Investing in a franchise is one of the most significant financial decisions you'll make, and thorough due diligence is absolutely critical to your success. The Franchise Disclosure Document (FDD) is your most important tool in this process—it's a legally mandated document that provides comprehensive information about the franchise opportunity, the franchisor's background, costs, obligations, and much more.

This comprehensive Anytime Fitness franchise analysis examines the FDD issued April 3, 2024 (as amended November 11, 2024) to help prospective franchisees understand what they're getting into before signing on the dotted line. The Anytime Fitness FDD review covers all critical aspects of this fitness franchise opportunity, from initial investment requirements to ongoing fees, territorial rights, and financial performance data.

The franchise disclosure document is divided into 23 items, each addressing specific aspects of the franchise relationship:

• Items 1-4 cover the franchisor's background, business experience, litigation history, and bankruptcy
• Items 5-7 detail all fees and investment requirements
• Items 8-9 explain product sourcing restrictions and franchisee obligations
• Items 10-18 address financing, support, territory, trademarks, and operational requirements
• Items 19-20 provide financial performance representations and outlet information
• Items 21-23 include financial statements, contracts, and receipts

Federal law requires franchisors to provide this document at least 14 calendar days before you sign any binding agreement or make any payment. This waiting period exists to give you time to review, analyze, and seek professional advice about the opportunity. This article will help you understand what the Anytime Fitness FDD reveals about this franchise opportunity and what questions you should be asking before making your investment decision.

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Anytime Fitness Franchise Cost & Investment Requirements (Item 7)

Overview of Initial Investment

The total investment necessary to begin operation of an Anytime Fitness center ranges from $397,516 to $973,121. This represents a significant investment range with a variance of approximately 145% between the low and high estimates, which potential franchisees should carefully consider when evaluating their financial capacity.

Of this total investment, $85,551 to $107,660 must be paid directly to the franchisor or its affiliates, representing approximately 21.5% to 11.1% of the total initial investment.

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⚠️ CRITICAL ALERT: Cost Variation Factors

The substantial difference between the low and high investment estimates ($575,605 variance) is primarily driven by:

• Leasehold improvements: $50,785 to $495,260 (875% variance)
• Real estate costs: Varying by location, market tier, and existing conditions
• Market tier classification: Tier 1, 2, or 3 markets have different requirements
• Size variations: Centers typically range from 4,000 to 6,500 square feet
• Existing conditions: "Vanilla shell" vs. "as is" space requirements

These estimates assume a "vanilla shell" or "as is" space with minimum requirements (office, bathrooms, studio space, concrete floors, demised exterior walls, HVAC, roof, and utilities). Costs will be significantly higher if your location requires structural modifications, site work, or exterior improvements.

Complete Investment Breakdown

Detailed Investment Table

Detailed Cost Category Analysis

1. Initial Franchise Fee: $42,500

The standard initial franchise fee is $42,500, but Anytime Fitness offers several pricing tiers:

Franchise Fee Pricing Structure

Key Points:

• Veteran discount: 10% reduction for qualified military members or veterans with honorable discharge
• Existing franchisee discount: Available to franchisees of Anytime Fitness and affiliated brands (The Bar Method, Basecamp Fitness, OrangeTheory, Waxing the City) who are not in default
• Club Purple/Platinum pricing: Requires meeting performance standards; franchisees with 4+ centers must have 25% of clubs qualified
• Multi-unit discount: Significant savings for Area Development Agreements (2+ locations)
• Fee is non-refundable once paid
• 12-month opening deadline: You have 12 months from signing to open your center

Red Flag: The franchise fee is due in full at signing and is completely non-refundable, even if you never open the center.

2. Travel and Training Expenses: $1,500 - $1,875

What's Included:

• Travel to Woodbury, Minnesota (or designated location)
• Lodging during training period
• Meals and incidental expenses
• Training for Principal Operator (mandatory)
• Training for Principal Owner if different from Principal Operator (mandatory)

What's NOT Included:

• The training itself is provided at no additional charge
• Coaching Suite Training is included for new franchisees

Cost Drivers:

• Distance from training location
• Method of travel (driving vs. flying)
• Length of stay
• Personal spending habits

3. Real Estate Costs: $31,213 - $50,721 (Rent + Security Deposit)

Assumptions in Estimate:

• Base rent: $17.38 per square foot (system average for 2023)
• CAM charges: $6.03 per square foot (system average for 2023)
• Total per square foot: $23.41
• Security deposit: 1 month's rent
• Size range: 4,000 to 6,500 square feet

Rent Calculation Examples

Important Considerations:

• These are system averages; actual costs vary significantly by market
• Tier 1 markets (major metropolitan areas) will be substantially higher
• Tier 3 markets (smaller communities) will be lower
• Most franchisees receive tenant improvement allowances (2023 average: $19/sq ft; range: $0-$72/sq ft)
• Estimate assumes only 1 month security deposit; some landlords require more

Red Flag: Real estate costs are highly variable and location-dependent. The system averages may not reflect your specific market conditions.

4. Leasehold Improvements: $50,785 - $495,260

This category shows the largest variance in the entire investment table—a difference of $444,475 or 875%.

What's Included:

• Interior construction and build-out
• Flooring installation
• Lighting systems
• HVAC modifications
• Plumbing and electrical work
• Bathroom facilities
• Office space construction
• Studio space preparation
• Paint and finishes

What's Assumed:

• "Vanilla shell" or "as is" space with:
  • Existing rooms suitable for office
  • Functional bathrooms
  • Studio space
  • Concrete floors
  • Demised exterior walls
  • HVAC system
  • Roof
  • Utilities stubbed to premises

What's NOT Included:

• Structural modifications
• Site work
• Energy studies
• Surveys
• Exterior improvements
• Permitting fees (assumed included in contractor costs)

Cost Variables:

• Existing condition of space
• Size of facility (4,000-6,500 sq ft)
• Local labor rates
• Material costs in your market
• Design complexity
• Local building code requirements
• Tenant improvement allowance from landlord

Critical Note: The FDD states that most franchisees receive tenant improvement allowances averaging $19 per square foot (range: $0-$72/sq ft in 2023). This can significantly offset leasehold improvement costs but is not guaranteed and varies by lease negotiation.

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⚠️ MAJOR RED FLAG: Leasehold Improvement Variance

The 875% variance in leasehold improvements ($50,785 to $495,260) represents the single largest uncertainty in your investment. This massive range suggests:

• Costs are highly dependent on existing space conditions
• Significant market-to-market variation
• Potential for costs to exceed high estimate in challenging locations
• Critical importance of thorough site evaluation before committing

Action Item: Before signing, obtain detailed construction estimates specific to your proposed location. The FDD estimates may not reflect your actual costs.

5. Construction Management Fees: $0 - $13,500

Current Status: Optional (as of FDD issuance date)

Future Status: May become mandatory

What It Covers:

• Professional oversight of construction process
• Coordination with contractors
• Quality control
• Timeline management
• Compliance verification

Cost: $13,500 if utilized

Red Flag: The franchisor explicitly reserves the right to make this optional service mandatory in the future, which would add $13,500 to your required investment.

6. Architect/Design Fees: $13,400 - $22,150

Compliance Drawing (Franchisor-Provided):

• First drawing: Free for new franchisees
• Additional drawings: $250 each
• Renewal/transfer situations: $250 (credited against Monthly Fee if renovations completed on time)

Construction Documents (Third-Party Architect):

• Must use franchisor's designated architectural vendor, OR
• Pay $2,700 review fee if using different vendor

Total Estimated Range: $13,400 - $22,150

What's Included:

• Complete set of detailed construction documents
• Permit acquisition
• Compliance with local ordinances and building codes
• Technical specifications for contractors

Red Flag: If you don't use the designated architectural vendor, you'll pay an additional $2,700 review fee, increasing your costs.

7. Fitness Equipment: $123,310 - $151,866

This is a mandatory purchase representing one of the largest single expenditures.

What's Included:

• Cardio equipment (treadmills, ellipticals, bikes, etc.)
• Strength training equipment
• Free weights and accessories
• Benches and racks
• Functional training equipment

Cost Drivers:

• Size of facility (4,000-6,500 sq ft)
• Equipment quality and brand
• Quantity of machines
• Mix of cardio vs. strength equipment

Replacement Considerations (Not in Initial Investment):

• Cardio equipment: Replace within 5-7 years
• Strength equipment: Replace approximately 10 years after opening
• Timing depends on: usage levels, technology innovations, brand standards, industry trends

Important Note: The FDD states you must purchase equipment meeting franchisor specifications, which may limit your ability to shop for competitive pricing.

8. Technology Equipment Package: $32,051 - $38,960

This is a mandatory purchase from ProVision, the franchisor's affiliate.

What's Included:

• Computer hardware
• iPads
• Software and networking equipment
• Door readers
• Key fobs (hardware or digital)
• Security and surveillance system
• Fitness scanning/monitoring equipment
• Sound system
• CCTV cameras
• Taxes (38% of package cost)
• Shipping
• Installation

Breakdown of Costs:

• Base technology package: Approximately $23,000 - $28,000
• Taxes, shipping, installation (38%): Approximately $9,000 - $11,000

Red Flags:

• Mandatory affiliate purchase: No competitive bidding allowed
• Affiliate receives profit: ProVision is owned by the same parent company
• Additional equipment may be required: For larger clubs or enhanced systems
• Ongoing fees: Base Technology Fee of $799/month for support and updates (see Item 6)

9. Supplies: $3,500 - $3,800

What's Included:

• Office supplies
• Cleaning supplies
• Automated External Defibrillator (AED): $2,000 (mandatory)
• First aid supplies
• Operational supplies

AED Requirement: The $2,000 AED represents more than half of this category and is mandatory.

10. Interior & Exterior Signs: $20,557 - $46,775

What's Included:

• Exterior building signage
• Interior directional signage
• Branding elements
• Wayfinding signs
• Compliance signage

Cost Drivers:

• Size of facility
• Local zoning requirements
• Sign complexity
• Materials used
• Installation requirements

Note: These amounts reflect the franchisor's "recommended package." Actual costs will vary based on local regulations and landlord requirements.

11. Miscellaneous Opening Costs: $9,293 - $15,333

What's Included:

• Utility setup fees
• First month utility costs
• Permitting fees
• Licensing fees
• Professional fees (legal and accounting)
• Business registration costs
• Miscellaneous startup expenses

Important: This category covers various small but necessary expenses that add up quickly.

12. Pre-Sale/Grand Opening Advertising: $11,000 - $23,000

This is a mandatory minimum spend based on your market tier.

Grand Opening Requirements by Market Tier

Timeline: 60 days before opening through 60 days after opening (120-day total period)

Requirements:

• Must use franchisor's preferred vendors
• May require submission of grand opening plans for approval
• Must submit receipts to verify minimum spend
• Must show proof of advertising activity performance
• If you fail to spend the minimum, franchisor may require you to pay the difference into the General Advertising and Marketing Fund

What It Covers:

• Pre-opening marketing campaigns
• Grand opening event costs
• Initial member acquisition advertising
• Digital marketing
• Traditional media (if applicable)
• Promotional materials

Red Flag: Some franchisees (particularly multi-unit developers controlling entire markets) may spend significantly more than $23,000 per center, suggesting these minimums may be insufficient for optimal market penetration.

13. Insurance/Bond: $2,900 - $3,450

Insurance Requirements

Mandatory Coverage:

• General liability insurance: $1,000,000 per person / $1,000,000 per occurrence / $3,000,000 aggregate
• Complete operations coverage
• Broad form contractual liability coverage
• Property damage coverage
• Franchisor and

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Anytime Fitness Financial Statements: Evaluating Franchisor Stability (Item 21)

Critical Disclosure: Financial Statements Not Available

IMPORTANT NOTICE: Item 21 of the Anytime Fitness Franchise Disclosure Document indicates that financial statements should be included, but the actual financial statements are not present in the provided FDD documentation. The FDD structure shows Item 21 as "found: false" with no content summary available.

According to the FDD Table of Contents, financial statements should be located in Exhibit D (Financial Statements and Guarantee), but this exhibit was not included in the materials provided for analysis.

What This Means for Prospective Franchisees

The Absence of Financial Data

Without access to the actual financial statements, we cannot provide:

• Balance sheet analysis showing assets, liabilities, and equity positions
• Income statement review detailing revenue, expenses, and profitability
• Cash flow assessment evaluating liquidity and operational sustainability
• Year-over-year trend analysis tracking financial performance
• Financial ratio calculations measuring financial health
• Comparative benchmarking against industry standards

Critical Red Flag Identified in Item 4

The FDD does include one significant financial disclosure in the "Special Risks to Consider" section (page 4):

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"Financial Condition. The Franchisor's guarantor's financial condition as reflected in its financial statements (see Item 21) calls into question the Franchisor's financial ability to provide services and support to you."

This is a mandatory risk disclosure that certain states require franchisors to highlight when their financial condition raises concerns about their ability to fulfill obligations to franchisees.

Understanding the Corporate Structure

Complex Ownership Hierarchy

The franchisor operates within a multi-layered corporate structure that underwent significant restructuring:

Current Structure (as of April 2, 2024):

Purpose Brands Holdings, LLC (Parent)
    ↓
Purpose Brands Intermediate, LLC / Purpose Brands, LLC
    ↓
Self Esteem Brands, LLC (SEB)
    ↓
Anytime Fitness, LLC (AFLLC - Predecessor/Manager)
    ↓
SEB SPV Guarantor LLC (Guarantor)
    ↓
SEB Funding LLC
    ↓
SEB Systems LLC
    ↓
Anytime Fitness Franchisor LLC (The Franchisor)

The Securitization Transaction

In November 2021, the company underwent a "Securitization Transaction" that fundamentally restructured the business:

Key Changes:

• AFLLC (the predecessor) transferred all U.S. franchise agreements to the new entity (Anytime Fitness Franchisor LLC)
• Ownership and control of U.S. trademarks and intellectual property were transferred
• AFLLC now operates as the manager providing support services under a management agreement
• The franchisor became responsible for all obligations, but services are performed by AFLLC

What This Means:

• The actual franchisor entity (Anytime Fitness Franchisor LLC) has only been operating since October 2021 (approximately 2.5 years as of the FDD issuance date)
• Limited operating history as the franchisor entity
• Financial performance may not reflect long-term stability
• The management structure creates potential complexity in accountability

Financial Obligations and Cash Flow Considerations

Revenue Sources for the Franchisor

Based on the fee structure disclosed in Item 6, the franchisor generates revenue from:

Estimated Monthly Recurring Revenue Per Center:

• Minimum: $2,198 per center ($799 + $600 + $799)
• This represents approximately $26,376 annually per franchised location

System Size and Potential Revenue

According to Item 20 disclosure (not fully provided but referenced), as of December 31, 2023:

• The system includes thousands of franchised locations
• Specific numbers would be found in the complete Item 20 tables

Without the actual financial statements, we cannot verify:

• Whether reported revenues match expected revenues from the fee structure
• Operating expense ratios
• Profit margins
• Cash reserves
• Debt service obligations

What Prospective Franchisees Should Do

Essential Due Diligence Steps

1. Request Complete Financial Statements

You have the legal right to receive complete financial statements as part of the FDD. Specifically request:

• Audited financial statements for the most recent 3 fiscal years
• Balance sheets showing assets, liabilities, and equity
• Income statements (profit & loss statements)
• Cash flow statements
• Notes to the financial statements
• Auditor's opinion letter

Questions to Ask:

• "Can you provide the complete Exhibit D with audited financial statements?"
• "Who is the independent auditor, and what type of opinion did they issue?"
• "Are the statements for the franchisor entity or the parent company?"

2. Understand the Guarantee Structure

The FDD references a "Guarantor" entity (SEB SPV Guarantor LLC). Request:

• Copy of the guarantee agreement
• Financial statements of the guarantor
• Terms and conditions of the guarantee
• Whether the guarantee is limited or unlimited

3. Investigate the Financial Condition Warning

The mandatory disclosure about questionable financial condition requires serious investigation:

Critical Questions:

• What specific financial metrics triggered this disclosure requirement?
• Is the franchisor profitable or operating at a loss?
• What is the debt-to-equity ratio?
• Are there concerns about the ability to meet obligations?
• Has the franchisor missed any payments to vendors or franchisees?

4. Analyze the Securitization Impact

Questions About the 2021 Restructuring:

• Why was the securitization transaction necessary?
• What debt obligations were created?
• How does the debt service affect the franchisor's financial stability?
• What assets secure the debt?
• Are there restrictive covenants that could affect franchisee support?

5. Verify Operational Capability

Since AFLLC provides services under a management agreement:

• What happens if AFLLC cannot perform its obligations?
• Is there adequate funding to ensure service continuity?
• What protections exist for franchisees if the management relationship terminates?

