Detailed Information on STRIDE’s Initial Franchise Fee, Royalty Fee + 25 Other Fees (Items 5 and 6, 2021 FDD)
1. Initial Franchise Fee: $60,000
- You must pay to STRIDE an initial franchise fee of $60,000 (the “Initial Franchise Fee”) to establish a single Studio under a Franchise Agreement (whether a start-up or conversion). The Initial Franchise Fee is a lump sum payment due upon the signing of the Franchise Agreement.
2. Initial Buildout Package: $74,000 to $83,000
- You must purchase an initial package of furniture, fixtures, and related supplies that is designed to provide you with many of the items (other than the leased treadmills) that you will need in connection with outfitting, equipping, and otherwise building out your Studio (the “Initial Buildout Package”), as well as the shipping and installation of the items comprising that Package.
- As of the Issue Date of the current Disclosure Document, the costs associated with the Initial Buildout Package are comprised of: (i) between $59,000 and $68,000 in estimated amounts necessary to acquire and, if and as applicable, ship and install (a) free weights of various sizes and various other related equipment/supplies for use in connection with the provision of the Approved Services, (b) a Studio fixture package comprised of a desk, displays and display rack, storage cubbies, pedestals, and assorted other fixtures, and (c) certain other equipment used in connection with the Studio; and (ii) approximately $15,000 in estimated costs associated with acquiring certain of the hardware and software associated with the point of sale (“POS”) and computer system components STRIDE currently requires for use in connection with your Studio (the “SMS Bundle”).
3. Opening Inventory – Retail: $12,000
- Prior to opening your Studio, you must purchase opening inventory from STRIDE at a cost of approximately $12,000 (“Opening Retail Inventory”), which includes apparel and other merchandise that will be available for resale as part of your Approved Products, including items branded with the Marks.
4. Pre-Opening Coach Training: $1,499 to $10,493
- As previously disclosed, any individual that you wish to serve as an Authorized Coach so he/she is eligible to conduct classes and otherwise perform the Approved Services at your franchise Studio must first attend and successfully complete STRIDE’s then-current Authorized Coach Training.
- Prior to opening, STRIDE estimates it will provide Authorized Coach Training to at least one and as many as seven coach(es), as you determine appropriate in your discretion, and you will pay STRIDE between $1,499 and $10,493 in corresponding Coach Training Tuition fee(s).
5. Technology Fee: $399/month
- You will be required to commence paying STRIDE its then-current Technology Fee monthly, which is currently $399/month.
6. Development Fee: depends on the number of Franchised Businesses STRIDE grants you the right to open within the Development Area
- If STRIDE awards you the right to develop three or more Franchised Businesses within a given Development Area, you must pay STRIDE a one-time Development Fee upon execution of your Development Agreement.
- Your Development Fee will depend on the number of Franchised Businesses STRIDE grants you the right to open within the Development Area, and is calculated as follows: (i) $45,000 per Franchised Business if you agree to open and operate between three and five Franchised Businesses; (ii) $40,000 per Franchised Business if you agree to open and operate between six and nine Franchised Businesses; and (iii) $35,000 per Franchised Business if you agree to open and operate 10 or more Franchised Businesses.
- You will be required to enter into STRIDE’s then-current form of Franchise Agreement for each Franchised Business you wish to open under your Development Agreement, but you will not be required to pay any additional Initial Franchise Fee at the time you execute each of these Franchise Agreements.
- If you enter into a Development Agreement, you must execute STRIDE’s current form of Franchise Agreement for the first Studio STRIDE grants you the right to open within your Development Area concurrently with the Development Agreement.
- Your Development Fee will be deemed fully earned upon payment, and is not refundable under any circumstances.
7. Royalty: 7% of Gross Sales generated by your Franchised Business
- Due Date: Payable weekly based on the Gross Sales of your Franchised Business during the preceding business week.
- You will be required to start paying your Royalty once your Franchised Business begins collecting revenue from operations.
8. Brand Development Fund (the “Fund”) Contributions: the then-current contribution STRIDE designates you must make to the Fund (your “Fund Contribution”); currently, 2% of the Gross Sales generated by your Franchised Business
- Due Date: Payable weekly at the same time and in the same manner as the Royalty.
9. Local Advertising Requirement: $1,500 per month (your “Local Advertising Requirement”)
- Due Date: As arranged.
- This is the minimum amount you must expend within your Designated Territory each month in connection with the active promotion and marketing of your Franchised Business, including lead generation activities that STRIDE designates or approves.
10. Coach Training Tuition: then-current tuition fee (the “Coach Training Tuition”); currently, $1,499 per trainee
- Due Date: Prior to training.
11. Training Fee: then-current training fee (the “Training Fee”); currently, $500 per day per trainer
- Due Date: Prior to training.
- This fee is paid in connection with additional training/instruction that STRIDE may provide on an ongoing basis in connection with the overall operation and development of your Studio.
12. Required Software Fees: then-current fees charged by STRIDE’S Approved Supplier for (a) Studio management and POS software, (b) client performance tracking software, and (c) any other software STRIDE designates for use in connection with your Studio; currently, approximately (i) $269/month for Studio management software, and (ii) $150/month for the client performance software system
- Due Date: Payable monthly in the same manner as the Royalty.
