23 Substantial Fees Every The Exercise Coach Franchisee Needs to Know About

Detailed Information on The Exercise Coach’s Initial Franchise Fee, Royalty Fee + 21 Other Fees (Items 5 and 6, 2021 FDD)

1.  Initial Franchise Fee:  $49,500

• You will pay a $49,500 initial franchise fee for your franchise. The entire initial franchise fee is payable in full at the time you sign the Franchise Agreement.

• The initial franchise fee is used for initial sales, development, and pre-opening/opening support of your franchise and is not refundable under any circumstances. The initial franchise fee is uniform (except as discussed below for area developers) and fully earned even if you do not ever open your Business.

2.  Initial Training Fee:  $2,500

• You will pay The Exercise Coach a $2,500 initial training fee in exchange for the pre-opening initial training program that it will conduct for up to 3 people. The initial training fee is due at the time you sign the Franchise Agreement and is not refundable under any circumstances.

• The initial training fee is uniformly imposed.

3.  Fitness Equipment Package:  $72,380 to $90,378

• Prior to opening, you must purchase certain proprietary fitness equipment from The Exercise Coach’s affiliate Gymbot (the “Equipment Package”).

• The Exercise Coach’s current Equipment Package includes the following equipment/machines: Exerbotics Leg Press, Chest/Row, Nucleus, Crossfire, Shoulder Press/Pull-Down; Nautilus Abduction/Adduction; SciFit 360 Pro 2 (2); and a Tuff Stuff Multi-Trainer.

• Some of this equipment is optional for a personal training suite while other equipment is required. All of this equipment is required for a personal training studio.

• The purchase price for the Equipment Package is currently $103,737.

• Some franchisees finance the purchase of the Equipment Package through unaffiliated third-party finance companies.

• The purchase price for the Equipment Package is due immediately upon receipt of the invoice. The purchase price is nonrefundable and uniformly imposed.

• You must pay The Exercise Coach’s affiliates for all costs they incur for shipping, installation, and setup of the equipment. The Exercise Coach’s affiliate may outsource these functions to one or more third-party suppliers.

• The Exercise Coach’s affiliates will invoice you based on the estimated costs prior to shipment. If the amount invoiced is less than the actual costs incurred, The Exercise Coach’s affiliates will provide you with reconciliation and you must pay the affiliates the difference between the estimated costs and actual costs incurred.

• The costs for shipping, installation, and setup are due immediately upon receipt of the invoice. The Exercise Coach estimates these costs will range from $6,500 to $9,500 depending on how far your Business is located from The Exercise Coach’s headquarters and the point of shipment of the equipment.

4.  Development Fee:  varies based on the number of units

• If you sign an Area Development Agreement (ADA), you will pay the full $49,500 initial franchise fee for your first franchise and a reduced initial franchise fee for your 2nd and subsequent franchises to be established pursuant to the ADA.

• The total amount of these fees for your 2nd and subsequent franchises is referred to as the “Development Fee.” The specific initial franchise fee associated with each unit to be established under the ADA, and the associated Development Fee, is as follows:

• 1 unit:  $49,500 (initial franchise fee)
• 2 units:  $40,000 (initial franchise fee); $89,500 (total Development Fee)
• 3 units:  $25,000 (initial franchise fee); $114,500 (total Development Fee)
• 4 units:  $25,000 (initial franchise fee); $139,500 (total Development Fee)
• 5 units:  $20,000 (initial franchise fee); $159,500 (total Development Fee)
• 6 units (and beyond):  $20,000/unit (initial franchise fee); $159,500, plus $20,000 per additional unit (total Development Fee)

• The entire Development Fee is payable in full at the time you sign the ADA and is fully earned even if you do not ever open any additional franchised locations. The Development Fee is a pre-payment for holding the additional territories you purchase and is not refundable under any circumstances

5.  Royalty Fee:  greater of (i) 6% of monthly Adjusted Gross Revenues or (ii) $1,000 per month (waived for first full or partial calendar month of operation)

• Due Date:  7th day of month for prior month’s operations.

• The 1-month waiver of royalty fees is for the first initial month of operation, regardless of the date you open for business (i.e., it will not be for a full month unless you open on the 1st day of the month).

• The full royalty fee commences on the 1st day of the 2nd month after you open your Business (meaning your royalty fee due on the 7th day of the 3rd month is the greater of $1,000 or 6% of Adjusted Gross Revenues collected during your 2nd month of operation).

