What is the role of the Affiliate Business in the development of Fitstop Franchised Businesses?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
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General Note. The estimated investment ranges were prepared based upon and accounting for: (i) various sources of information, including (a) the experience of our affiliates developing two (2) System Businesses (each, an "Affiliate Business") over the past 18 months, (b) the experience of our Affiliate Franchisor and its System franchisees that have Franchised Businesses operating or under development in Australia, (c) information we have received from our current third-party Approved Suppliers for certain investment items or categories above, (d) information and data that we have received from various real estate brokers and/or other sources for information with respect to current real estate and commercial leasing markets, and (e) various other due diligence; and (ii) a number of expectations and reasonable assumptions that we make as part of our standard franchise offering, such as franchisee (a) securing an approved Premises and opening the Franchised Business within the prescribed timelines set forth in your Franchise Agreement (and on or before the Rent Commencement Date under the lease for the Premises), and (b) ensuring that the Premises is built out in accordance with our current System standards, specifications and processes, and (c) using our Approved Suppliers for certain Required Items as set forth in the Chart above and in Item 8 of this Disclosure Document below.
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- Initial Franchise Fee. Please see Item 5 of this Disclosure Document for additional details regarding this initial fee and the terms associated with the same. This amount must be paid in connection with each Franchised Business you are awarded the right to independently own and operate at the time such rights are awarded, and such amounts are deemed fully earned upon payment under your signed Franchise Agreement.
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- Training-Related Costs and Expenses.
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, the Affiliate Business plays a role in estimating the initial investment required to open a franchise. The estimated investment ranges were prepared based upon and accounting for the experience of Fitstop's affiliates developing two System Businesses (each, an "Affiliate Business") over the past 18 months. This experience is factored into considerations such as securing an approved premises, build-out in accordance with system standards, and using approved suppliers.
Specifically, the experience of Fitstop's affiliates in opening two franchised locations in California is considered when estimating the security deposit and other pre-opening amounts under the lease for the approved premises. The FDD notes that the low end of the estimate assumes a premises in a suburban or rural area, while the high end assumes a location in a higher-end real estate market or more densely populated area.
By drawing on the experience of its affiliates, Fitstop aims to provide prospective franchisees with a more realistic and informed understanding of the potential costs involved in establishing and operating a Fitstop franchise. This includes costs related to site selection, leasehold improvements, equipment, signage, and initial marketing efforts. However, franchisees should still consult with their own advisors to assess local conditions and economic factors.