Red Flags and Concerns

Major Warning Signs

Specific Concerns

1. Financial Stability Questions

• The mandatory disclosure suggests the franchisor or its guarantor may have:
  • High debt levels
  • Negative equity
  • Operating losses
  • Insufficient working capital
  • Liquidity concerns

2. Support and Service Delivery

• If the franchisor faces financial difficulties, franchisees may experience:
  • Reduced support services
  • Delayed technology updates
  • Inadequate marketing support
  • Difficulty accessing training resources
  • Potential system instability

3. Long-Term Viability

• Financial instability could lead to:
  • Bankruptcy or restructuring
  • Sale to another company
  • Changes in franchise terms
  • Reduced investment in system improvements

Comparison to Industry Standards

What Healthy Franchise Systems Show

While we cannot provide specific comparisons without Anytime Fitness's actual financials, healthy franchise systems typically demonstrate:

Strong Financial Indicators:

• Positive net income with consistent profitability
• Current ratio of 1.5 or higher (current assets ÷ current liabilities)
• Debt-to-equity ratio below 2.0
• Cash reserves sufficient for 6-12 months of operations
• Revenue growth of 5-15% annually
• Working capital adequate to support franchisee services

Concerning Indicators:

• Negative equity (liabilities exceed assets)
• Operating losses for multiple consecutive years
• High debt-to-equity ratios (above 3.0)
• Declining revenues
• Negative cash flow from operations
• Minimal cash reserves

Financial Obligations You'll Owe

Understanding Your Payment Structure

Even without the franchisor's financial statements, you should understand your financial obligations:

Monthly Payments to Franchisor/Affiliates:

Additional Considerations:

• These fees are paid regardless of your profitability
• Fees can increase (Monthly Fee subject to CPI adjustments)
• Technology and advertising fees could convert to percentage-based fees
• Local marketing spend requirements: $600-$1,000/month additional

Cash Flow Impact

First Year Obligations (Single Location):

• Initial Franchise Fee: $42,500
• Monthly fees (12 months): $26,376
• Grand Opening: $11,000 - $23,000
• Local Marketing: $7,200 - $12,000
• Total to Franchisor/System (Year 1): $87,076 - $103,876

This represents significant cash outflow before considering:

• Rent and occupancy costs
• Employee wages
• Equipment maintenance
• Utilities and insurance
• Debt service on your initial investment

Questions About Financial Stability

What to Ask the Franchisor

Direct Financial Questions:

1. "What is your current debt-to-equity ratio?"

   • Healthy: Below 2.0
   • Concerning: Above 3.0
   • Critical: Negative equity

2. "What were your revenues and net income for the last 3 years?"

   • Look for: Consistent profitability and growth
   • Red flag: Losses or declining revenues

3. "How much cash and liquid assets do you maintain?"

   • Adequate: 6-12 months of operating expenses
   • Concerning: Less than 3 months

4. "What debt obligations resulted from the 2021 securitization?"

   • Understand: Total debt, interest rates, maturity dates
   • Assess: Impact on ability to support franchisees

5. "Have you ever delayed or reduced franchisee support due to financial constraints?"

   • Any "yes" answer requires detailed explanation

6. "What percentage of franchise fee revenue goes to debt service?"

   • Concerning if: More than 40-50% of revenues service debt

What to Ask Current Franchisees

Financial Stability Indicators:

1. "Have you experienced any reduction in support services?"
2. "Are technology updates and improvements being delivered as promised?"
3. "Has the franchisor been responsive to system needs?"
4. "Have there been any delays in marketing support or materials?"
5. "Do you have confidence in the long-term stability of the system?"

Recommendations for Prospective Franchisees

Before Signing Anything

✅ MUST DO:

1. Obtain Complete Financial Statements

   • Do not proceed without reviewing actual audited financials
   • Insist on Exhibit D with complete financial statements
   • Have your accountant review them thoroughly

2. Hire Professional Advisors

   • Franchise attorney: Review all agreements and financial disclosures
   • CPA/accountant: Analyze financial statements and projections
   • Industry consultant: Assess competitive position and viability

3. Investigate the Financial Warning

   • Understand exactly what triggered the mandatory disclosure
   • Determine if issues have been resolved or are ongoing
   • Assess risk to your investment

4. Talk to Multiple Franchisees

   • Contact at least 10-15 current franchisees
   • Speak with franchisees who left the system (Item 20)
   • Ask specifically about financial stability concerns

5. Understand the Corporate Structure

   • Know who is responsible for what obligations
   • Verify the guarantee is meaningful and enforceable
   • Understand implications of the management agreement

⚠️ PROCEED WITH EXTREME CAUTION IF:

• You cannot obtain complete financial statements
• The franchisor cannot adequately explain the financial condition warning
• Current franchisees express concerns about system stability
• Financial statements show negative equity or consistent losses
• Debt levels appear unsustainable
• The franchisor is evasive about financial questions

🛑 DO NOT PROCEED IF:

• Financial statements are not provided
• You cannot verify the financial stability of the franchisor
• The franchisor refuses to answer financial questions
• Multiple franchisees report concerns about system stability
• Your advisors recommend against the investment based on financial concerns

Alternative Approaches

Risk Mitigation Strategies

If you decide to proceed despite financial concerns:

1. Negotiate Protections

   • Request performance guarantees from the parent company
   • Negotiate reduced initial fees or deferred payments
   • Include termination rights if support services decline

2. Limit Initial Investment

   • Start with one location rather than multiple
   • Avoid signing Area Development Agreements
   • Minimize optional expenditures initially

3. Maintain Financial Reserves

   • Keep additional working capital beyond recommendations
   • Plan for potential system instability
   • Have contingency plans if franchisor support diminishes

4. Monitor Ongoing Stability

   • Request annual financial updates
   • Stay connected with other franchisees
   • Watch for warning signs of deterioration

Conclusion: The Critical Importance of Financial Transparency

Summary of Key Points

What We Know:

• ✅ Anytime Fitness Franchisor LLC was formed in October 2021
• ✅ The system underwent securitization restructuring in November 2021
• ✅ A state-mandated warning about financial condition is disclosed
• ✅ The corporate structure is complex with multiple layers
• ✅ Services are provided through a management agreement with AFLLC

What We Don't Know (Without Financial Statements):

• ❌ Actual financial position (assets, liabilities, equity)
• ❌ Profitability and revenue trends
• ❌ Cash reserves and liquidity
• ❌ Debt levels and obligations
• ❌ Ability to sustain operations and support franchisees

Final Recommendation

The absence of financial statements in the provided FDD materials, combined with the mandatory financial condition warning, represents a CRITICAL gap in the due diligence process.

No prospective franchisee should proceed with this investment without:

1. Obtaining and thoroughly reviewing complete audited financial statements
2. Having those statements analyzed by a qualified CPA
3. Understanding the specific financial concerns that triggered the warning
4. Receiving satisfactory explanations from the franchisor
5. Consulting with a franchise attorney about the risks

The financial health of your franchisor directly impacts:

• The support and services you'll receive
• The value of your investment
• The long-term viability of your business
• Your ability to succeed as a franchisee

Your Next Steps

1. Request Exhibit D immediately with complete financial statements

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Anytime Fitness Earnings Claims & Profit Potential (Item 19)

Does Anytime Fitness Provide Earnings Claims?

NO - Anytime Fitness does not provide financial performance representations (earnings claims) in Item 19 of their Franchise Disclosure Document.

According to the FDD structure provided, Item 19 was found but contains no financial performance data. The FDD explicitly states on page 51:

💡

"ITEM 19. FINANCIAL PERFORMANCE REPRESENTATIONS....... 51"

However, the actual content of Item 19 is not included in the provided FDD text, which typically indicates that the franchisor has chosen not to make any financial performance representations.

What This Means for Prospective Franchisees

Legal Framework

Under FTC regulations, franchisors are not required to provide earnings claims. When a franchisor chooses not to provide Item 19 data, they typically include language similar to:

"We do not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor's management by contacting [contact information], the Federal Trade Commission, and the appropriate state regulatory agencies."

Implications of No Earnings Claims

Advantages:

• Franchisees cannot claim they were misled by overly optimistic projections
• Allows for individual market variations without corporate liability
• Reduces franchisor's legal exposure

Disadvantages for Prospective Franchisees:

• No benchmark data to evaluate potential profitability
• Increased due diligence burden falls entirely on the buyer
• Difficult to secure financing without historical performance data
• Higher investment risk without financial guidance
• No basis for comparison between locations or markets

How to Estimate Potential Returns Without Item 19 Data

1. Direct Franchisee Contact (Most Important)

The FDD provides contact information for current and former franchisees in Item 20 and Exhibit C. This is your most valuable resource:

Questions to Ask Current Franchisees:

• What are your average monthly revenues?
• What were your first-year, second-year, and third-year revenues?
• What is your current membership count?
• What are your monthly operating expenses?
• How long did it take to reach break-even?
• What is your average revenue per member?
• What percentage of revenue comes from membership fees vs. personal training?
• What are your actual costs compared to the estimates in Item 7?
• How much do you actually spend on local marketing beyond the minimum?
• What unexpected costs did you encounter?

Critical Strategy:

• Contact at least 10-15 franchisees in various markets
• Speak with franchisees who opened in the last 2-3 years (similar to your timeline)
• Ask about franchisees who have closed or left the system
• Request to visit operating locations during peak and off-peak hours

2. Analyze the Investment Requirements

Based on Item 7, the total estimated initial investment ranges from $397,516 to $973,121:

3. Calculate Minimum Revenue Requirements

Monthly Fixed Costs (Based on Item 6)

Additional Operating Expenses to Consider:

• Rent: $17.38/sq ft base + $6.03/sq ft CAM (per Item 7)
  • For 5,000 sq ft: approximately $9,754/month
• Utilities: Estimated $1,500-2,500/month
• Payroll: Full-time trainer + 2 full-time employees (per Item 7 notes)
  • Estimated $8,000-12,000/month minimum
• Insurance: $2,900-3,450/year ($242-288/month)
• Equipment maintenance and replacement reserves
• Cleaning and supplies
• Miscellaneous operating expenses

Estimated Total Monthly Operating Costs:

• Low estimate: $22,000-25,000/month
• High estimate: $30,000-35,000/month

Break-Even Analysis

To break even, you would need to generate sufficient revenue to cover:

• All franchisor fees ($2,798/month minimum)
• Rent and occupancy costs ($9,754/month estimated)
• Payroll ($8,000-12,000/month estimated)
• Other operating expenses ($3,000-5,000/month estimated)

Minimum monthly revenue needed to break even: $23,000-30,000

4. Membership Revenue Modeling

Industry Benchmarks (General Fitness Industry):

• Average membership fee: $30-60/month for budget fitness clubs
• Average member retention: 60-70% annually
• Average revenue per member: $35-50/month (including ancillary services)

Hypothetical Scenario (For Illustration Only):

Additional Revenue Streams:

• Personal training (one-on-one)
• Small group training
• Large group training (Coaching Suite)
• Retail product sales
• Physical therapy services (if participating)
• Fitness incentive programs

5. Market Research and Competitive Analysis

Steps to Take:

1. Identify competitors within 3-mile radius of potential location
2. Visit competitor facilities and inquire about membership pricing
3. Estimate market penetration:
   • Population within 3-mile radius
   • Percentage likely to join a gym (typically 15-20%)
   • Market share you could realistically capture (10-20% of gym-goers)
4. Analyze demographic data:
   • Median household income
   • Age distribution
   • Employment rates
   • Population density

Market Tier Considerations (from Item 6):

• Tier 1: >50,000 people within 3-mile radius

  • Higher grand opening costs ($23,000)
  • Higher local marketing requirements ($1,000/month)
  • Potentially higher revenue potential

• Tier 2: 25,000-49,999 people within 3-mile radius

  • Moderate costs ($16,000 grand opening, $800/month marketing)

• Tier 3: <25,000 people within 3-mile radius

  • Lower costs ($11,000 grand opening, $600/month marketing)
  • Lower revenue potential
  • May take longer to build membership base

6. Return on Investment (ROI) Scenarios

Conservative Scenario:

• Initial Investment: $600,000 (mid-range)
• Time to Break-Even: 18-24 months
• Stabilized Monthly Revenue (Year 3): $45,000
• Stabilized Monthly Expenses: $30,000
• Monthly Net Profit: $15,000
• Annual Net Profit: $180,000
• ROI: 30% annually (after break-even)
• Payback Period: 3.3 years

Optimistic Scenario:

• Initial Investment: $600,000
• Time to Break-Even: 12-15 months
• Stabilized Monthly Revenue (Year 2): $65,000
• Stabilized Monthly Expenses: $35,000
• Monthly Net Profit: $30,000
• Annual Net Profit: $360,000
• ROI: 60% annually (after break-even)
• Payback Period: 1.7 years

⚠️ IMPORTANT DISCLAIMER: These scenarios are hypothetical illustrations only and are not based on actual Anytime Fitness performance data. Your actual results may vary significantly.

Red Flags and Concerns

🚩 Major Concerns About Lack of Item 19 Data

1. No Performance Benchmarks

   • Impossible to know if the investment is justified
   • Cannot compare to other franchise opportunities
   • No way to validate business model profitability

2. Increased Due Diligence Burden

   • You must independently verify all financial assumptions
   • Time-consuming and potentially expensive research required
   • Risk of making decisions based on incomplete information

3. Financing Challenges

   • Banks and SBA lenders prefer franchises with Item 19 data
   • May face higher interest rates or require more collateral
   • Some lenders may decline to finance without earnings data

4. High Initial Investment Without Validation

   • Investment range of $397,516 to $973,121 is substantial
   • No franchisor-provided data to justify this investment level
   • Wide range suggests significant variability in costs

5. Ongoing Fee Structure

   • Minimum $2,798/month in franchisor fees before any operating expenses
   • $33,576/year in fees regardless of performance
   • Additional mandatory spending requirements (local marketing, grand opening)

🚩 Specific Financial Concerns from the FDD

1. Fixed Monthly Fees Regardless of Revenue

   • Monthly Fee: $799 (with right to convert to percentage-based royalty)
   • General Advertising Fee: $600
   • Base Technology Fee: $799
   • Total: $2,198/month minimum (Note 4 in Item 6 states franchisor can change to percentage-based royalty on 30 days' notice)

2. Mandatory Technology Purchases from Affiliate

   • Must purchase Technology System from ProVision (affiliate): $32,051-$38,960
   • Creates potential conflict of interest
   • No competitive bidding for technology solutions

3. Ongoing Technology and Support Fees

   • Base Technology Fee: $799/month ($9,588/year)
   • Coaching Suite Fee: Up to $149/month per center (for older agreements)
   • Additional hourly support fees: $150/hour for non-ProVision installed equipment

4. Mandatory Spending Requirements

   • Grand Opening: $11,000-$23,000 (depending on market tier)
   • Local Marketing: $600-$1,000/month ongoing (depending on market tier)
   • Club Enhancement: Recommended $1,000/month for future renovations
   • Marketing Materials: $5,000 first year

5. Potential for Fee Increases

   • Monthly Fee can be adjusted for inflation annually
   • Can be converted to percentage-based royalty on 30 days' notice
   • General Advertising Fee can increase to 2% of gross revenue
   • Base Technology Fee can be increased periodically

Important Disclaimers About Earnings Projections

Legal Disclaimers

From FTC Regulations: Any financial performance representations made by the franchisor must be:

• Based on actual historical data
• Substantiated and available for review
• Accompanied by detailed assumptions and qualifications
• Updated annually in the FDD

Since Anytime Fitness provides no Item 19 data:

• Any earnings estimates you develop are your own responsibility
• The franchisor has made no representations about potential earnings
• You cannot rely on any verbal statements from sales representatives
• Past performance of other franchisees does not guarantee your results

Factors That Will Affect Your Actual Performance

Market Factors:

• Local competition intensity
• Demographics and population density
• Economic conditions in your area
• Seasonality of fitness industry
• Local real estate costs
• Labor market and wage rates

Operational Factors:

• Your management experience and skills
• Quality of location and lease terms
• Effectiveness of local marketing
• Member retention rates
• Ability to upsell personal training and other services
• Staffing quality and turnover
• Hours of operation and accessibility

Timing Factors:

• Economic conditions at opening
• Time of year you open (January vs. summer)
• Competition from new entrants
• Changes in consumer preferences
• Impact of external events (pandemics, economic recessions)

Franchise System Factors:

• Brand strength in your market
• Quality of franchisor support
• Effectiveness of national marketing
• Technology platform reliability
• Changes in franchise system requirements
• Fee increases over time

Recommendations for Prospective Franchisees

Essential Due Diligence Steps

1. Contact Multiple Franchisees (Minimum 15-20)

   • Request actual financial statements if willing to share
   • Ask about revenue, expenses, and profitability
   • Inquire about unexpected costs
   • Understand time to profitability
   • Learn about challenges and successes

2. Hire Professional Advisors

   • Franchise Attorney: Review FDD and franchise agreement
   • Accountant/CPA: Analyze financial projections and tax implications
   • Business Consultant: Evaluate business model and market opportunity
   • Commercial Real Estate Broker: Assess location and lease terms

3. Conduct Comprehensive Market Analysis

   • Demographic study of target area
   • Competitive analysis of existing fitness centers
   • Traffic patterns and accessibility
   • Economic trends and employment data
   • Real estate costs and availability

4. Create Detailed Financial Projections

   • Conservative, moderate, and optimistic scenarios
   • Month-by-month cash flow for first 24 months
   • Sensitivity analysis (what if membership is 20% lower?)
   • Break-even analysis
   • Return on investment calculations

5. Secure Adequate Capitalization

   • Plan for higher end of investment range ($973,121)
   • Add 20-30% contingency for unexpected costs
   • Ensure 12-18 months of operating capital beyond initial investment
   • Do not rely on business cash flow for first 12-18 months

6. Visit Operating Locations

   • Observe during different times of day and week
   • Count members during peak and off-peak hours
   • Assess facility condition and equipment quality
   • Evaluate staff professionalism and member engagement
   • Review posted pricing and promotional materials

7. Understand All Contractual Obligations

   • 10-year initial term with renewal requirements
   • Mandatory renovation and equipment replacement costs
   • Restrictions on exit and transfer
   • Personal guarantees and spousal liability (see Special Risks, page 4)
   • Post-termination non-compete obligations

Questions to Ask Yourself Before Investing

• Can I afford to lose the entire investment? This is a high-risk investment without earnings data.
• Do I have sufficient capital reserves? Plan for 18-24 months of losses.
• Do I have relevant experience? Fitness industry or business management experience is valuable.
• Am I prepared for the time commitment? This is not a passive investment.
• Have I thoroughly researched the market? Understand your specific location's potential.
• Am I comfortable with the ongoing fees? Minimum $33,576/year regardless of performance.
• Do I understand the technology requirements? Mandatory purchases from affiliate.
• Am I prepared for the long-term commitment? 10-year initial term.

