What factors influence the rent costs for a Fitstop franchise location?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
proposal package.
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- Lease: Security Deposit and other Pre-Opening Payments. These are estimated amounts of your security deposit under the lease for the Premises, which our standard franchise offering expects will be between 1,800 to up to 3,000 square feet. We expect that the lease terms, including rent, will vary substantively amongst our System franchisees based on (a) demand in the Designated Territory, (b) the population and other demographics of the Designated Territory and surround region, and (c) the terms you are responsible for negotiating with landlord with respect to rent (and/or free rent) and other primary business/payment terms under the lease for the Premises. These amounts will vary by market and may be refundable (as determined by the landlord). The low end of this estimate assumes a Premises in a suburban or rural area that is not in a city or other densely populated area or metropolitan area, with a security deposit amounting 1-2 months of rent. The high end of this estimate assumes that the Premises is located in a higher-end real estate market and/or more densely populated area, with a security deposit amounting to 2-3 months of rent. The range here is based on (a) the experience of our affiliates opening two (2) franchised locations in CA, (b) the experience of our Affiliate Franchisor and its franchisee network when securing a premises to operate a System Business in Australia, and (c) information we have received from third-party real estate brokers and consultants.
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- Operational Equipment and Supplies Package. This estimated range is designed to cover the initial operational equipment, supplies and inventory necessary to outfit the Premises and Franchised Business with the Required Items necessary for Authorized Instructors to provide the Approved Services, as well as certain other Required Items that will be utilized to buildout and/or operate the Franchised Business. The exact package components will be detailed more fully in our Manuals or otherwise in writing. The costs of the applicable package for your Franchised Business may vary from other System franchisees based on the location, design, layout and size of your Franchised Business as well as any upgrades or other variances you request and we allow in connection with your buildout.
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- Leasehold Improvements. You may need to construct improvements or "build out" the Facility at which you will operate your Franchised Business. You may be able to negotiate various terms with
your landlord, including paying for some of the build out costs for your space. Also, you may seek to finance some or all of your build out costs through your landlord or other financing sources. A variety of factors may affect the availability of landlord and other financing, the monthly overall costs of the financing, and other terms relevant to your decision whether to pay or finance the build out costs. Your landlord may also agree to provide you with a tenant improvement credit, whereby the landlord credits some of the costs you incur in building out the Premises towards your monthly rent.
Source: Item 7 — TEM 7: ESTIMATED INITIAL INVESTMENT (FDD pages 15–19)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, several factors can influence the rent costs for a Fitstop franchise. The size, quality, and position of the premises, along with local market conditions, play a significant role in determining rent. The FDD notes that the standard franchise offering assumes a premises size between 1,800 and 3,000 square feet, and rent costs are estimated to be between $20,000 to $50,000 for the first four months after opening. However, premium locations in urban areas may exceed these amounts, subject to the franchisor's approval.
Lease negotiations between the franchisee and the landlord are critical, as the franchisee is responsible for negotiating rent terms, including potential free rent periods. The demand in the designated territory, along with its population and demographics, also affects rent costs. Security deposits, estimated between $8,000 and $75,000, can vary based on whether the location is in a suburban/rural area (1-2 months' rent) or a higher-end/densely populated area (2-3 months' rent).
Tenant improvement credits from the landlord, where the landlord credits some build-out costs towards monthly rent, can also influence the overall rent expense. Additionally, the FDD mentions that the experience of affiliates opening locations in California and Australia, along with information from real estate brokers and consultants, was used to estimate these costs. Prospective franchisees should carefully review these figures in light of local conditions and consult with their accountant to assess the potential rent expenses for their specific location.