• At this time, The Exercise Coach automatically generates reports of your Adjusted Gross Revenues from its POS system. In the future, The Exercise Coach may require that you provide it with periodic revenue reports.

• The Exercise Coach reserves the right to require that all royalty and other percentage-based fees be paid weekly rather than monthly.

6.  Brand and System Development Fund Fee:  1% of Adjusted Gross Revenues

• Due Date:  Same as royalty fee due date.

7.  Local Marketing Fee:  ranges from $2,000 to $2,500 per month

• Due Date:  As incurred.

8.  Cooperative Advertising Fee:  up to $2,000 per month

• Due Date:  Same as royalty fee due date.

9.  Virtual Personal Training (VPT):  $99 per month, plus additional amount ranging from $3.50 to $5.00 per session

• Due Date:  Due monthly upon receipt of invoice (debited via ACH).

10.  Ongoing Training/Assistance Fee:  up to $500 per person per day (plus reimbursement of expenses for onsite training/assistance)

• Due Date:  10 days after invoice.

11.  Conference Registration Fee:  up to $500 per person per day

• Due Date:  10 days after invoice.

12.  Technology Fee:  varies (currently, $369 per month)

• Due Date:  10 days after invoice, commencing 1st full calendar month after installation of The Exercise Coach’s affiliates’ proprietary exercise equipment.

13.  Audit Fee:  actual cost of audit (including travel and lodging expenses for audit team)

• Due Date:  10 days after invoice.

• Payable only if the audit (i) reveals that you have understated any amount that you owe The Exercise Coach by at least 3% or (ii) is necessary because you fail to furnish required information or reports to The Exercise Coach in a timely manner.

14.  Fees Imposed by Advisory Council:  set by advisory council, subject to The Exercise Coach’s approval

• Due Date:  As determined by council and approved by The Exercise Coach.

• The Exercise Coach may form a franchisee advisory council to serve in an advisory capacity. The advisory council would have the right to suggest additional fees that would be imposed on franchisees to improve marketing and/or the brand. If The Exercise Coach approves the fee, all franchisees must pay it.

15.  Fines:  up to $500 per incident

• Due Date:  Upon demand.

• Payable if you fail to comply with a mandatory standard or operating procedure and you do not cure the non-compliance within the time period The Exercise Coach requires.

• The Exercise Coach will deposit all fines into the brand and system development fund. Until the brand and system development fund is established, The Exercise Coach has no obligation to use the fines it collects in any particular manner.

16.  Renewal Fee:  20% of then-current initial franchise fee (Franchise Agreement)

• Due Date:  At time you sign Renewal Agreement.

17.  Transfer Fee (Franchise Agreement):  $15,000 (reduced to $7,500 if buyer is an existing The Exercise Coach franchisee)

• Due Date:  Before transfer.

• Payable when you transfer or sell your franchise.

• No charge if franchise is transferred to an entity that you control or for certain transfers of ownership interests between existing owners, unless such transfer results in a change of control.

18.  Transfer Fee (Area Development Agreement):  $25,000 (includes transfer of ADA and all franchised locations under the ADA)

• Due Date:  Before transfer.

• Payable when you transfer or sell your franchise.

• No charge if franchise is transferred to an entity that you control or for certain transfers of ownership interests between existing owners, unless such transfer results in a change of control.

19.  Late Fee:  lesser of 18% of amount past due or highest rate allowed by applicable law

• Due Date:  10 days after invoice.

20.  Management Fee:  $6,000 to $8,000 per month

• Due Date:  10 days after invoice.

• If you default under the Franchise Agreement or the Managing Owner dies, The Exercise Coach can designate a temporary manager to manage your Business until you cure the default or find a replacement Managing Owner, as applicable.

21.  Indemnification:  will vary with circumstances

• Due Date:  10 days after invoice.

• You must indemnify and reimburse The Exercise Coach for any damages, losses, or expenses it incurs as a result of the operation of your Business or your breach of the Franchise Agreement.

• The Exercise Coach’s indemnification clauses are uniform with all franchises and The Exercise Coach does not provide mutual indemnification of any kind within its Franchise Agreements.

22.  New Product or Supplier Testing:  $50 per hour

• Due Date:  10 days after invoice.

• This covers the costs of testing new products or inspecting new suppliers you propose.

23.  Insurance:  actual cost of premiums, plus The Exercise Coach’s costs and expenses

• Due Date:  10 days after invoice.

• If you fail to obtain and maintain the insurance The Exercise Coach requires, and it elects to do so on your behalf, you must reimburse The Exercise Coach.