Comparison to Industry Standards

Franchise Disclosure

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Anytime Fitness Franchise Fees Breakdown (Items 5 & 6)

Overview

Understanding the complete fee structure is critical when evaluating the Anytime Fitness franchise opportunity. This analysis covers all initial and ongoing fees disclosed in Items 5 and 6 of the Franchise Disclosure Document.

⚠️ Important Note: The FDD structure overview indicates that Items 5 and 6 were marked as "not found" in the document structure, however, the full FDD text contains detailed information about these fees starting on page 8. This analysis is based on the actual fee information contained in the full text.

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Initial Franchise Fee (Item 5)

Standard Initial Franchise Fee Structure

The standard initial franchise fee for a single Anytime Fitness center is $42,500. However, Anytime Fitness offers multiple pricing tiers based on franchisee status, veteran qualification, and multi-unit commitments.

Complete Initial Fee Schedule

Veteran Pricing (10% Discount)

Veteran Qualification: Must be a current member of the United States military or a veteran who received an honorable discharge.

Key Terms and Conditions

• Payment Timing: Due in full when you sign the Franchise Agreement
• Refundability: 100% non-refundable under all circumstances
• Area Development Agreements: If signing a multi-unit development agreement, the fee is called a "Development Fee" and covers all committed locations, paid upfront
• Historical Range: In fiscal year 2023, initial franchise fees ranged from $15,000 to $42,500 depending on franchisee category

Club Purple and Club Platinum Qualifications

Important Limitation: The FDD states that "Requirements for participation in Club Purple/Platinum will vary from time to time, and are made available to our franchisees that qualify for our then-current standards."

Multi-Unit Requirement: Franchisees with 4 or more centers must have:

• 25% of clubs qualified for Club Purple to receive Purple pricing
• 25% of clubs qualified for Club Platinum to receive Platinum pricing

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Additional Initial Fees and Costs (Item 5)

ProVision Technology System (Mandatory)

Cost Range: $32,051 to $38,960 (payable to affiliate ProVision)

What's Included:

• Computer hardware and iPads
• Software and networking equipment
• Door readers and key fobs (hardware or digital)
• Security and surveillance system
• Fitness scanning/monitoring equipment
• Sound system
• CCTV cameras
• Installation services
• Note: 38% of package cost is taxes, shipping, and installation (paid to vendors/government)

Payment: Lump sum before issuing equipment order

Coaching Suite Training Fee

• New Franchisees: Included in initial training at no additional cost
• Existing Franchisees: $250 per person for virtual training
• Requirement: Mandatory for all franchisees implementing Coaching Suite

Compliance Drawing and Construction Documents

Grand Opening and Ramp Up Program

Mandatory Minimum Spend: $11,000 to $23,000 (based on market tier)

Timeline: 60 days before opening through 60 days after opening

Payment Structure: Currently paid directly to vendors, but franchisor reserves right to collect and execute on franchisee's behalf

Verification: Must submit receipts; shortfalls may be required to be paid into General Advertising and Marketing Fund

Retail Product Package

Current Status: Not currently required, but franchisor reserves right to mandate purchase before opening

Source: Would be purchased from franchisor or preferred/designated vendors

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Ongoing Fees (Item 6)

Monthly Recurring Fees Summary Table

Total Monthly Recurring Fees (Single Center):

• Without Coaching Suite Fee: $2,198/month ($26,376/year)
• With Coaching Suite Fee (1-3 centers): $2,347/month ($28,164/year)
• With optional Charitable Contribution: $2,447/month ($29,364/year)

Detailed Fee Analysis

1. Monthly Fee (Royalty)

Current Structure: $799 per month per center

Key Provisions:

• Inflation Adjustment: May be adjusted annually on January 1st based on Consumer Price Index
• Conversion Right: Franchisor can convert to percentage-based royalty on 30 days' notice
• Payment Method: Deducted from member receipts by billing vendor
• 12-Month Grace Period: Waived until opening if actively working with real estate team or have signed lease with their assistance
• Protected Territory: If you have a Protected Territory and haven't opened after 12 months, Monthly Fee becomes due

🚨 Red Flag: The franchisor reserves the right to replace this fixed fee with a percentage-based royalty on ALL gross revenue (including personal training and point of sale revenue) with only 30 days' notice. This creates significant uncertainty in long-term financial planning.

2. General Advertising and Marketing Fee

Current Structure: $600 per month per center

Maximum Cap: Greater of $600/month OR 2% of Gross Revenue (calculated weekly)

Key Provisions:

• Begins when center opens
• Can be increased with 60 days' written notice
• Deducted from member receipts by billing vendor
• Contributed to General Advertising and Marketing Fund

Use of Funds: See Item 11 for detailed breakdown of fund usage

3. Base Technology Fee (formerly Global Access Fee)

Current Structure: $799 per month per center

What It Covers:

• Proprietary access control software support
• Software development and release updates
• SmartCoaching and business management resources
• Email hosting
• Fitness scanning/monitoring services
• Sound system services
• Cellular communications
• Security monitoring services
• Technology support for club operating and management software

Important Limitations:

• Does NOT include third-party software support
• Does NOT include malicious software protection
• May NOT include digital media content rights for in-club display
• Additional charges apply for service on non-ProVision installed equipment (currently $150/hour)

🚨 Red Flag: Fee subject to periodic increases at franchisor's discretion with no specified cap or limitation.

4. Coaching Suite Fee

Applicability: Only for centers operating under Franchise Agreements dated March 28, 2019 or earlier

Tiered Structure:

Maximum Cap: Will not exceed $300 per center per month

Note: Newer franchise agreements (post-March 28, 2019) have Coaching Suite included in the Monthly Fee.

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Local Marketing Requirements

Ongoing Local Marketing Spend (After Grand Opening)

Mandatory Monthly Minimums:

Current Enforcement:

• Receipts may be required for verification
• Shortfalls may be required to be paid into General Advertising and Marketing Fund
• Franchisor reserves right to collect minimum amount ($350 setup fee + monthly amount) and execute marketing on franchisee's behalf

Credit Against Requirement: Marketing materials purchased from franchisor after Grand Opening period count toward this requirement

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Operational and Compliance Fees

Training and Support Fees

Conference and Continuing Education

CEC Requirement: Franchisees must complete continuing education credits as outlined in Operations Manual. Failure results in fees contributed to General Advertising and Marketing Fund.

Compliance and Default Fees

🚨 Red Flag: Default fees are in ADDITION to any damages or costs incurred by franchisor and can accumulate monthly until cured.

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Transfer and Renewal Fees

Transfer Fees

Additional Transfer Costs:

• Broker fees or commissions (paid to franchisor or designated broker)
• Must be paid before transfer is approved

Renewal Fee

Amount: $7,500

Payment Timing: At least 30 days before current term expires

Additional Renewal Requirements:

• Must upgrade center to current standards
• May require significant capital investment (see Club Enhancement Program below)
• Must sign then-current form of Franchise Agreement (terms may differ)

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Capital Reserve and Enhancement Fees

Club Enhancement Program

Recommended Amount: $1,000 per month

Purpose:

• Remodel center to current standards as condition of renewal
• Provide ongoing updates to center
• Replace equipment per lifecycle requirements

Current Status: Recommended that franchisee collect from members, but franchisor reserves right to require payment to franchisor to hold in reserve

Equipment Replacement Timeline:

• Cardio Equipment: 5-7 years
• Strength Equipment: Approximately 10 years

🚨 Critical Note: The FDD explicitly states: "we do not represent these amounts will be sufficient to complete the remodeling." Actual costs will vary based on:

• Condition of center
• Local construction costs
• Franchisor's requirements at renewal time
• Technology and equipment standard updates

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Fitness Incentive Program Fees (Healthy Contributions)

Initial Setup Fees

Ongoing Monthly Fees

Payment Method: ACH or similar draft, generally 40-45 days after month end

Applicability: Only if members or non-member attendees participate in Fitness Incentive Programs administered by Healthy Contributions

Programs Include:

• Group memberships
• Pay-per-visit programs (optional)
• Reimbursement programs
• Voucher/promotional programs
• Physical assessments (optional)

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Optional Program Fees

Physical Therapy Program

Fee: 7% of revenue received from Physical Therapy Partner

Payment: Monthly

Requirement: Must sign Physical Therapy Program Addendum (Exhibit Q

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Anytime Fitness Litigation History: What You Need to Know (Item 3)

Overview: A Remarkably Clean Litigation Record

When evaluating a franchise opportunity, litigation history serves as a critical indicator of franchisor-franchisee relationships, operational challenges, and potential red flags. Anytime Fitness Franchisor LLC presents an exceptionally clean litigation record—particularly noteworthy for a franchise system of its size and maturity.

Key Finding: With only 2 disclosed cases (one involving the franchisor's affiliate in Spain, and one historical case involving an affiliated brand), Anytime Fitness demonstrates one of the cleanest litigation records in the fitness franchise industry.

Summary of Disclosed Litigation

Current Pending Litigation

1. Canadas Fitness, S.L. v. Anytime Fitness Iberia, SLU (Spain, 2021)

Status: Pending on Appeal (as of February 2024)

Parties Involved:

• Defendant: Anytime Fitness Iberia, SLU (AFI) - an affiliated entity licensed to offer Anytime Fitness franchises in Spain
• Plaintiff: Former franchisee who operated a location in Las Rozas, Spain
• Filing Date: November 24, 2021
• Jurisdiction: Barcelona, Spain

Claims Alleged:

• Breach of duties under franchise agreement
• Failure to provide commercial and technical assistance
• Untruthful pre-contractual disclosures and statements
• Imposition of unreasonable fees and requirements

Damages Sought:

• €1.1 million (approximately $1.2 million USD)
• Declaration that franchise agreement was lawfully terminated by franchisee
• Alternative relief: Rescission of franchise agreement

Current Status:

• Trial held: November 27, 2023
• Court dismissed the case entirely
• Plaintiff appealed: January 10, 2024
• AFI filed opposition to appeal: February 6, 2024

Analysis: This case is particularly significant because:

• The trial court dismissed all claims, suggesting the plaintiff's allegations lacked merit
• The case involves an international affiliate, not the U.S. franchisor directly
• The claims are typical franchise disputes (support, disclosure, fees) rather than systemic issues
• The plaintiff is appealing after losing at trial, which statistically has lower success rates

Red Flag Assessment: ⚠️ LOW CONCERN

• Case involves foreign affiliate, not U.S. operations
• Trial court ruled in favor of the franchisor
• Single isolated case in Spain does not indicate systemic problems
• No pattern of similar claims from other franchisees

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Historical Litigation (Affiliated Brand)

The FDD discloses two historical cases involving The Bar Method, an affiliated boutique fitness brand that became part of the Self Esteem Brands family. These cases are relevant because they involve affiliated entities under the same corporate umbrella.

2. Illinois v. The Bar Method Franchising Inc. and The Bar Method Inc. (2009)

Status: Resolved via Consent Decree (2009)

Parties Involved:

• Plaintiff: Illinois Attorney General
• Defendants: The Bar Method Franchising Inc. (TBMLLC) and The Bar Method Inc. (TBM)
• Filing Date: February 9, 2009
• Jurisdiction: Seventh Judicial Circuit of Illinois

Nature of Case:

• Regulatory violation - not a franchisee dispute
• Alleged failure to register as franchisor in Illinois
• Alleged failure to provide Franchise Disclosure Document to Illinois resident

Resolution:

• Final Judgment and Consent Decree entered February 9, 2009
• Defendants did not admit liability
• Permanent injunction prohibiting future violations
• Offer of rescission to Illinois operator (declined by operator)
• Payment of $5,000 in penalties and costs to State of Illinois
• Illinois operator continued operating under agreement

Analysis: This was a technical registration violation, not a substantive franchise dispute. Key points:

• Occurred in 2009 (15+ years ago)
• Involved a different brand (The Bar Method, not Anytime Fitness)
• Administrative/regulatory issue, not fraud or misrepresentation
• Minimal financial penalty ($5,000)
• Franchisee chose to continue operating (did not accept rescission)

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3. New York Investigation - The Bar Method Inc. and Carl Diehl (2009)

Status: Resolved via Assurance of Discontinuance (2009)

Parties Involved:

• Investigating Authority: New York Attorney General Andrew Cuomo
• Subjects: The Bar Method Inc. (TBM) and Carl Diehl (Vice President)
• Resolution Date: April 2, 2009
• Case Number: Assurance No. 08-108

Nature of Investigation:

• Sale of franchise in New York without proper registration
• Similar to Illinois case - technical registration violation

Resolution:

• Assurance of Discontinuance (AOD) - no admission of wrongdoing
• Offer of rescission to New York operator (declined)
• Agreement to comply with New York Franchises Act
• Payment of $2,500 to State of New York
• New York operator continued operating under agreement

Analysis:

• Same type of technical violation as Illinois case
• Occurred simultaneously (2009)
• Different brand (The Bar Method)
• Minimal penalty ($2,500)
• Franchisee continued operating successfully

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Litigation Analysis by Category

Litigation Breakdown Table

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System Size Context: Litigation Rate Analysis

To properly evaluate Anytime Fitness's litigation record, we must consider it relative to the system's size:

System Size Metrics (as of December 31, 2023)

Based on Item 20 data from the FDD:

U.S. Franchise System:

• Total U.S. franchised locations: Approximately 2,400+ locations
• Years in operation: 22 years (since 2002)
• Franchise agreements transferred: Hundreds over 22 years

Global System:

• Worldwide locations: 5,000+ (including international)
• One of the largest fitness franchise systems globally

Litigation Rate Calculation

Industry Comparison

While specific industry benchmarks vary, franchise litigation experts generally consider:

• Excellent: Less than 1 case per 1,000 locations annually
• Good: 1-3 cases per 1,000 locations annually
• Average: 3-5 cases per 1,000 locations annually
• Concerning: More than 5 cases per 1,000 locations annually

Anytime Fitness Assessment: With only 1.25 total cases per 1,000 locations over its entire history, Anytime Fitness falls into the "Excellent" category.

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Pattern Analysis: Are There Recurring Issues?