13. Technology Fee: STRIDE’s then-current technology fee (the “Technology Fee”); currently, $399/month
- Due Date: Payable monthly in the same manner as the Royalty.
14. Renewal Fee: $10,000
- Due Date: At time of renewal.
- You must renovate and reimage the Studio at your expense at the time of renewal to conform to STRIDE’s then-current standards and image.
15. Transfer Fee Under Franchise Agreement: $10,000
- Due Date: At the time you apply for STRIDE’s approval or consent to a proposed transfer.
- Instead of the standard transfer fee, STRIDE will only charge an administrative fee amounting to: (i) $500 if you are an individual and are assigning your franchise and/or development rights under your agreements with STRIDE to an entity that you fully own; or (ii) $1,500 if it is a transfer from an existing System franchisee to an immediate family member.
16. Transfer Fee Under Development Agreement: $10,000
- Due Date: On submitting application for consent to assignment.
- Payable when you want to sell/transfer the rights under your Development Agreement.
17. Insurance Policies: amount of unpaid premium
- Due Date: Must have the policies within 60 calendar days after signing the Franchise Agreement, but no later than the time that you acquire an interest in the real property from which you will operate the Studio.
- Payable only if you fail to maintain required insurance coverage and STRIDE elects to obtain coverage for you.
18. Audit Fees: reimbursement of STRIDE’s actual costs incurred in connection with the audit; approximately, $500 to $2,500
- Due Date: Within 15 calendar days after receipt of audit report.
- Payable only if (a) audit or review shows an understatement of Gross Sales for audited period of 2% or more, or (b) the audit or review is being conducted in response to your failure to timely submit any reports required by your Franchise Agreement.
19. Mystery Shopper and Other Quality Control Programs: currently, STRIDE does not require franchisees to contribute to these programs, but it reserves the right to do so in the future
- Due Date: Within 30 days of demand.
- Payable only if STRIDE establishes a mystery shopper program or other quality control mechanism/program, in which case it reserves the right to require a franchisee to contribute up to $500/year to help defray the costs of such programs that are designed to preserve the goodwill and brand image.
20. Late Fees: the greater of the highest applicable legal rate for open account business credit, or 1.5% per month. STRIDE may also charge an administrative fee of $50 for each late payment or report.
- Due Date: Upon demand.
- Applies to all amounts not paid when due, until paid in full.
21. Penalty Fee: then-current fee charged by STRIDE; currently, $100 for each day of non-compliance
- Due Date: Upon demand.
- Payable only in the event you fail to comply with your material obligations under your Franchise Agreement by (a) permitting any coach at your Studio to provide running instruction or other Approved Services before they complete the Authorized Coach Training, or (b) offering or selling any unauthorized products or services at your Studio, including provision of the Authorized Coach Training with an approved Master Trainer.
- The Penalty Fee will be incurred during each day of non-compliance.
22. Attorneys’ Fees and Other Enforcement-related Costs: the costs that STRIDE incurs in connection with any action to (a) enforce your obligations under any Franchise Agreement or Development Agreement, and/or (b) defend against any action you bring against STRIDE wherein it prevails
- Due Date: As incurred or upon demand, as applicable.
- You must reimburse STRIDE all costs and expenses that it incurs in connection with any action it brings against you to enforce the terms of an agreement against you, as well as in connection with any action you bring against STRIDE that it successfully defends against.
23. Other Agreement-Related Costs and Expenses: the attorneys’ fees and actual costs that STRIDE (a) actually incurs, or (b) provides specific notice of in its Manuals with regards to certain situations (such as relocation, certain transfers, etc.) in connection with a given amendment or other change to the franchise relationship
- Due Date: Upon demand and prior to STRIDE countersigning any relevant addendum, amendment, or other document modifying the terms of your Franchise Agreement or Development Agreement.
24. Indemnification: all costs, including attorneys’ fees
- Due Date: Upon settlement or conclusion of claim or action.
- You will defend suits at your own cost and hold STRIDE harmless against suits involving damages resulting from your operation of the Studio (subject to applicable state law).
25. Alternative Supplier Approval: $500 per day for personnel engaged in evaluating a supplier
- Due Date: At time of request.
- Additionally, you must reimbursement STRIDE for any travel, accommodations, and meal expenses.
26. Regional Cooperative: as the Cooperative determines
- Due Date: As the Cooperative determines.
- STRIDE may establish regional cooperatives comprised of Studios that are within a given geographical area (each, a “Cooperative”). If a Cooperative is established where your Studio is located, you will be required to participate in that Cooperative and contribute to that Cooperative in the amounts the Cooperative determines.
27. Liquidated Damages: $10,000
- Due Date: As incurred.
- If you in any way compromise the secure access to the online version of the Manual, including, but not limited to, allowing unauthorized users access to the Manual and its confidential contents, you will be required to pay STRIDE liquidated damages in the amount of $10,000, to compensate STRIDE for the breach and related damage to the System.