In the context of C3 Wellness Spa, what does the term 'Outlet' refer to?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
(p) Outlet refers to either a Company Owned Outlet or Franchise Outlet, as the context requires.
(c) Company Owned Outlet means an outlet owned either directly or indirectly by us, our affiliate or any person identified in Item 2 of this Disclosure Document, that operates a C3 Wellness Business. A Company Owned Outlet also includes any C3 Wellness Business that: (i) is operated as a joint venture owned in part by us, our affiliate or any person identified in Item 2 of this Disclosure Document; or (ii) is managed by us our affiliate or any person identified in Item 2.
(e) Franchise Outlet(s) means a C3 Wellness Business operated under a Franchise Agreement that is not a Company Owned Outlet.
(k) New Company Owned Outlet means, as to a particular Calendar Year, a Company Owned Outlet that for the first time opened and commenced operations during the Calendar Year.
For example, if a Company Owned Outlet first opened for business in February 2022, as to the 2022 Calendar Year, the Company Owned Outlet would qualify as a New Company Owned Outlet and not as an Operational Company Owned Outlet, see definition below.
If this Company Owned Outlet remained in operation throughout the 2023 Calendar Year, it would qualify as an Operational Company Owned Outlet during the 2023 Calendar Year.
- (l) New Franchise Outlet means, as to a particular Calendar Year, a Franchise Outlet that for the first time opened and commenced operations during the Calendar Year.
For example, if a Franchise Outlet first opened for business in February 2022, as to the 2022 Calendar Year, the Franchise Outlet would qualify as a New Franchise Outlet and not as an Operational Franchise Outlet, see definition below.
If this Franchise Outlet remained in operation throughout the 2023 Calendar Year, it would qualify as an Operational Franchise Outlet during the 2023 Calendar Year.
- (m) Operational Company Owned Outlet means, as to a particular Calendar Year, a Company Owned Outlet that was open and in operation on or prior to the commencement of the Calendar Year.
For example, if a Company Owned Outlet first opened for business in February 2022, as to the 2022 Calendar Year, the Company Owned Outlet would qualify as a New Company Owned Outlet, see definition above, and not as an Operational Company Owned Outlet.
If this Company Owned Outlet remained in operation throughout the 2023 Calendar Year, it would qualify as an Operational Company Owned Outlet during the 2023 Calendar Year.
- (n) Operational Franchise Outlet means, as to a particular Calendar Year, a Franchise Outlet that was open and in operation on or prior to the commencement of the Calendar Year.
For example, if a Franchise Outlet first opened for business in February 2022, as to the 2022 Calendar Year, the Franchise Outlet would qualify as a New Franchise Outlet, see definition above, and not as an Operational Franchise Outlet.
If this Franchise Outlet remained in operation throughout the 2023 Calendar Year, it would qualify as an Operational Franchise Outlet during the 2023 Calendar Year.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 51–55)
What This Means (2024 FDD)
According to C3 Wellness Spa's 2024 Franchise Disclosure Document, the term 'Outlet' refers to either a Company Owned Outlet or a Franchise Outlet, depending on the context. A 'Company Owned Outlet' is a C3 Wellness Business owned directly or indirectly by the franchisor, its affiliate, or any person identified in Item 2 of the FDD. This definition also includes C3 Wellness Businesses operated as joint ventures or managed by the franchisor, its affiliate, or individuals listed in Item 2.
Conversely, a 'Franchise Outlet' is defined as a C3 Wellness Business operated under a Franchise Agreement that is not a Company Owned Outlet. Understanding this distinction is crucial for prospective franchisees as the financial performance and operational characteristics may differ between these two types of outlets. For example, the FDD notes that Company Owned Outlets may benefit from the managerial skill and experience of the franchisor's management team, brand recognition, and the absence of ongoing monthly fees that franchisees must pay.
The FDD also clarifies the terms 'New' and 'Operational' when describing outlets. A 'New Company Owned Outlet' or 'New Franchise Outlet' is one that opened and commenced operations for the first time during a particular calendar year. An 'Operational Company Owned Outlet' or 'Operational Franchise Outlet' is one that was open and in operation on or before the start of the calendar year. For instance, an outlet opening in February 2022 would be considered 'New' for the 2022 calendar year but 'Operational' for the 2023 calendar year, provided it remained open.
These definitions are important for interpreting the financial performance representations provided in Item 19 of the FDD. The document includes data from Company Owned Outlets, and it's essential to understand whether these outlets were 'New' or 'Operational' during the reported period to properly assess their performance. The FDD explicitly states that individual results may vary, and there is no guarantee that a franchisee will achieve the same level of financial success as the Company Owned Outlets.