Iron Tribe Fitness Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)

• All fees and payments are non-refundable, unless otherwise stated or permitted by the payee.

1.  Initial Franchise Fee:  $42,000

• The Initial Franchise Fee is $42,000 and is described in greater detail in Item 5 of the Franchise Disclosure Document.

2.  Rent and Lease Deposit:  $5,000 to $8,000

• You must lease or sublease a location at which to operate the Facility. Real estate expenses will vary based on the Facility’s location and size. An average Facility will be between 2,500 and 5,000 square feet.

• Figures above include the estimated cost of lease deposits plus three months’ rent.

• Because of a number of variables, the costs projected in the chart for the lease deposit of the lease are an estimate only, and your initial investment may be higher or lower. Be sure to investigate all real estate costs thoroughly before signing a lease.

3.  Leasehold Improvements:  $110,000 to $190,000 (new facility)

• The Facility must conform to Iron Tribe Fitness’ standards and specifications for appearance, layout, and design. Iron Tribe Fitness may provide you its specifications for construction, remodeling, and decorating the Location and general floor plans and interior layout and design.

• You will submit to Iron Tribe Fitness for approval all construction and design plans for adapting its specifications to your Location, which plans will comply with any requirements identified by it. Iron Tribe Fitness will review those plans and will approve or disapprove them in writing no later than 30 days after receipt.

• You will ensure that all design, construction, and remodeling work is performed in a competent and professional manner, and that the Location meets all specifications identified by Iron Tribe Fitness.

• This figure includes general buildout costs, which is approximately $44 per square foot. The buildout figure includes the building permit.

• Alternatively, if you purchase a space to use for the Facility instead of leasing a space, the upfront costs you will incur for leasehold improvements will greatly decrease because you will be able to include the costs for such improvements in the mortgage for the Facility.

• The costs incurred in connection with the design, remodeling, decorating, and/or construction of a Facility will vary greatly depending on a number of factors, including the size and location of the Facility, as well as the amount of construction or remodeling needed and the prior use of the premises.

• You will employ qualified personnel to perform all design, construction, and remodeling work at the Location.

• At Iron Tribe Fitness’ request, you will provide it with any requested information concerning the personnel employed by you for design, construction, or remodeling, and it is permitted to disapprove any of those personnel if it concludes that they are not reasonably qualified or financially capable of performing that work. At Iron Tribe Fitness’ option, you will employ any design, construction, and remodeling professionals identified by it.

• If you obtain financing from a third party for some or all of the construction costs, you will also have to pay interest on the amount borrowed.

• If leasehold improvement costs are estimated to exceed the amounts set forth in the Disclosure Document, you may wish to investigate and/or obtain an alternate site for your Facility.

4.  Fixtures, Furnishings, and Other Fixed Assets:  $20,000 to $22,000

• You must purchase or lease furniture, fixtures, and other equipment and supplies necessary for the Facility including Facility equipment. Leasing furniture, fixtures, and equipment may significantly reduce your initial investment by spreading these “start-up” costs over a longer period of time. The estimate set forth above assumes that you purchase your furniture, fixtures, and equipment from Iron Tribe Fitness’ designated or approved suppliers.

5.  Gym Equipment:  $50,000 to $55,000

• You must purchase required gym equipment that meets Iron Tribe Fitness’ current standards and specifications from its designated supplier. This figure includes all training equipment, aluminum package, and aluminum shipping. This amount will vary depending on how far your Facility is located from the shipping facility.

6.  Computer Equipment, Software, and Website:  $5,500 to $6,250

• You must purchase required computer equipment and software that meets Iron Tribe Fitness’ current standards and specifications from its designated supplier. This estimate includes fees related to: (i) hosting your website; (ii) Iron Core; (iii) Infusionsoft; (iv) Google Apps; and (v) Yammer.

• You must establish your own web page through Iron Tribe Fitness’ Website Management System or other designated source.

7.  Inventory:  $9,000 to $10,000

• You must purchase an initial supply of inventory items including janitorial supplies, men and women’s gym apparel and accessories, nutritional supplements, towels, water bottles, decals, wristbands, and duffle bags and other equipment from Iron Tribe Fitness’ approved or designated suppliers.

8.  Signage:  $5,000 to $8,000

• This represents the expenses of acquiring interior and exterior signage on the Facility. The cost of signage will depend on the size and location of the Facility, your landlord’s particular requirements, local and state ordinances, and zoning requirements.

• Unless Iron Tribe Fitness has designated an approved supplier to service your Territory, you may purchase signage from any third-party supplier so long as the signage conforms to Iron Tribe Fitness’ standards and specifications.

9.  Permits, Licenses, and Professional Services:  $1,000 to $1,500

• You must obtain insurance policies protecting yourself and Iron Tribe Fitness, and your and its respective officers, directors, partners, and employees, against any demand or claim for personal injury, death, or property damage, or any loss, liability, or expense arising from the operation of your Facility.

• These policies must be written by a responsible carrier or carriers acceptable to Iron Tribe Fitness, and must include coverage that meets Iron Tribe Fitness’ minimum specifications.

• In the event that the coverage required by the lease and the Franchise Agreement differs, the higher limits will apply.

• This figure takes into account any insurance premiums for the first three months of operation of the Facility.

10.  Training (transportation, lodging, etc.):  $4,000 to $6,000

• You are responsible for all expenses associated with attending Iron Tribe Fitness’ tuition-free initial training program, including your and your employees’ transportation to and from the training site, lodging, meals, and employee wages during training.

• This figure also includes the expenses associated with sending: (i) one Operations Manager through Iron Tribe Fitness’ “Manager Practicum Program” (MPP) for three weeks; and (ii) one lead Coach through Iron Tribe Fitness’ “Coach Practicum Program” (CPP) for three weeks.

11.  Utility Deposits and Other Prepaid Expenses:  $500 to $750

12.  Initial Marketing and Grand Opening Event:  $5,000

• You will spend for initial marketing $4,000 (the “Initial Marketing Fee”) starting 30 days prior to opening the Facility for business. Your Initial Marketing Fee does not decrease or affect your obligations with respect to local advertising, any Ad Co-op, or any Ad Program Fees.

• In addition, you will spend no less than $1,000 to promote and host a grand opening event at the Location (“Grand Opening Event”).

13.  Legal Fees:  $3,000 to $4,000

14.  Working Capital Required During the Initial Phase of the Business (3 months):  $40,000 to $75,000

• The estimate of additional funds is based on an owner-operated franchised business. It does not include any allowance for owner’s draws.

• This estimate is based on Iron Tribe Fitness’ principal members’ experience in owning and operating a number of franchised fitness businesses.

• The Company estimates that, in general, you may expect to put additional cash into the business during at least the first 3 months of operation and sometimes longer but the Company cannot estimate or promise when, or whether, you will receive a positive cash flow or profits from the franchised business. Iron Tribe Fitness cannot guarantee that you will not have additional expenses starting the Franchised Business.

• Your costs will depend on factors such as: (a) how closely you follow Iron Tribe Fitness’ methods and procedures; (b) your management skill, experience, and business acumen; (c) local economic conditions; (d) the local market for Iron Tribe Fitness’ services and products; (e) the prevailing wage rate; (f) competition; and (g) the sales level reached during the initial period.

15.  Total:  $300,000 to $433,500