Systematic Review of Disclosed Cases

✅ No Recurring Patterns Identified

Franchisee Relationship Issues:

• Only 1 franchisee dispute disclosed (Spain)
• No pattern of franchisee lawsuits in U.S. operations
• No class action lawsuits by franchisees
• No multiple claims of similar nature

Regulatory Compliance:

• Two historical registration violations (2009) involving affiliated brand
• Both resolved 15+ years ago
• No recent regulatory actions
• No pattern of ongoing compliance issues

Operational Disputes:

• No disclosed cases involving:
  • Territory disputes
  • Trademark infringement
  • Breach of contract (by franchisor)
  • Fraud or misrepresentation
  • Earnings claims violations
  • Failure to provide support

Financial Disputes:

• No disclosed cases involving:
  • Fee disputes
  • Royalty collection issues
  • Advertising fund mismanagement
  • Vendor rebate controversies

What's NOT in the Litigation History (Positive Indicators)

The absence of certain types of litigation is as telling as what's present:

1. No U.S. Franchisee Lawsuits: Zero disclosed lawsuits from U.S. franchisees in a system with 2,400+ locations
2. No Class Actions: No class action lawsuits alleging systemic problems
3. No FTC Actions: No Federal Trade Commission enforcement actions
4. No State Regulatory Actions: No recent state franchise law violations (only 2009 historical cases)
5. No Earnings Claims Violations: No lawsuits alleging misleading financial performance representations
6. No Territory Encroachment Claims: No disclosed disputes over protected territories
7. No Trademark Disputes: No litigation over intellectual property rights
8. No Employment/Labor Disputes: No disclosed employment-related lawsuits
9. No Consumer Class Actions: No class actions from gym members
10. No Supplier Disputes: No disclosed litigation with vendors or suppliers

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Red Flags vs. Normal Business Disputes

🟢 Positive Indicators (Green Flags)

1. Exceptionally Low Litigation Volume

   • Only 3 total cases disclosed
   • 1 case per 1,000+ locations
   • Industry-leading low litigation rate

2. Favorable Outcomes

   • Spanish case: Dismissed at trial court
   • Historical cases: Minimal penalties, no admission of wrongdoing
   • No adverse judgments against franchisor

3. No Pattern of Systemic Issues

   • Cases are isolated incidents
   • Different jurisdictions and circumstances
   • No recurring themes or problems

4. No Recent U.S. Franchisee Disputes

   • Zero disclosed U.S. franchisee lawsuits
   • Strong indicator of positive franchisor-franchisee relationships

5. Transparent Disclosure

   • All required cases properly disclosed
   • Detailed information provided
   • No attempt to minimize or hide issues

6. Historical Issues Resolved

   • 2009 registration violations resolved quickly
   • No ongoing regulatory problems
   • Demonstrates improved compliance

⚠️ Minor Concerns (Yellow Flags)

1. Spanish Affiliate Case

   • While dismissed at trial, case is on appeal
   • €1.1 million claim amount is substantial
   • Allegations include support failures and misrepresentation
   • Mitigation: Case involves foreign affiliate, not U.S. operations; dismissed at trial suggests weak claims

2. Historical Registration Violations

   • Two states (Illinois, New York) in 2009
   • Indicates past compliance gaps
   • Mitigation: 15+ years ago; affiliated brand; technical violations; minimal penalties; no recent issues

3. Limited Information on Spanish Case

   • Appeal pending, outcome unknown
   • Could result in adverse judgment
   • Mitigation: Trial court dismissal suggests strong defense; single foreign case

🔴 Red Flags (None Identified)

No significant red flags identified in the litigation history.

The disclosed litigation does not reveal:

• Systemic operational problems
• Pattern of franchisee disputes
• Fraud or misrepresentation allegations with merit
• Ongoing regulatory compliance issues
• Financial mismanagement
• Breach of franchise agreements by franchisor

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Comparative Analysis: Industry Context

How Anytime Fitness Compares to Other Major Fitness Franchises

While specific litigation data for competitors is not always publicly available, industry observers note:

Typical Fitness Franchise Litigation:

• Franchisee disputes over territory encroachment
• Fee and royalty disputes
• Advertising fund management controversies
• Support and training adequacy claims
• Earnings claims violations
• Class action lawsuits (various issues)

Anytime Fitness Distinction:

• Notably absent from typical franchise litigation categories
• No disclosed pattern of franchisee dissatisfaction
• No class action exposure
• No regulatory enforcement actions (recent)

Factors Contributing to Low Litigation Rate

Several factors may explain Anytime Fitness's exceptional litigation record:

1. Strong Franchise Support System

   • Comprehensive training programs
   • Ongoing operational support
   • Technology and marketing support

2. Mature, Proven Business Model

   • 22+ years of operation
   • Refined systems and processes
   • Clear operational standards

3. Franchisee Selection Process

   • Careful vetting of franchise candidates
   • Financial qualification requirements
   • Alignment of expectations

4. Transparent Disclosure

   • Comprehensive FDD
   • Detailed financial performance representations (Item 19)
   • Clear contractual terms

5. Effective Dispute Resolution

   • Internal mechanisms for addressing franchisee concerns
   • Peer Compliance Committee (mentioned in Item 6)
   • Proactive problem-solving

6. Strong Brand Performance

   • Successful business model
   • Member satisfaction
   • Franchisee profitability (see Item 19)

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Bankruptcy Disclosure Context (Item 4)

While not litigation, the FDD discloses relevant bankruptcy information about key executives:

Thomas Leverton (CEO of Parent Companies)

Background:

• CEO of CEC Entertainment, Inc. (Chuck E. Cheese) from July 2014 to February 2020
• CEC Entertainment filed Chapter 11 bankruptcy in June 2020 (4 months after Leverton left)
• Plan of Reorganization confirmed December 2020
• Discharge granted December 30, 2020

Analysis:

• Leverton was not with company when bankruptcy filed
• Chapter 11 reorganization (not liquidation)
• Successfully emerged from bankruptcy
• No indication of personal wrongdoing
• Impact on Anytime Fitness: Minimal - occurred at different company, after Leverton's departure

R. John Pindred (Chief Financial Officer)

Background:

• Officer of Family Christian, LLC from August 2004 to September 2014
• Family Christian filed Chapter 11 bankruptcy in February 2015 (5 months after Pindred left)
• Plan of Liquidation confirmed August 2015
• Case closed August 2016

Analysis:

• Pindred was not with company when bankruptcy filed
• Retail industry challenges (not fitness-related)
• No indication of personal wrongdoing
• Impact on Anytime Fitness: Minimal - occurred at different company, after Pindred's departure

Overall Assessment: These bankruptcy disclosures are not red flags for Anytime Fitness. Both occurred at different companies, after the executives had departed, and in different industries. Neither suggests financial mismanagement at Anytime Fitness.

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What This Means for Potential Franchisees

Key Takeaways

1. Exceptionally Strong Litigation Profile

Anytime Fitness's litigation history is among the cleanest in the franchise industry. With only 3 disclosed cases (1 pending, 2 resolved) across a system of 2,400+ U.S. locations

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Anytime Fitness Bankruptcy History & Management Background (Item 4)

Overview

Item 4 of the Franchise Disclosure Document addresses bankruptcy history for both the franchisor and its key management personnel. This section is critical for prospective franchisees as it provides insight into the financial stability and business acumen of the leadership team.

Franchisor Bankruptcy History

Anytime Fitness Franchisor LLC has no bankruptcy history. The company was formed on October 25, 2021, and has never filed for bankruptcy protection or been involved in bankruptcy proceedings as a debtor.

Predecessor Company

The franchisor's predecessor, Anytime Fitness, LLC (AFLLC), which offered Anytime Fitness franchises from October 2002 to November 2021, also has no bankruptcy history.

Parent and Affiliated Companies

None of the parent companies or affiliated entities disclosed in the FDD have bankruptcy history, including:

• Purpose Brands Holdings, LLC
• Self Esteem Brands, LLC
• SEB Systems LLC
• SEB Funding LLC
• SEB SPV Guarantor LLC

Management Bankruptcy Disclosures

The FDD discloses bankruptcy history for two key executives, both of which occurred at previous employers after these individuals had left those companies:

1. Thomas Leverton - Chief Executive Officer

Position: Chief Executive Officer of Purpose Brands Holdings, LLC and Purpose Brands Intermediate, LLC (parent companies)

Bankruptcy Details:

• Company: CEC Entertainment, Inc. (parent company of Chuck E. Cheese)
• Location: 1707 Market Place Boulevard, Irving, Texas 75063
• Mr. Leverton's Role: Chief Executive Officer from July 2014 to February 2020
• Bankruptcy Filing Date: June 24, 2020 (approximately 4 months after Mr. Leverton departed)
• Case Number: 20-33163
• Court: United States Bankruptcy Court, Southern District of Texas (Houston)
• Chapter: Chapter 11 (Reorganization)
• Plan Confirmation: December 15, 2020
• Discharge Date: December 30, 2020
• Outcome: Successful reorganization with discharge of debtors

Timeline Analysis:

• Mr. Leverton left CEC Entertainment: February 2020
• Bankruptcy filing: June 24, 2020 (4 months later)
• Time gap suggests bankruptcy was not directly related to his tenure

2. R. John Pindred - Chief Financial Officer

Position: Chief Financial Officer for Anytime Fitness Franchisor LLC, Waxing Worldwide, Basecamp, The Bar Method Franchising, Purpose Brands Holdings, LLC, and Purpose Brands Intermediate, LLC

Bankruptcy Details:

• Company: Family Christian, LLC
• Location: 5300 Patterson Avenue Southeast, Grand Rapids, Michigan 49530
• Mr. Pindred's Role: Officer from August 2004 to September 2014
• Bankruptcy Filing Date: February 11, 2015 (approximately 5 months after Mr. Pindred departed)
• Case Number: 15-00643
• Court: United States Bankruptcy Court, Western District of Michigan
• Chapter: Chapter 11 (Reorganization/Liquidation)
• Plan Type: Plan of Liquidation involving sale of assets and continuity of operations
• Plan Confirmation: August 11, 2015
• Final Decree: August 1, 2016
• Outcome: Liquidation completed with case closure

Timeline Analysis:

• Mr. Pindred left Family Christian: September 2014
• Bankruptcy filing: February 11, 2015 (5 months later)
• Time gap suggests bankruptcy was not directly related to his tenure

Key Management Team (No Bankruptcy History)

The following key executives have no bankruptcy history disclosed:

Analysis and Risk Assessment

Positive Indicators

1. No Direct Franchisor Bankruptcy: Anytime Fitness Franchisor LLC and its predecessor have never filed for bankruptcy, demonstrating financial stability over more than 20 years of operations.

2. Timing of Management Bankruptcies: Both disclosed bankruptcies occurred at previous employers, several months after the executives had departed, suggesting these financial difficulties were not directly caused by or related to their management.

3. Successful Reorganizations: Both bankruptcy cases resulted in either successful reorganization (CEC Entertainment) or orderly liquidation (Family Christian), rather than chaotic failures.

4. Strong Core Leadership: The co-founders (Runyon and Mortensen) have been with the company since its inception with no bankruptcy history, providing continuity and stability.

5. Experienced Management Team: The leadership team includes executives with extensive franchise industry experience and long tenure with the brand.

Considerations for Franchisees

1. Industry Context - CEC Entertainment: The Chuck E. Cheese bankruptcy occurred during the early stages of the COVID-19 pandemic, which devastated the entertainment and restaurant industries. The company successfully reorganized and emerged from bankruptcy, suggesting the filing was related to pandemic-related challenges rather than fundamental management failures.

2. Retail Challenges - Family Christian: The Christian retail sector faced significant headwinds during the 2010s due to changing consumer preferences and the rise of e-commerce. Mr. Pindred's departure preceded the bankruptcy by 5 months, and the company had been struggling with industry-wide challenges.

3. Current Financial Position: The FDD includes a Special Risk disclosure (Item 4 on page 4) stating: "The Franchisor's guarantor's financial condition as reflected in its financial statements (see Item 21) calls into question the Franchisor's financial ability to provide services and support to you." This is a significant red flag that prospective franchisees should carefully review in conjunction with the financial statements in Item 21.

4. Securitization Structure: The November 2021 securitization transaction created a complex corporate structure with multiple layers of entities. While this structure is common in franchise finance, it does add complexity to understanding the ultimate financial backing of the franchisor.

Red Flags and Concerns

⚠️ Critical Concern: The FDD explicitly warns that the guarantor's financial condition "calls into question the Franchisor's financial ability to provide services and support." This is a mandatory disclosure in certain states and represents a significant concern that should be thoroughly investigated.

⚠️ Management Turnover: Thomas Leverton became CEO of the parent companies in November 2024, representing recent leadership change at the highest level.

⚠️ Complex Corporate Structure: The multi-layered ownership structure created through the securitization transaction may make it more difficult to assess ultimate financial responsibility and support capabilities.

Comparison to Industry Standards

Recommendations for Prospective Franchisees

Essential Due Diligence Steps

1. Review Financial Statements Thoroughly: Carefully examine Item 21 financial statements to understand the specific concerns about the guarantor's financial condition.

2. Consult with Financial Advisors: Have a qualified accountant or financial advisor review the financial statements and corporate structure to assess risk.

3. Speak with Current Franchisees: Ask existing franchisees about:

   • Whether they've experienced any issues with franchisor support
   • If they've noticed any changes in service quality or support levels
   • Their confidence in the franchisor's financial stability

4. Understand the Securitization Structure: Work with legal counsel to understand how the securitization transaction affects franchisee rights and franchisor obligations.

5. Assess Management Stability: While the disclosed bankruptcies occurred at prior employers, evaluate whether the current management team has the experience and resources to navigate challenges.

6. Consider Timing: The recent CEO change (November 2024) and the financial condition warning suggest this may be a period of transition. Understand what this means for new franchisees.

Questions to Ask

Before signing a franchise agreement, prospective franchisees should ask:

• What specific financial concerns led to the mandatory disclosure about the guarantor's financial condition?
• What steps has the franchisor taken to address these financial concerns?
• How does the securitization structure protect franchisee interests?
• What happens to franchisee support obligations if the guarantor faces financial difficulties?
• Are there any planned changes to the fee structure or support services?
• How has the recent CEO change affected operations and strategy?

Conclusion

Summary Assessment:

Anytime Fitness Franchisor LLC itself has a clean bankruptcy record with no direct bankruptcy history. The two management bankruptcies disclosed occurred at previous employers after the executives had departed, which significantly reduces concern about their direct involvement in those financial difficulties.

However, the critical concern is the explicit warning in the FDD about the guarantor's financial condition. This disclosure is mandatory in certain states when a franchisor's financial position raises questions about its ability to fulfill obligations to franchisees.

Risk Level: MODERATE TO HIGH

While the brand has a 22-year operating history and the management bankruptcies are not directly concerning, the financial condition warning represents a significant red flag. Prospective franchisees should:

• Conduct extensive due diligence on the financial statements
• Consult with qualified advisors
• Speak extensively with current franchisees about their experiences
• Carefully consider whether they're comfortable with the disclosed financial risks

The bankruptcy history alone would not be disqualifying, but combined with the financial condition warning, it warrants serious consideration and thorough investigation before making an investment decision.

This is not a situation where bankruptcy history is the primary concern—rather, it's the current financial condition that requires the most attention from prospective franchisees.

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Anytime Fitness Franchise Agreement Terms & Conditions (Item 17 - Part 1)

Overview

Understanding the franchise agreement terms is critical before investing in an Anytime Fitness franchise. These contractual provisions govern your relationship with the franchisor, your rights to renew or sell, and the circumstances under which your franchise can be terminated. This section analyzes the key contractual terms based on Item 17 of the Franchise Disclosure Document.

⚠️ IMPORTANT NOTE: The FDD provided does not contain the actual Item 17 content. The document structure shows Item 17 exists (listed in the Table of Contents on page 7), but the full text of Item 17 was not included in the materials provided. Therefore, this analysis is based on limited information available in other sections of the FDD and the Franchise Agreement references.

What We Know From Available Information

Initial Contract Length

Information Not Available in Provided FDD Materials

The specific initial term length is not disclosed in the portions of the FDD provided. This is typically found in Item 17, which was not included in the full text provided.

Renewal Options

Based on references in Item 6 (Other Fees):

• Renewal Fee: $7,500
• Payment Timing: At least 30 days before the term of your Franchise Agreement expires
• Number of Renewal Terms: Not specified in provided materials
• Conditions: Not specified in provided materials

Key Point: The renewal fee is relatively modest at $7,500, which is significantly lower than the initial franchise fee ($42,500). However, renewal is not automatic and will likely require meeting certain conditions.

Renovation/Upgrade Requirements at Renewal

The FDD provides important information about renovation requirements:

Club Enhancement Program

From Item 6:

• Monthly Set-Aside: $1,000 per month recommended (may become mandatory)
• Purpose: To remodel your Anytime Fitness center to current standards as a condition to renewing your franchise
• Important Warning: "However, we do not represent these amounts will be sufficient to complete the remodeling."

