold improvements or fixtures. You may choose to invest in leasehold improvements, but 9Round does not recommend it.

6.  Leasehold Finishes and Fixtures:  $6,000 to $7,000

• Includes the cost of paint, paneling, mirrors, lighting, and entry and bathroom tile. These estimates do not include the cost of purchasing real property, as 9Round does not expect that you will buy real property.

• These figures do not incorporate any landlord concessions, such as free rent or landlord build out of your space.

7.  Sound Proofing (optional):  $0 to $10,000

• 9Round recommends, but does not require, that you soundproof your Center, according to its specifications. The figures included reflect these costs.

8.  Grand Opening Marketing:  $5,000

• Before your Center opens for business, you will pay approved vendors a Grand Opening Marketing Fee of $5,000 for certain digital marketing services and pre-opening and grand opening advertising materials, including business cards featuring workout passes, club brochures, and vinyl banners.

• The Grand Opening Marketing Fee will also cover the costs of digital marketing.

9.  Opening Equipment and Inventory Package:  $35,000 to $37,000

• The Opening Equipment and Inventory Package includes exercise equipment and floor mats necessary to operate the Center (including punching bags, weights, jump roaps, medicine balls and racks, speed bag platforms, and high-end industrial quality floor mats), interior signage, entry furniture and displays, and your initial inventory of retail items (including gloves, hand wraps, heart rate monitors, apparel, and nutritional products).

10.  Exterior Signage:  $2,000 to $6,000

• This includes the estimated purchase cost of exterior signage and related delivery and installation. You may use a local vendor.

11.  Heart Rate Zone System:  $775

• You must purchase the 9Round Heart Rate Zone system called 9Round Pulse. You also must purchase all equipment required to implement and use the system, which includes a minimum 60-inch flat screen television to display live workout statistics. You also must pay the franchisor an additional monthly license fee, currently $139 per month.

12.  Shipping and Handling (for both Grand Opening Marketing Materials and Opening Equipment and Inventory Package):  $4,000 to $5,500

13.  Travel, Lodging, and Meals for Initial Training Program:  $1,000 to $2,000

• Training is held at the corporate headquarters (currently, Greenville, South Carolina). You are responsible for all costs associated with attending, such as travel, room, and board.

14.  Business Licenses and Other Professional Fees:  $400 to $1,000

• The franchisor recommends that you hire an attorney to help you evaluate the franchise offering, to identify the laws and regulations that may apply to your Center, to help you set up a business entity, to review and negotiate your lease, and for whatever other purpose you deem appropriate.

15.  Additional Funds for 3 Months:  $15,000 to $20,000

• The figures in the chart represent the estimated amount of working capital you will need to cover other initial operating expenses for a period of three months. This includes the minimum $500 per month that you must spend on local advertising and marketing.

• The figures in the chart include the estimated amounts of employee salary or wages and rent.

16.  Total:  $81,175 to $150,275

• The franchisor relied on its principals’ combined expertise when preparing these figures.

• The estimate of initial investment funds is based on owner-operated businesses, and does not include salaries or benefits for full-time employees. As your business grows, you may choose to hire employees to carry out support service tasks.

• This estimate does not include any finance charges, interest, or debt service obligation, or your living expenses. You should have sufficient capital or other means to pay for your living expenses for at least 12 months.