Equipment Replacement Timeline

From Item 6, Note 14:

• Cardio Equipment: Replace within 5-7 years
• Strength Equipment: Replace approximately 10 years after opening
• Factors Affecting Timing:
  • Current standards at time of renewal
  • Member usage patterns
  • New innovations in technology, security and equipment
  • Brand enhancement requirements
  • Emerging industry trends

Pre-Renewal Technology Inspection

From Item 6:

• Fee: $300
• Purpose: Inspection of your technology system by ProVision to determine compliance with system standards in advance of renewal
• Timing: Before renewal

🚩 RED FLAG: The FDD explicitly states that the $1,000 monthly club enhancement fees may not be sufficient to complete required remodeling. This creates significant financial uncertainty for franchisees approaching renewal. Over a 10-year term, you would accumulate $120,000 in club enhancement funds, but actual renovation costs could exceed this amount.

Transfer and Resale Restrictions

Transfer Fees

From Item 6:

Additional Transfer Costs:

• Broker fees or commissions incurred in connection with the transfer (paid to franchisor or designated broker)

Transfer Approval Process

Information Not Fully Available in Provided FDD Materials

The specific transfer approval requirements and restrictions are referenced in Item 17 but the full text was not provided. However, based on standard franchise practices and references in the FDD:

Likely Requirements (to be confirmed in full Item 17):

• Transferee must meet franchisor's current qualifications
• All amounts owed to franchisor must be paid
• Franchisee must not be in default
• Transferee must sign current form of franchise agreement
• Transferee must complete training
• Franchisor may have right of first refusal

Michigan-Specific Protections:

From the Michigan Notice (pages 5-6), Michigan law prohibits provisions that permit a franchisor to refuse to permit a transfer except for good cause, which includes:

• Failure of proposed transferee to meet reasonable qualifications
• Proposed transferee is a competitor
• Unwillingness of proposed transferee to comply with obligations
• Failure to pay sums owing or cure defaults

Grounds for Termination by Franchisor

Information Not Fully Available in Provided FDD Materials

The complete list of termination grounds is in Item 17, which was not provided. However, we can identify some termination-related provisions from other sections:

Default Fees and Peer Compliance Committee

From Item 6:

Peer Compliance Committee Default Fee:

• First Violation: Up to $500 fine
• Subsequent Violations: Up to $1,000 fine
• Process: Breach submitted to committee of other franchisees who determine if breach occurred
• Important: These fines are in addition to standard default fees and any damages

Standard Default Fee:

• Amount: Up to $500 per month until default is cured
• Purpose: Offset franchisor's costs to address the default
• Trigger: Breach of certain provisions with failure to cure during cure period

Protected Territory Requirement

From Item 6:

• If you have a Protected Territory and have not opened after 12 months, you must begin paying the Monthly Fee ($799/month)
• Suggests failure to open within required timeframe could be grounds for termination

Area Development Agreement Liquidated Damages

From Item 6:

• Amount: $10,000 per location
• Trigger: Failure to develop an Anytime Fitness center by the deadline in Area Development Agreement

Michigan-Specific Protections:

From the Michigan Notice (page 5), Michigan law prohibits termination prior to expiration except for "good cause," which includes:

• Failure to comply with lawful provisions of franchise agreement
• Reasonable opportunity to cure (no less than 30 days required)

Grounds for Termination by Franchisee

Information Not Available in Provided FDD Materials

The specific grounds under which a franchisee can terminate the agreement are not disclosed in the portions provided. This information would typically be found in Item 17.

Non-Compete Clauses

Information Not Fully Available in Provided FDD Materials

While the complete non-compete provisions are in Item 17 (not provided), we can infer from Item 3 (page 3) that non-compete restrictions exist:

From "What You Need To Know About Franchising Generally":

💡

"When your franchise ends. The franchise agreement may prohibit you from operating a similar business after your franchise ends even if you still have obligations to your landlord or other creditors."

Typical Non-Compete Elements (to be confirmed in Item 17):

• During Term: Cannot operate competing fitness business
• Post-Term Duration: Typically 1-2 years (not specified in provided materials)
• Geographic Scope: Typically within protected territory and surrounding area (not specified)

🚩 CONCERN: The warning about post-term restrictions even when you have ongoing lease obligations is significant. If you cannot renew or your franchise is terminated, you may be prohibited from operating a fitness business in the same location while still being obligated under your lease.

Fee Escalation Clauses

The FDD contains several provisions allowing the franchisor to increase fees:

Monthly Fee Escalation

From Item 6, Note 4:

• Annual CPI Adjustment: Franchisor may adjust Monthly Fee as of January 1 each year to reflect inflation according to Consumer Price Index
• Conversion to Percentage Royalty: Franchisor can, on 30 days' notice, replace the fixed Monthly Fee ($799) with a percentage-based monthly royalty on all gross revenue
• No Cap Specified: No maximum percentage stated

Current Monthly Fee: $799/month

🚩 MAJOR RED FLAG: The ability to convert from a fixed monthly fee to a percentage-based royalty with only 30 days' notice and no specified cap is highly unusual and creates significant financial uncertainty. This could dramatically increase your costs if your center becomes successful.

General Advertising and Marketing Fee Escalation

From Item 6:

• Current Fee: $600/month
• Increase Authority: Franchisor can increase upon 60 days' written notice
• Maximum: Greater of $600/month or 2% of Gross Revenue (may be calculated weekly)

Base Technology Fee Escalation

From Item 6, Note 7:

• Current Fee: $799/month
• Increase Authority: Franchisor reserves right to periodically increase this fee
• No Cap Specified

Coaching Suite Fee Escalation

From Item 6:

• Current Fees: $149/center (1-3 centers), $109/center (4-9 centers), $0 (10+ centers after first 9)
• Maximum: Will not increase to more than $300 per center per month
• Applies To: Only centers operating under Franchise Agreements dated March 28, 2019 or earlier

Summary Table: Fee Escalation Provisions

🚩 CRITICAL CONCERN: The combination of CPI adjustments and the ability to convert to uncapped percentage-based royalties creates substantial financial risk. A successful franchisee could see their royalty burden increase dramatically.

Key Contract Terms Summary Table

Restrictive or Unusual Clauses

1. Conversion of Fixed Fee to Percentage Royalty (HIGHLY UNUSUAL)

From Item 6, Note 4:

💡

"Although we currently do not charge a percentage-based royalty, we can, on 30 days' notice to you, replace the fixed Monthly Fee with a percentage-based monthly royalty on all gross revenue, including personal training revenue and point of sale revenue."

Analysis:

• This is an extremely unusual provision in franchise agreements
• Most franchises either charge a fixed fee OR a percentage royalty, not both with the option to switch
• The 30-day notice period is very short for such a significant change
• No maximum percentage is specified
• Could dramatically increase costs for successful franchisees
• Creates significant financial uncertainty for business planning

🚩 MAJOR RED FLAG: This provision essentially allows the franchisor to change the fundamental economics of your business with minimal notice. If your center becomes highly successful, the franchisor could convert to a percentage royalty that would be far more expensive than the fixed fee.

2. Peer Compliance Committee

From Item 6: The franchisor can submit defaults to a "Peer Compliance Committee" made up of other franchisees who can levy fines of $500-$1,000.

Analysis:

• Unusual to have other franchisees involved in enforcement
• Creates potential for inconsistent application
• Fines are in addition to standard default fees
• No clear appeal process mentioned

3. Mandatory Minimum Payments Regardless of Sales

From Special Risks (page 4):

💡

"You must make minimum monthly fees, advertising and other payments, regardless of your sales levels. Your inability to make the payments may result in termination of your franchise and loss of your investment."

Current Minimum Monthly Obligations:

• Monthly Fee: $799
• General Advertising Fee: $600
• Base Technology Fee: $799
• Local Marketing Spend: $600-$1,000 (depending on tier)
• Total Minimum: $2,798 - $3,198 per month

Plus:

• Coaching Suite Fee (if applicable): $109-$149
• Charitable Contribution (if required): $100
• Potential Total: $3,007 - $3,447 per month

Analysis:

• These fixed costs must be paid even if the business is losing money
• Annual minimum obligation: approximately $33,600 - $41,400
• Does not include rent, utilities, payroll, insurance, or other operating costs

4. Spousal Liability

From Special Risks (page 4):

💡

"Your spouse must sign a document that makes your spouse liable for all financial obligations under the franchise agreement even though your spouse has no ownership interest in the franchise. This guarantee will place both your and your spouse's marital and personal assets, perhaps including your house, at risk if your franchise fails."

Analysis:

• Extends liability beyond the franchise owner
• Puts family assets at risk
• Applies even if spouse has no involvement in the business
• May create personal relationship complications

5. Out-of-State Dispute Resolution

From Special Risks (page 4):

💡

"The Franchise Agreement and Area Development Agreement require you to resolve disputes with the franchisor by mediation at a place selected by the mediator, by arbitration in Minnesota (or if franchisor's principal office is not in Minnesota, at the office of the American Arbitration Association located closest to its principal office) and/or by litigation only in Minnesota."

Analysis:

• Forces franchisees to travel to Minnesota for disputes
• Increases cost of pursuing claims
• May discourage franchisees from asserting rights
• Particularly burdensome for franchisees far from Minnesota

6. Renovation Requirements with Insufficient Funds

From Item 6, Note 14:

💡

"However, we do not represent these amounts will be sufficient to complete the remodeling."

Analysis:

• Franchisor requires $1,000/month club enhancement savings
• Explicitly states this may not be enough
• Creates open-ended financial obligation at renewal
• No cap on renovation costs specified

7. Unilateral Right to Require Payment of Local Marketing Funds

From Item 6, Note 15:

💡

"We may also require you to pay to us the minimum required amount each month for local advertising, plus our current one-time setup fee, and we will conduct the local advertising on your behalf."

Analysis:

• Currently franchisees control their local marketing spend
• Franchisor can require payment to them instead
• Removes franchisee control over local marketing
• One-time setup fee of $350 currently

What Happens When the Contract Ends?

Information Limited in Provided FDD Materials

The complete provisions regarding end of term are in Item 17, which was not provided. However, we can identify some key points:

Post-Term Obligations

From "What You Need To Know About Franchising Generally" (page 3):

💡

"When your franchise ends. The franchise agreement may prohibit you from operating a similar business after your franchise ends even if you still have obligations to your landlord or other cred

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Dispute Resolution: Anytime Fitness Franchise Legal Rights (Item 17 - Part 2)

Overview of Dispute Resolution Framework

CRITICAL NOTICE: The Anytime Fitness Franchise Disclosure Document (FDD) provided does not contain Item 17 content. The FDD structure overview indicates that Item 17 was "not found" in the provided documentation. Therefore, we cannot provide specific details about Anytime Fitness's dispute resolution provisions, mediation requirements, arbitration clauses, jurisdiction, choice of law, or other legal rights provisions.

However, the FDD does contain a Special Risk disclosure on page 4 that provides limited information about dispute resolution requirements. We will analyze this disclosure and provide general context about what franchisees should expect.

⚠️ Critical Information Gap

The absence of Item 17 content in this FDD is highly unusual and concerning. Item 17 is a mandatory disclosure item under FTC regulations that must detail:

• Renewal rights and conditions
• Termination provisions
• Transfer/assignment rights
• Dispute resolution procedures
• Post-termination obligations
• Modification of the agreement

Potential franchisees should immediately request the complete Item 17 disclosure before proceeding.

Available Information from Special Risk Disclosure

Based on the Special Risk disclosure on page 4, we can identify the following dispute resolution requirements:

Out-of-State Dispute Resolution Requirement

The FDD includes this mandatory state disclosure:

💡

"Out-of-State Dispute Resolution. The Franchise Agreement and Area Development Agreement require you to resolve disputes with the franchisor by mediation at a place selected by the mediator, by arbitration in Minnesota (or if franchisor's principal office is not in Minnesota, at the office of the American Arbitration Association located closest to its principal office) and/or by litigation only in Minnesota."

Key Implications

🚩 Red Flags and Concerns

1. Mandatory Out-of-State Resolution

Concern: Franchisees located anywhere in the United States must travel to Minnesota (or potentially another distant location) to resolve disputes.

Financial Impact:

• Travel costs for you and your attorney
• Hotel accommodations for multi-day proceedings
• Lost business time away from your center
• Potentially $10,000-$50,000+ in additional costs compared to local resolution

Strategic Disadvantage: The franchisor (headquartered in Minnesota) has home-field advantage and lower costs, creating pressure on franchisees to settle rather than pursue legitimate claims.

2. Mediation Location Uncertainty

Concern: The mediation location is "selected by the mediator" rather than being predetermined or mutually agreed upon.

Implications:

• No guarantee of convenient location
• Mediator selection process unclear
• Potential for additional travel and expense

3. Minnesota Law Likely Applies

While not explicitly stated in the available excerpt, venue provisions typically correlate with choice of law provisions. Franchisees should expect:

• Minnesota law to govern the franchise relationship
• Need to hire Minnesota-licensed attorneys or attorneys familiar with Minnesota franchise law
• Unfamiliarity with local Minnesota legal precedents

4. Missing Critical Details

Without the complete Item 17 disclosure, franchisees cannot determine:

• Whether mediation is mandatory before arbitration or litigation
• Specific arbitration rules and procedures
• Whether class action waivers exist
• Who pays arbitration fees and costs
• Attorney fee provisions
• Timeline requirements for filing claims
• Statute of limitations modifications

What Franchisees Need to Know

Questions to Ask Before Signing

Since Item 17 is not included in the provided FDD, potential franchisees must obtain answers to these questions:

Mediation Provisions

1. Is mediation mandatory before arbitration or litigation?
2. What is the process for selecting the mediator?
3. Who pays mediation costs?
4. What is the timeline for completing mediation?
5. Can either party proceed to arbitration/litigation if mediation fails?
6. Are there any exceptions to the mediation requirement?

Arbitration Provisions

1. Is arbitration mandatory or optional?
2. Which arbitration organization's rules apply (AAA, JAMS, etc.)?
3. Who selects the arbitrator(s)?
4. Who pays arbitration filing fees and arbitrator costs?
5. Can discovery be conducted, and to what extent?
6. Is the arbitrator's decision binding and final?
7. Can arbitration awards be appealed?
8. Are there any claims excluded from arbitration?

Litigation Provisions

1. Under what circumstances can litigation proceed instead of arbitration?
2. Which Minnesota court has jurisdiction (county, district)?
3. Can the franchisor seek injunctive relief in other jurisdictions?
4. Are there any exceptions to the Minnesota venue requirement?

Choice of Law

1. Which state's law governs the franchise agreement?
2. Are there exceptions for state-specific franchise laws?
3. How do state franchise relationship laws interact with Minnesota law?

Class Actions and Collective Proceedings

1. Is there a class action waiver?
2. Can franchisees join together in collective arbitration?
3. Are there any exceptions to class action waivers?

Attorney Fees and Costs

1. Who pays attorney fees if the franchisor prevails?
2. Who pays attorney fees if the franchisee prevails?
3. Are there any fee-shifting provisions?
4. Who pays costs of litigation/arbitration?

Timelines and Limitations

1. What is the statute of limitations for bringing claims?
2. Are there shorter notice periods for certain types of claims?
3. What are the deadlines for responding to disputes?

Typical Dispute Resolution Process (General Framework)

While we cannot provide Anytime Fitness's specific process without Item 17, here is a typical franchise dispute resolution flowchart:

┌─────────────────────────────────────────────────────────────┐
│                    DISPUTE ARISES                           │
│         (Breach of contract, termination, etc.)             │
└────────────────────────┬────────────────────────────────────┘
                         │
                         ▼
┌─────────────────────────────────────────────────────────────┐
│              STEP 1: INTERNAL RESOLUTION                    │
│  • Franchisee contacts franchisor                           │
│  • Attempt informal resolution                              │
│  • Timeline: 10-30 days typical                             │
└────────────────────────┬────────────────────────────────────┘
                         │
                         ▼
┌─────────────────────────────────────────────────────────────┐
│              STEP 2: FORMAL NOTICE                          │
│  • Written notice of dispute required                       │
│  • Specific claims and relief sought                        │
│  • Timeline: 30-60 days to respond                          │
└────────────────────────┬────────────────────────────────────┘
                         │
                         ▼
┌─────────────────────────────────────────────────────────────┐
│              STEP 3: MEDIATION                              │
│  • Location: Selected by mediator                           │
│  • Non-binding process                                      │
│  • Timeline: 30-90 days to complete                         │
│  • Cost: $5,000-$15,000+ per party                          │
└────────────────────────┬────────────────────────────────────┘
                         │
                    ┌────┴────┐
                    │         │
         Settlement │         │ No Settlement
                    │         │
                    ▼         ▼
              ┌─────────┐  ┌──────────────────────────────────┐
              │  DONE   │  │   STEP 4: ARBITRATION/LITIGATION │
              └─────────┘  │  • Location: Minnesota            │
                           │  • Binding decision               │
                           │  • Timeline: 12-24+ months        │
                           │  • Cost: $50,000-$250,000+        │
                           └──────────────────────────────────┘

State-Specific Considerations

States with Franchise Relationship Laws

Several states have franchise relationship laws that may override certain dispute resolution provisions:

Important: State-specific addenda (Exhibit G) may modify dispute resolution provisions for franchisees in these states. Review your state's addendum carefully.

Michigan-Specific Notice

The FDD includes a Michigan-specific notice (pages 5-6) that provides important protections for Michigan franchisees:

💡

"(f) A provision that requires that arbitration or litigation be conducted outside this state. This shall not preclude the franchisee from entering into an agreement, at the time of arbitration, to conduct arbitration at a location outside this state."

Michigan franchisees: You may have the right to arbitrate or litigate in Michigan, despite the Minnesota venue requirement. Consult with a Michigan franchise attorney.

Estimated Costs of Dispute Resolution

Mediation Costs

Arbitration Costs

Litigation Costs

Note: These are estimates. Actual costs can be significantly higher for complex disputes or appeals.

Your Legal Rights as a Franchisee

Rights You Likely Have (Subject to Item 17 Confirmation)

1. Right to Notice: Franchisor must provide notice of alleged breaches before termination (in most cases)

2. Right to Cure: Opportunity to correct certain breaches within specified timeframes

3. Right to Representation: Ability to hire legal counsel at any stage

4. Right to Present Evidence: Opportunity to present your case in mediation, arbitration, or litigation

5. Right to Appeal: Depending on the dispute resolution method (limited in arbitration)

Rights You Likely Do NOT Have

1. Right to Local Venue: Must travel to Minnesota for dispute resolution

2. Right to Jury Trial: If arbitration is mandatory, no jury trial right

3. Right to Class Action: Likely waived (though not confirmed in available materials)

4. Right to Choose Mediator/Arbitrator: Process likely controlled by franchisor or AAA rules

5. Right to Extensive Discovery: May be limited in arbitration

State Law Protections

Depending on your state, you may have additional rights under state franchise relationship laws:

• Termination protections (good cause requirements)
• Renewal rights
• Transfer rights
• Local venue rights
• Prohibition of certain unfair practices

Action Required: Consult with a franchise attorney licensed in your state to understand your specific rights.

Practical Implications for Franchisees

Before Signing the Franchise Agreement

1. Obtain Complete Item 17 Disclosure

Action: Request the complete Item 17 from Anytime Fitness immediately. Do not sign any agreement without reviewing this critical information.

2. Consult with a Franchise Attorney

Action: Hire an experienced franchise attorney licensed in your state to review:

• The complete franchise agreement
• Item 17 dispute resolution provisions
• State-specific addenda
• Your specific rights and obligations

Cost: $2,500 - $7,500 for comprehensive review

Value: Potentially saves $100,000+ in future dispute costs

3. Negotiate Dispute Resolution Terms

Possible Negotiations:

• Request local or regional mediation/arbitration
• Negotiate cost-sharing provisions
• Seek exceptions for certain types of disputes
• Request mutual attorney fee provisions

Reality Check: Anytime Fitness is unlikely to modify these terms for individual franchisees, but it's worth attempting, especially if you're signing a multi-unit development agreement.

4. Understand the Financial Risk

Action: Factor dispute resolution costs into your financial planning:

• Maintain legal reserve fund ($25,000 - $50,000)
• Obtain appropriate insurance coverage
• Understand total cost of potential disputes

5. Review State-Specific Protections

Action: Carefully review Exhibit G (State Specific Addenda) for your state to understand any modifications to dispute resolution provisions.

After Opening Your Franchise

1. Document Everything

Best Practices:

• Keep detailed records of all communications with franchisor
• Document compliance with franchise agreement terms
• Maintain financial records meticulously
• Save all emails, letters, and notices
• Take photos/videos of your center's condition

Why: Strong documentation is critical if disputes arise

2. Address Issues Early

Best Practices:

• Communicate concerns to franchisor promptly
• Attempt informal resolution before formal disputes
• Maintain professional, written communication
• Seek guidance from franchise advisory council (if available)

Why: Early resolution avoids costly formal proceedings

3. Know Your Triggers

Common Dispute Triggers:

• Termination notices
• Transfer denials
• Renewal disputes
• Royalty/fee disputes
• Territory

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Anytime Fitness Franchisee Success Rate & Turnover (Item 20 - Part 1)

Overview

CRITICAL NOTICE: The Item 20 data from the Anytime Fitness FDD is not available in the provided documentation. The FDD structure overview indicates that Item 20 was "not found" in the document provided for analysis. This represents a significant limitation in our ability to provide comprehensive franchisee success rate and turnover analysis.

Item 20 of a Franchise Disclosure Document is one of the most critical sections for prospective franchisees to review, as it contains detailed information about:

• Current franchised and company-owned units
• Historical growth patterns
• Closures and failures
• Transfers of ownership
• Terminations and non-renewals
• State-by-state breakdowns

What We Know From Other Sections

While Item 20 data is unavailable, we can extract some relevant information from other parts of the FDD:

Historical Context

Franchisor History:

• Current Franchisor: Anytime Fitness Franchisor LLC (formed October 25, 2021)
• Predecessor: Anytime Fitness, LLC (AFLLC)
  • Offered Anytime Fitness franchises from October 2002 to November 2021
  • Operated company-owned centers since January 2005
  • Also offered Anytime Fitness Express Market franchises from October 2006 to November 2021 (discontinued April 2024)

Securitization Transaction (November 2021): In November 2021, as part of a securitization financing transaction, AFLLC transferred all existing U.S. franchise and area development agreements to the current franchisor entity. This corporate restructuring means:

• All existing franchisees were transferred to the new entity
• The brand has over 20 years of franchising history
• The system has substantial operational history despite the new corporate structure

International Operations

The FDD mentions an affiliate, Anytime Fitness Iberia, SLU (AFI), which operates in Spain:

• As of December 31, 2023:
  • 37 franchised centers in Spain
  • 4 company-owned centers in Spain
  • Operating since October 2012
  • Offering franchises since 2013

This suggests the brand has international presence and experience, though these numbers are not part of the U.S. system covered by this FDD.

What Should Be in Item 20

For prospective franchisees, Item 20 should typically include the following tables and information:

Expected Data Tables

Table 1: System-Wide Outlet Summary (3-Year History) This table should show:

• Total franchised outlets at year-end
• Total company-owned outlets at year-end
• Total outlets in the system
• Data for the past 3 fiscal years

Table 2: Transfers, Terminations, Non-Renewals, and Reacquisitions This table should detail:

• Number of franchises transferred to new owners
• Number of terminations by franchisor
• Number of non-renewals by franchisor
• Number of franchisee-initiated terminations/non-renewals
• Number of franchises reacquired by franchisor
• Number of franchises that ceased operations for other reasons

Table 3: Status of Franchised Outlets (State-by-State) This comprehensive table should show for each state:

• Outlets at start of year
• Outlets opened during year
• Terminations
• Non-renewals
• Reacquired by franchisor
• Ceased operations - other reasons
• Outlets at end of year

Table 4: Status of Company-Owned Outlets Similar breakdown for company-owned locations

Table 5: Projected Openings

• Franchise agreements signed but outlets not yet opened
• Projected new franchised outlets in next fiscal year
• Projected new company-owned outlets in next fiscal year

Red Flags and Concerns

Major Concern: Missing Item 20 Data

🚩 CRITICAL RED FLAG: The absence of Item 20 data in the provided FDD documentation is highly unusual and concerning. This could indicate:

1. Incomplete FDD Provided: The document may be incomplete or redacted
2. Data Not Yet Compiled: Though unlikely for an established brand
3. Potential Issues with System Performance: Companies sometimes delay or obscure unfavorable data

Special Risk Disclosure

The FDD includes a notable special risk disclosure:

"Unopened Franchises" (Page 4):

💡

"The Franchisor has signed a significant number of Franchise Agreements with franchisees who have not yet opened their outlets. If other franchisees are experiencing delays in opening their outlets, you may also experience delays in opening your own outlet."

Analysis: This disclosure suggests:

• A substantial pipeline of unopened locations
• Potential challenges in the opening process
• Possible market saturation concerns
• Could indicate aggressive sales without corresponding support infrastructure

Financial Condition Concern

Another special risk highlighted:

"Financial Condition" (Page 4):

💡

"The Franchisor's guarantor's financial condition as reflected in its financial statements (see Item 21) calls into question the Franchisor's financial ability to provide services and support to you."

Analysis: This is a significant warning that:

• The parent company may have financial challenges
• Support services could be at risk
• Long-term viability questions exist
• Prospective franchisees should carefully review Item 21 financial statements

What Prospective Franchisees Should Do

Given the absence of Item 20 data, prospective franchisees should take the following steps:

1. Request Complete Item 20 Data

Action Required:

• Formally request complete Item 20 tables from the franchisor
• Ask specifically for:
  • Total number of franchised units currently operating
  • Total number of company-owned units
  • 3-year history of openings, closures, transfers, and terminations
  • State-by-state breakdown
  • Number of signed but unopened franchises

2. Contact Current and Former Franchisees

Critical Due Diligence: The FDD states that current and former franchisee contact information is available in:

• Item 20 (not provided)
• Exhibit C (referenced but not included in provided documentation)

You should:

• Obtain the complete franchisee contact list
• Contact at least 10-15 current franchisees
• Contact former franchisees who left the system
• Ask specific questions about:
  • Profitability and actual performance
  • Support quality
  • Reasons for transfers or closures
  • Time to break even
  • Challenges faced

3. Calculate Key Metrics When Data Becomes Available

Once you obtain Item 20 data, calculate:

Turnover Rate Formula:

Annual Turnover Rate = (Closures + Terminations + Non-Renewals) ÷ Total Units at Start of Year × 100

Healthy Benchmarks:

• Turnover rate below 5% annually = Excellent
• 5-10% = Acceptable
• 10-15% = Concerning
• Above 15% = Major red flag

Growth Rate Formula:

Net Growth Rate = (New Openings - Closures) ÷ Total Units at Start of Year × 100

Transfer Rate Formula:

Transfer Rate = Number of Transfers ÷ Total Units × 100

High transfer rates (>10% annually) may indicate:

• Franchisees struggling to operate profitably
• Franchisees wanting to exit the system
• Potential "churning" where units change hands frequently

Industry Context and Comparisons

Fitness Industry Considerations

The fitness industry has unique characteristics that affect franchisee success:

Positive Factors:

• Recurring revenue model (monthly memberships)
• Growing health and wellness trends
• 24/7 access model reduces staffing costs
• Established brand with 20+ years of history

Challenging Factors:

• High competition from boutique fitness concepts
• Economic sensitivity (memberships often cut during recessions)
• Member retention challenges
• Equipment maintenance and replacement costs
• Real estate and lease obligations

COVID-19 Impact

Important Note: Any analysis of recent turnover data (2020-2023) must consider:

• Pandemic-related closures and restrictions
• Member cancellations during lockdowns
• Financial stress on franchisees
• Potential government assistance programs
• Recovery patterns post-pandemic

The fitness industry was among the hardest hit during COVID-19, with many facilities forced to close temporarily or permanently.

Estimated System Size

While exact current numbers are not available in the provided documentation, we can infer:

Historical Scale:

• Brand founded in 2002
• Over 20 years of franchising experience
• International presence (Spain operations mentioned)
• Securitization transaction in 2021 suggests substantial system size
• Multiple affiliated brands under parent company (Waxing the City, Basecamp Fitness, The Bar Method, OrangeTheory)

Parent Company Portfolio (as of December 31, 2023):

• Waxing the City: 150 franchised studios
• Basecamp Fitness: 16 franchised studios, 5 company-owned
• The Bar Method: 73 franchised studios
• OrangeTheory: 1,289 franchised, 22 affiliate-owned (U.S.)

This suggests the parent company has substantial franchising experience and infrastructure.

Development Pipeline Analysis

Area Development Agreements

The FDD offers Area Development Agreements (ADAs) for multi-unit development:

Minimum Commitment: 2 locations Development Fees:

Analysis:

• Significant discounts for multi-unit developers
• Incentives for existing franchisees to expand
• Recognition programs (Club Purple, Club Platinum) suggest performance tiers
• Veteran pricing indicates targeted recruitment

Liquidated Damages:

• $10,000 per location if you fail to develop committed locations
• This suggests the franchisor is serious about development commitments
• Indicates potential issues with franchisees not opening committed locations (aligns with "Unopened Franchises" risk disclosure)

Opening Timeline

Standard Timeline:

• 12 months from signing Franchise Agreement to opening
• Monthly Fee waived if actively working with real estate team
• Suggests typical development period of 6-12 months

Implications:

• Relatively quick to market compared to some concepts
• Real estate selection appears to be a critical factor
• Support available during site selection process

Signs of Healthy vs. Unhealthy Systems

Indicators of a Healthy Franchise System

What to Look For (When Item 20 Data Available):

✅ Positive Indicators:

• Net positive growth (more openings than closures)
• Low termination rate (<3% annually)
• Low voluntary non-renewal rate
• Moderate transfer rate (5-8% annually is normal)
• Geographic expansion into new markets
• High percentage of multi-unit franchisees
• Long average tenure of franchisees
• Company buying back successful locations (shows confidence)

Indicators of an Unhealthy System ("Churning")

Red Flags to Watch For:

🚩 Warning Signs:

• High closure rate (>10% annually)
• High termination rate (>5% annually)
• Declining total unit count year-over-year
• High transfer rate (>15% annually) - suggests franchisees wanting out
• Many locations closing shortly after opening (within 2-3 years)
• Concentration of closures in specific regions
• Large number of signed but never-opened locations
• Company not opening new company-owned locations
• Franchisees not expanding (no multi-unit growth)

"Churning" Defined: Churning occurs when a franchise system maintains unit count through aggressive new sales while experiencing high failure rates. The system appears stable in total numbers but has high turnover of individual franchisees. This is harmful because:

• New franchisees replace failed ones
• Franchisor continues collecting initial fees
• System appears healthy on surface
• Individual franchisee success rate is actually low

Questions to Ask the Franchisor

When you receive complete Item 20 data, ask:

Growth and Stability Questions

1. What is your current total number of franchised locations in the U.S.?
2. How many locations opened in each of the last 3 years?
3. How many locations closed in each of the last 3 years?
4. What were the primary reasons for closures?
5. How many franchisees own multiple locations?
6. What percentage of your franchisees are renewing their agreements?
7. How many franchise agreements have been signed but not yet opened?
8. What is the average time from signing to opening?
9. How many locations are currently for sale or in transfer?

Performance Questions

10. What percentage of locations are meeting your internal performance benchmarks?
11. How many locations are in the Club Purple or Club Platinum recognition programs?
12. What is the average tenure of your franchisees?
13. How many franchisees have been in the system for 10+ years?
14. What support do you provide to struggling locations?

Financial Questions

15. Given the financial condition disclosure, what steps are being taken to ensure ongoing support?
16. How is the securitization transaction affecting franchisee support?
17. Are there any planned changes to fee structures?

Questions to Ask Current Franchisees

Success and Satisfaction

1. How long have you been operating your Anytime Fitness center?
2. Are you profitable? If so, when did you reach profitability?
3. Would you buy this franchise again knowing what you know now?
4. Are you planning to open additional locations?
5. How does your actual performance compare to what you expected?

Support and Operations

6. How would you rate the franchisor's support (1-10)?
7. Has support quality changed since the 2021 securitization?
8. Are the Operations Manual and training adequate?
9. How responsive is the franchisor to questions and issues?
10. What are the biggest operational challenges?

Financial Reality

11. What were your actual startup costs vs. the FDD estimates?
12. What is your monthly break-even point in members?
13. How long did it take to reach break-even?
14. What are your actual monthly operating expenses?
15. Are the fee structures (Monthly Fee, Marketing Fee, etc.) reasonable for the value provided?

Market Conditions

16. How competitive is your market?
17. Are you aware of other Anytime Fitness locations closing in your area?
18. Do you know franchisees who have left the system? Why did they leave?
19. How has COVID-19 affected your business and recovery?

Questions to Ask Former Franchisees

Critical Insights:

1. Why did you leave the Anytime Fitness system?
2. Were you profitable when you left?
3. If you sold, did you recoup your investment?
4. What were the primary challenges you faced?
5. What would you have done differently?
6. Would you recommend this franchise to others?
7. How did the franchisor handle your exit?
8. Were there any surprises not disclosed in the FDD?

Comparative Analysis Framework

When Item 20 Data Becomes Available

Create a comparison table like this:

| Metric | Year 1 | Year 2 | Year 3 | Trend | Industry Benchmark | |--------|--------|--------|

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Anytime Fitness Franchise Locations: Current & Former Franchisee List (Item 20 - Part 2)

Overview: The Critical Importance of Franchisee Validation

IMPORTANT NOTICE: The FDD provided does not contain Item 20 data or franchisee contact lists. This section provides a comprehensive framework for conducting franchisee validation once you receive the complete FDD with Exhibit C (franchisee lists).

Item 20 of the Franchise Disclosure Document is arguably the most valuable section for prospective franchisees. It contains contact information for current and former franchisees—real people who have invested their money and time in the Anytime Fitness system. This is your opportunity to conduct due diligence directly with those who have walked the path you're considering.

According to the FDD structure, franchisee contact information should be provided in Exhibit C, which will include:

• Current franchisees operating Anytime Fitness centers
• Former franchisees who left the system in the past fiscal year
• Former franchisees who had their franchises terminated, cancelled, or not renewed
• Former franchisees who otherwise left the system

How to Access the Franchisee Contact List

What the FDD Should Provide

When you receive the complete Anytime Fitness FDD, Exhibit C should contain:

1. Names of all current franchisees
2. Business addresses and phone numbers
3. City and state of each location
4. Date each franchise agreement was signed
5. Status of each location (operating, under development, etc.)

What to Request from Anytime Fitness

If the franchisee list is not comprehensive or clear, request:

• Organized lists by region or state (for easier geographic targeting)
• Lists segmented by opening date (to speak with both new and established franchisees)
• Multi-unit franchisee identification (to understand multi-unit economics)
• Club performance tier information (if available, to speak with Club Purple/Platinum members)

Red Flag Alert 🚩

The FDD provided for this analysis does not include Item 20 data or Exhibit C. This is a significant limitation. Before proceeding with any franchise purchase:

• ✅ Ensure you receive a complete FDD with all exhibits
• ✅ Verify Exhibit C contains comprehensive franchisee contact information
• ✅ Confirm the list includes both current and former franchisees
• ✅ Check that contact information is current and complete

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How Many Franchisees Should You Contact?

Recommended Contact Strategy

Strategic Selection Criteria

Geographic Diversity:

• Contact franchisees in markets similar to yours (population, demographics, competition)
• Include both urban and suburban locations if applicable
• Consider regional economic differences

Operational Diversity:

• Mix of single-unit and multi-unit operators
• Various stages of business maturity (new, established, mature)
• Different market tiers (Tier 1, 2, and 3 as defined by Anytime Fitness)

Performance Diversity:

• If possible, identify and contact both high-performing and struggling franchisees
• Seek out Club Purple and Club Platinum members (if disclosed)
• Contact franchisees who may have faced challenges

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Key Questions to Ask Current Franchisees

Category 1: Financial Performance & Profitability

Critical Financial Questions:

1. "What were your total revenues in your first year, second year, and most recent full year of operation?"

   • Why this matters: Validates Item 19 financial performance representations
   • Follow-up: "How does this compare to what you were told to expect?"

2. "What is your current monthly membership count, and what has been your member retention rate?"

   • Why this matters: Member retention drives recurring revenue
   • Follow-up: "What percentage of members stay beyond 12 months?"

3. "What are your actual monthly operating expenses, and how do they compare to the estimates in Item 7?"

   • Why this matters: The FDD estimates $397,516-$973,121 initial investment
   • Follow-up: "Were there any significant unexpected costs?"

4. "How long did it take you to reach break-even, and when did you start taking an owner's draw?"

   • Why this matters: Cash flow timeline is critical for financial planning
   • Follow-up: "How much working capital did you actually need?"

5. "What is your current EBITDA or net profit margin?"

   • Why this matters: Direct profitability indicator
   • Follow-up: "Has this improved or declined over time?"

6. "What percentage of your revenue comes from membership fees versus personal training, retail, and other services?"

   • Why this matters: Revenue diversification affects stability
   • Follow-up: "Which revenue streams are most profitable?"

Category 2: Fees & Ongoing Costs

7. "How do you feel about the fee structure—the $799 Monthly Fee, $600 General Advertising Fee, and $799 Base Technology Fee?"

   • Why this matters: These total $2,198/month ($26,376/year) per location
   • Follow-up: "Do you feel you receive adequate value for these fees?"

8. "Have you experienced any unexpected fees or charges not clearly disclosed in the FDD?"

   • Why this matters: Identifies hidden costs
   • Follow-up: "What about default fees, inspection fees, or compliance committee fines?"

9. "How much do you actually spend on local marketing beyond the minimum required $600-$1,000 per month?"

   • Why this matters: Marketing costs significantly impact profitability
   • Follow-up: "What marketing strategies have been most effective?"

Category 3: Franchisor Support & Relationship

10. "How would you rate the quality and responsiveness of franchisor support on a scale of 1-10?"

    • Why this matters: Support quality affects operational success
    • Follow-up: "Can you provide specific examples of when you needed help?"

11. "Has the franchisor made significant changes to system requirements or standards since you opened?"

    • Why this matters: The FDD notes "The franchise agreement may allow the franchisor to change its manuals and business model without your consent"
    • Follow-up: "Were these changes beneficial or burdensome?"

12. "How useful is the Coaching Suite program, and do members actually use it?"

    • Why this matters: Coaching Suite is mandatory with additional fees ($149/month for 1-3 locations)
    • Follow-up: "Does it generate meaningful revenue?"

Category 4: Operations & Staffing

13. "What are your actual staffing costs, and how many hours per week do you staff the club?"

    • Why this matters: Labor is typically the largest operating expense
    • Follow-up: "Have you had difficulty finding and retaining qualified staff?"

14. "How much time do you personally spend working in/on the business each week?"

    • Why this matters: Determines if this is truly a semi-absentee opportunity
    • Follow-up: "Is this what you expected when you bought the franchise?"

15. "What operational challenges have been most difficult to overcome?"

    • Why this matters: Identifies common pain points
    • Follow-up: "How did you resolve these challenges?"

Category 5: Market & Competition

16. "How has competition from other gyms (Planet Fitness, LA Fitness, local gyms) affected your business?"

    • Why this matters: The FDD notes "The market for fitness centers is a developed market in most areas"
    • Follow-up: "What is your competitive advantage?"

17. "If you could start over, would you choose the same location? Why or why not?"

    • Why this matters: Location is critical to success
    • Follow-up: "What location factors matter most?"

Category 6: Overall Satisfaction

18. "On a scale of 1-10, how satisfied are you with your decision to purchase this franchise?"

    • Why this matters: Overall satisfaction indicator
    • Follow-up: "What would you do differently if starting over?"

19. "Would you buy another Anytime Fitness franchise? Why or why not?"

    • Why this matters: Strongest indicator of franchisee satisfaction
    • Follow-up: "Are you currently considering expansion?"

20. "What advice would you give to someone considering this franchise?"

    • Why this matters: Open-ended insights from experience
    • Follow-up: "What should I know that isn't in the FDD?"

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Questions for Former Franchisees Who Exited Voluntarily

Understanding Voluntary Exits

Former franchisees who left voluntarily can provide invaluable insights into why the franchise didn't meet their expectations or needs. These conversations are often more candid than those with current franchisees.

Key Questions for Voluntary Exits

1. "What were the primary reasons you decided to leave the Anytime Fitness system?"

   • Why this matters: Identifies systemic issues or unrealistic expectations
   • Follow-up: "Was this decision financial, operational, or personal?"

2. "Did you achieve profitability before you exited? If so, for how long?"

   • Why this matters: Determines if the business model worked
   • Follow-up: "What was your peak annual revenue and profit?"

3. "How did your actual financial performance compare to what you were told to expect during the sales process?"

   • Why this matters: Validates franchisor representations
   • Follow-up: "Were there specific claims that proved inaccurate?"

4. "What were your biggest challenges as an Anytime Fitness franchisee?"

   • Why this matters: Identifies common obstacles
   • Follow-up: "Did the franchisor provide adequate support to address these?"

5. "How would you describe your relationship with the franchisor?"

   • Why this matters: Relationship quality affects operational success
   • Follow-up: "Did you feel supported or micromanaged?"

6. "Were there any unexpected costs or fees that significantly impacted your profitability?"

   • Why this matters: Identifies hidden costs
   • Follow-up: "What should prospective franchisees budget for beyond the FDD?"

7. "How difficult was the exit process? Were you able to sell your franchise?"

   • Why this matters: Exit strategy is part of investment planning
   • Follow-up: "What was the transfer fee and process like?" (FDD indicates $9,999 transfer fee after opening)

8. "If you could go back, would you still buy this franchise? Why or why not?"

   • Why this matters: Overall assessment of the opportunity
   • Follow-up: "What would you do differently?"

9. "What advice would you give someone considering an Anytime Fitness franchise?"

   • Why this matters: Practical wisdom from experience
   • Follow-up: "What questions should I be asking that I haven't asked?"

10. "Are there any legal or contractual issues I should be aware of?"

    • Why this matters: Identifies potential legal concerns
    • Follow-up: "Did you face any disputes with the franchisor?"

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Questions for Terminated Franchisees

Understanding Terminations

Franchisees whose agreements were terminated by the franchisor can provide critical insights into enforcement practices, compliance requirements, and potential pitfalls. These conversations may be more difficult to obtain but are extremely valuable.

Key Questions for Terminated Franchisees

1. "What were the stated reasons for your franchise termination?"

   • Why this matters: Identifies franchisor enforcement priorities
   • Follow-up: "Do you believe the termination was justified?"

2. "Did you receive adequate notice and opportunity to cure the default before termination?"

   • Why this matters: The FDD references cure periods and default procedures
   • Follow-up: "How much time were you given to correct the issues?"

3. "What were the financial consequences of the termination?"

   • Why this matters: Understanding total cost of failure
   • Follow-up: "Were you able to recover any of your investment?"

4. "Were there warning signs or compliance issues that led to the termination?"

   • Why this matters: Identifies critical compliance areas
   • Follow-up: "Could the termination have been avoided?"

5. "How would you describe the franchisor's enforcement of system standards?"

   • Why this matters: Understanding franchisor management style
   • Follow-up: "Were standards enforced consistently across franchisees?"

6. "Did you face any fines from the Peer Compliance Committee?"

   • Why this matters: The FDD mentions fines up to $1,000 per violation
   • Follow-up: "What violations triggered these fines?"

7. "What advice would you give to help someone avoid the mistakes you made?"

   • Why this matters: Learning from others' failures
   • Follow-up: "What are the most critical compliance requirements?"

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Franchisee Interview Guide Template

Pre-Interview Preparation

Before contacting franchisees:

✅ Review the complete FDD thoroughly ✅ Prepare your questions in advance ✅ Create a spreadsheet to track responses ✅ Schedule calls at convenient times for franchisees ✅ Be respectful of their time (30-45 minutes maximum) ✅ Prepare to take detailed notes or record (with permission)

Interview Template

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ANYTIME FITNESS FRANCHISEE INTERVIEW TEMPLATE

Date of Interview: _______________
Franchisee Name: _______________
Location(s): _______________
Years in System: _______________
Number of Locations: _______________
Interview Duration: _______________

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INTRODUCTION SCRIPT

"Hello, my name is [YOUR NAME], and I'm seriously considering purchasing an Anytime Fitness franchise. The franchisor provided your contact information as a current franchisee. Would you have 30-45 minutes to share your experience with me? I really appreciate your time and candid feedback."

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SECTION 1: BACKGROUND & CONTEXT

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SECTION 2: FINANCIAL PERFORMANCE

Initial Investment Comparison:

| Item | FDD Estimate | Actual Cost | Variance | |------|--------------|

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Anytime Fitness Franchise Territory Analysis (Item 12)

Overview

Critical Finding: The FDD structure provided indicates that Item 12 (Territory) was not found in the document, and no content summary is available. However, the full FDD text provided does contain Item 12 information starting on page 41 of the document.

Based on the available information, here is a comprehensive analysis of Anytime Fitness's territory provisions:

Territory Grant Structure

Protected Territory Specifications

According to the FDD, Anytime Fitness does grant a protected territory, but the specific details regarding territory size, radius, and population requirements are referenced but not fully detailed in the excerpt provided. The FDD states:

💡

"Item 12 and the 'territory' provisions in the franchise agreement describe whether the franchisor and other franchisees can compete with you."

Key Territory Characteristics

Based on the document structure and references throughout the FDD, here's what we know about Anytime Fitness territories:

Market Tier Classification

Anytime Fitness uses a three-tier market classification system based on population density within a 3-mile radius of your location:

Analysis: This tiered approach suggests that territory size and protection likely correlate with population density, with higher-density markets requiring more substantial marketing investments.

Territory Protection and Exclusivity

What We Know

1. Protected Territory Exists: The FDD references "Protected Territory" multiple times, indicating franchisees do receive some form of territorial protection.

2. 12-Month Development Period: You have 12 months from signing the Franchise Agreement to open your center. If you have a Protected Territory and haven't opened after 12 months, you must begin paying the Monthly Fee ($799/month).

3. Area Development Agreements: For multi-unit developers, territories are defined in Area Development Agreements, with specific development schedules and liquidated damages ($10,000 per location) for failure to develop.

Critical Limitations (Red Flags)

⚠️ WARNING: The specific territory size, radius, and exact protection details are not fully disclosed in the provided FDD excerpt. This is concerning because:

• You cannot determine the actual square mileage or radius of your protected territory
• Population requirements for territory grants are unclear
• The exact nature of territorial exclusivity is not specified

Franchisor Rights and Competition

Franchisor's Ability to Compete

The FDD includes this important warning:

💡

"Competition from franchisor. Even if the franchise agreement grants you a territory, the franchisor may have the right to compete with you in your territory."

This is a significant red flag that requires careful examination of the actual Franchise Agreement.

Alternative Distribution Channels

Based on the FDD content, Anytime Fitness and its affiliates operate through multiple channels:

1. Direct Company Operations

• The franchisor's predecessor (AFLLC) has operated Anytime Fitness centers since January 2005
• As of December 31, 2023, the system included both franchised and company-owned locations

2. International Operations

• Affiliate AFI operates in Spain with 37 franchised and 4 company-owned centers
• International master franchise arrangements exist

3. Digital and Technology Services

• ProVision (affiliate) provides technology systems to all franchisees
• Healthy Contributions (affiliate) manages fitness incentive programs
• Club management software and digital platforms

4. Related Brand Competition

The parent company operates multiple fitness brands that could potentially compete:

Concern: While these are different fitness concepts, there's no explicit prohibition against the franchisor opening these competing fitness brands within your territory.

Encroachment Policies

What's Not Clear

The provided FDD excerpt does not include specific information about:

• Minimum distance requirements between Anytime Fitness locations
• Specific encroachment protections
• Compensation for territory violations
• Dispute resolution for territorial conflicts

Reciprocal Access System

One unique aspect of Anytime Fitness is the reciprocal access system:

💡

"Through an affiliate, we have developed an access and security system that allows members of an Anytime Fitness center to have access to any Anytime Fitness center 24 hours a day and reciprocal benefits between centers."

Impact on Territory Value:

• ✅ Positive: Increases brand value and member satisfaction
• ⚠️ Negative: Members can use any location, potentially reducing your exclusive customer base
• ⚠️ Negative: Nearby locations could attract your members without violating territory agreements

Territory Performance Requirements

Development Timeline

If you sign an Area Development Agreement:

Development Commitment Structure:
├── Sign ADA → Pay full Development Fee upfront
├── Sign 1st Franchise Agreement → Immediately upon ADA signing
├── Each subsequent location → 12 months to open from FA signing
└── Failure to develop → $10,000 liquidated damages per location

Performance Expectations

While specific territory performance requirements aren't detailed in the excerpt, the FDD indicates:

1. Staffing Requirements: Minimum staffed hours per week (specific hours not provided)
2. Service Requirements: Must offer small/large group training, coaching, and personal training
3. Marketing Requirements: Tier-based local marketing spend (see table above)
4. Member Engagement: Must implement Coaching Suite system

Territory Specifications Table

Based on available information:

Impact on Franchise Success

Positive Factors

✅ Some territorial protection exists: Unlike some franchises with no territory protection, Anytime Fitness does provide a protected territory.

✅ Market-based approach: The tier system suggests territories are sized appropriately for market density.

✅ Multi-unit opportunities: Area Development Agreements allow for market control and reduced per-unit fees.

✅ 12-month grace period: You don't pay Monthly Fees during development if working with the real estate team.

Negative Factors and Red Flags

🚩 CRITICAL: Incomplete territory information: The most important details about territory size, exact boundaries, and protection specifics are not included in the provided excerpt.

🚩 Franchisor competition rights: The explicit warning that the franchisor may compete within your territory is concerning.

🚩 Reciprocal access dilutes exclusivity: Members can use any location, reducing the value of territorial protection.

🚩 Multiple competing brands: Parent company operates several fitness brands that could compete for the same customers.

🚩 No encroachment compensation mentioned: No discussion of compensation if territory is violated.

🚩 Technology dependency: All locations use the same ProVision technology system, making it easy for the franchisor to open competing locations.

Financial Impact Analysis

Scenario 1: Tier 1 Market (High Density)

Initial Investment: $397,516 - $973,121
Monthly Fixed Costs: $2,398 minimum (Monthly Fee + Marketing + Base Tech)
Required Local Marketing: $1,000/month
Grand Opening: $23,000

If a competing Anytime Fitness opens nearby:
- Member access to both locations reduces your exclusivity
- Marketing spend competes with nearby location
- Shared member base reduces revenue potential

Scenario 2: Multi-Unit Developer (4 Locations)

Development Fee: $90,000 - $130,000 (depending on status)
Per Location Savings: $7,500 - $12,500 vs. single unit
Risk: $40,000 in liquidated damages if you fail to develop all 4
Monthly Fees (all locations): $3,196 minimum × 4 = $12,784/month

Questions You Must Ask

Before signing, you must obtain and review the complete Item 12 and ask:

Essential Questions:

1. What is the exact size of my protected territory?

   • Square miles?
   • Radius from my location?
   • Specific boundaries?

2. What population is required for my territory?

   • Minimum population?
   • Demographic requirements?
   • Income levels?

3. Can the franchisor open company-owned locations in my territory?

   • Under what circumstances?
   • What compensation would I receive?

4. Can the franchisor open other fitness brands in my territory?

   • OrangeTheory?
   • Basecamp Fitness?
   • Other future brands?

5. What happens if another franchisee encroaches on my territory?

   • Dispute resolution process?
   • Compensation?
   • Enforcement mechanisms?

6. How does reciprocal access affect my territory value?

   • Can I restrict access from nearby locations?
   • How is revenue shared or allocated?

7. What are the specific performance requirements to maintain my territory?

   • Minimum member counts?
   • Revenue requirements?
   • Quality standards?

8. Can my territory be reduced or modified?

   • Under what circumstances?
   • What notice would I receive?

9. What happens to my territory if I want to open additional locations?

   • Do I get first right of refusal for adjacent territories?
   • How are multi-unit territories structured?

10. How many Anytime Fitness locations currently exist within 5 miles of my proposed location?

    • How has this affected their performance?
    • What is the saturation point for this market?

Comparison to Industry Standards

Typical Fitness Franchise Territory Provisions

Red Flags Summary

🔴 Critical Concerns:

1. Incomplete Disclosure: The most important territory details are not included in the provided FDD excerpt
2. Franchisor Competition Rights: Explicit warning that franchisor may compete in your territory
3. Reciprocal Access: Reduces the practical value of territorial exclusivity
4. No Encroachment Compensation: No mention of compensation for territory violations
5. Multiple Competing Brands: Parent company operates several fitness brands

🟡 Moderate Concerns:

1. Market Saturation Risk: No information on maximum locations per market
2. Technology Dependency: Centralized systems make it easy to open competing locations
3. Performance Requirements: Not clearly specified in excerpt
4. Territory Modification Rights: Not addressed in excerpt

🟢 Positive Aspects:

1. Some Protection Exists: Better than franchises with no territorial protection
2. Market-Based Approach: Tier system suggests thoughtful market analysis
3. Multi-Unit Opportunities: Allows for market control with reduced fees
4. Development Grace Period: 12 months without Monthly Fees if actively developing

Practical Recommendations

Before Signing:

1. Obtain Complete Item 12: Do not proceed without the full territory provisions from the Franchise Agreement

2. Request Territory Map: Ask for a visual representation of your exact territory boundaries

3. Conduct Market Analysis:

   • Identify all existing Anytime Fitness locations within 10 miles
   • Analyze population density and demographics
   • Assess competition from all fitness brands (including franchisor's other brands)

4. Negotiate Protections:

   • Request explicit prohibition on franchisor-owned locations in your territory
   • Negotiate encroachment compensation provisions
   • Seek first right of refusal for adjacent territories

5. Validate with Current Franchisees:

   • Ask franchisees about territory protection enforcement
   • Inquire about encroachment experiences
   • Understand how reciprocal access affects their business

6. Legal Review: Have an experienced franchise attorney review:

   • Complete Item 12
   • Territory provisions in Franchise Agreement
   • Area Development Agreement (if applicable)
   • Any state-specific addenda

After Signing:

1. Document Your Territory: Maintain clear records of your territory boundaries
2. Monitor Competition: Track new Anytime Fitness and related brand openings
3. Build Strong Member Base: Focus on retention to minimize reciprocal access impact
4. Maintain Performance: Ensure you meet all requirements to protect your territory rights
5. Communicate with Franchisor: Report any potential encroachment issues immediately

Conclusion

The territory provisions for Anytime Fitness franchises present significant concerns due to incomplete information in the provided FDD excerpt. While the franchise does offer some form of protected territory, the explicit warning that the franchisor may compete within your territory, combined with the reciprocal access system and multiple competing brands under the same parent company, substantially reduces the practical value of this protection.

Critical Action Required: Before making any investment decision, you must:

• Obtain and thoroughly review the complete Item 12 from the FDD
• Review all territory provisions in the Franchise Agreement
• Consult with an experienced franchise attorney
• Speak with multiple current franchisees about their territory experiences
• Conduct comprehensive market analysis of your proposed territory

The territory provisions could significantly impact your franchise's success and profitability. Do not proceed without complete information and professional legal advice.

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Note: This analysis is based on the limited information provided in the FDD excerpt. The actual Item 12 content, which was not included in the provided materials, may contain additional important information that could change this analysis. Always review the complete FDD and consult with qualified professionals before making any franchise investment decision.

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Anytime Fitness Franchisor Support & Obligations (Item 11 - Part 1)

Overview

CRITICAL NOTICE: Item 11 content is NOT available in the provided FDD document. The FDD structure overview indicates that Item 11 was not found in the document provided. This represents a significant gap in our ability to provide comprehensive analysis of franchisor support and obligations.

However, based on the information available in other sections of the FDD (particularly Items 5, 6, 7, and 8), we can piece together some insights about support services, though this analysis is necessarily incomplete.

⚠️ Major Red Flag: Missing Item 11 Content

The absence of Item 11 content in the provided FDD is concerning because this item typically contains:

• Detailed pre-opening support obligations
• Ongoing operational support commitments
• Training program specifics
• Marketing and advertising support details
• Technology and systems support
• Field representative visit schedules

Recommendation: Potential franchisees MUST obtain and carefully review the complete Item 11 section before making any investment decision.

Pre-Opening Support (Based on Available Information)

Site Selection and Real Estate

Based on Item 7 and related sections, we can infer some real estate support:

Gap Analysis: The FDD does not specify:

• How site selection assistance is delivered
• Qualifications of real estate team members
• Response time commitments
• Whether site selection is mandatory or optional
• Criteria used for site approval

Design and Construction Support

Compliance Drawing Services

Construction Documents

Key Observations:

• Franchisor provides design specifications but outsources actual architectural work
• Using non-designated vendors adds $2,700 in review fees
• Construction management is currently optional but may become mandatory
• No indication of franchisor site visits during construction

Equipment and Technology Ordering

Technology System (Mandatory Purchase from ProVision - Affiliate)

Concerns:

• Must purchase from franchisor affiliate (captive supplier relationship)
• No competitive bidding allowed
• Price includes 38% markup for taxes/shipping/installation
• Ongoing Base Technology Fee of $799/month also required

Fitness Equipment

Initial Training Programme

⚠️ CRITICAL GAP: Detailed training information is in Item 11, which is not available in the provided FDD.

Based on available information from other sections:

What We Don't Know (Due to Missing Item 11):

• Duration of training program
• Specific curriculum topics
• Instructor qualifications
• Pass/fail criteria
• Hands-on vs. classroom time
• Whether additional staff can attend
• Frequency of training sessions
• Materials provided

Grand Opening Support

Grand Opening and Ramp Up Program Requirements

Key Requirements:

• Must use franchisor's preferred vendors
• May require submission of grand opening plans for prior approval
• Must submit receipts to verify minimum spend
• Must show proof of performance of advertising activity
• If minimum not spent, franchisor may require payment of difference to General Advertising Fund

Concerns:

• Franchisor "may require" various things but doesn't guarantee specific support
• Must use preferred vendors (limits franchisee control)
• Significant upfront marketing investment required
• No indication of franchisor personnel involvement in grand opening

Marketing Materials

Ongoing Support (Based on Available Information)

Field Representative Visits

⚠️ CRITICAL GAP: Field representative visit frequency and structure would typically be detailed in Item 11, which is not available.

Based on available information:

Cancellation Policies:

• No fee if cancelled 30+ days before scheduled training
• 100% fee (no refund) if cancelled less than 30 days before
• $1,500 re-booking fee if required documents not provided 14 days in advance

What We Don't Know:

• Regular field visit frequency (monthly, quarterly, annually?)
• Whether field visits are guaranteed or discretionary
• Qualifications of field representatives
• What field representatives actually do during visits
• Response time for franchisee support requests

Marketing Support and Materials

General Advertising and Marketing Fund

⚠️ Concern: Franchisor can increase fee to 2% of gross revenue with only 60 days notice.

Local Marketing Requirements

Additional Requirements:

• Franchisor may require receipts to verify spend
• If minimum not met, may require payment of difference to General Advertising Fund
• Franchisor may require franchisee to pay minimum amount to franchisor ($350 setup fee + monthly amount) and franchisor will execute local marketing

Concerns:

• Franchisor can take over local marketing and charge setup fee
• Must use approved vendors (limits flexibility)
• Significant ongoing marketing obligation beyond franchise fees

Technology and Systems Provided

Ongoing Technology Support

Key Points:

• Paid to franchisor or affiliate (ProVision)
• Can be increased periodically (no cap specified)
• Security monitoring included but not separately charged
• Does NOT include third-party software support
• Does NOT include malicious software protection
• May NOT include digital media content rights (could be additional charge)
• $150/hour for support on non-ProVision installed equipment

Club Management Software

⚠️ Red Flag: $500/month penalty for not reporting PT revenue through designated system is substantial and could add $6,000/year to costs.

Continuing Education and Training

Conference Attendance

Key Points:

• Fee charged even if you don't attend
• Only one registration included per franchisee (regardless of number of centers)
• Additional attendees would pay separate registration fees

Continuing Engagement Credits (CEC)

Details:

• Prorated in first year
• Fees contributed to General Advertising and Marketing Fund
• Specific CEC activities not detailed in available sections (would be in Item 11 and Operations Manual)

Customer Service Requirements

Operations Manual Access

⚠️ CRITICAL GAP: Operations Manual details would typically be in Item 11, which is not available.

Based on available information:

Concerns:

• Franchisor can change manual unilaterally
• Changes may require additional franchisee investments
• No indication of how changes are communicated
• No franchisee input on changes

Online Support Resources

⚠️ CRITICAL GAP: Online support resources would typically be detailed in Item 11, which is not available.

Mentioned resources based on available information:

• SmartCoaching (part of Base Technology Fee)
• Business management resources and memberships (part of Base Technology Fee)
• Online Operations Manual
• Healthy Contributions online portal (for fitness incentive programs)

Required vs. Discretionary Services Analysis

Required Services (Guaranteed by Franchisor)

Based on available information, the following appear to be required:

Discretionary Services (May or May Not Be Provided)

Based on language like "may require," "may provide," "if we determine," etc.:

Services with Unclear Status

Due to missing Item 11, the following remain unclear:

• Regular field support visit frequency and nature
• Ongoing training programs beyond initial training
• Marketing creative development support
• Technology troubleshooting response times
• Business consulting availability
• Peer networking facilitation
• Best practices sharing

Gap Analysis: Promised vs. Guaranteed

What Appears to Be Guaranteed

✅ Initial Training Program

• Training for Principal Operator and Principal Owner
• Location: Woodbury, Minnesota or designated location
• Cost included in franchise fee (travel extra)

✅ Technology System and Support

• Base technology package from ProVision
• Ongoing technology support via Base Technology Fee
• Security monitoring included

✅ Operations Manual

• Online access provided
• Specifications for operations

✅ One Compliance Drawing

• Free for new franchisees
• Specific design for your location

What Is Promised But Not Guaranteed

⚠️ Site Selection Assistance

• Mentioned but no specifics on:
  • Response times
  • Level of involvement
  • Approval criteria
  • Support if site is rejected

⚠️ Field Representative Support

• No frequency specified
• No qualifications detailed
• No response time commitments
• Visits appear discretionary

⚠️ Marketing Support

• General Advertising Fund exists but:
  • No specific deliverables promised
  • No guaranteed ROI or results
  • Franchisor controls spending
  • Can increase fee to 2% of revenue

⚠️ Grand Opening Support

• Must spend $11,000-$23,000
• Must use preferred vendors
• No indication of franchisor personnel involvement
• No guaranteed results

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Anytime Fitness Franchisee Responsibilities & Requirements (Item 9)

⚠️ Critical Notice: Missing Item 9 Content

IMPORTANT LIMITATION: The FDD provided does not contain the actual content of Item 9 (Franchisee's Obligations). The document structure shows Item 9 is listed in the Table of Contents on page 7, but the actual detailed obligations section is not included in the provided pages.

Based on the FDD structure and cross-references found throughout other Items, we can provide a partial analysis of franchisee responsibilities, but prospective franchisees should request the complete Item 9 section directly from Anytime Fitness before making any franchise decision.

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What We Know: Franchisee Obligations Overview

While the complete Item 9 is not available in the provided FDD, the Franchise Agreement and other sections reference specific obligations. Here's what can be determined from the available information:

Summary of Key Obligation Areas

Based on cross-references throughout the FDD, franchisees have obligations in these areas:

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Operational Requirements (Based on Available Information)

1. Hours of Operation

24-Hour Access Model:

• Anytime Fitness centers are designed to operate with 24-hour member access
• However, the FDD states: "In limited cases, we may allow your center to not be accessible 24 hours a day"
• This suggests flexibility but 24/7 operation is the standard expectation

Staffing Hours:

• The FDD explicitly states: "As of the issuance date of this Disclosure Document, we require you to staff your Anytime Fitness center for a minimum amount of hours per week"
• Specific minimum hours are not disclosed in the provided pages
• Some states and municipalities have laws requiring fitness centers to have staff available during all hours of operation

State-Specific Requirements:

💡

"Some states and municipalities may also have enacted laws requiring fitness centers to have a staff person available during all hours of operation, and in some cases this person may be required to be certified in basic cardiopulmonary resuscitation, or have other specialized training."

2. Service Offerings - Mandatory Programs

Coaching Suite (Mandatory)

Implementation Requirement:

• "The Coaching Suite is a required element of the Anytime Fitness system"
• You must implement it in your Anytime Fitness center
• Must offer small and/or large group training, coaching, and personal training services

Training Obligations:

• For new franchisees: Coaching Suite Training is included in initial training
• For existing franchisees adding Coaching Suite: Must complete separate virtual training
• Training fee: $250 per person (for existing franchisees)

Ongoing Fees:

• Coaching Suite fees vary by number of locations:
  • 1-3 centers: $149 per center per month
  • 4-9 centers: $109 per center per month
  • 10+ centers: $109 for first 9 centers, $0 for additional
• Only applies to centers operating under Franchise Agreements dated March 28, 2019 or earlier
• Fee can increase up to $300 per center per month

3. Staffing Requirements

Minimum Staffing:

• Must staff center for minimum hours per week (specific hours not disclosed)
• May be done by owner or qualified staff you hire
• May be required to use telephone answering service during unstaffed hours

Training and Certification:

• Some states require staff certified in CPR
• Some states require specialized training for staff
• Physical therapy services require licensed professionals (if offered)
• Tanning services may require specific licensing (if offered)

Key Personnel:

• Principal Operator: Person designated to manage day-to-day operations
• Principal Owner: Person owning more than 10% interest who signs and guarantees the franchise agreement

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Owner Participation Requirements

On-Site vs. Absentee Ownership

Item 15 Reference: The FDD states: "See Item 15 for information on your obligation to participate in the actual operation of the franchise business."

What We Know:

• You may designate a "Principal Operator" to manage operations
• If Principal Operator is not a Principal Owner, then a Principal Owner must also attend initial training
• This suggests semi-absentee ownership is possible with qualified management

Training Requirements for Owners:

• Principal Operator must attend mandatory initial training
• If Principal Operator ≠ Principal Owner, then Principal Owner must also attend
• Both must complete training before opening

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Quality Control and Compliance Standards

1. Equipment and Facility Standards

Initial Requirements:

• Must purchase Technology System from ProVision (affiliate): $32,051 - $38,960
• Must purchase fitness equipment meeting specifications: $123,310 - $151,866
• Must have automated external defibrillator (AED): approximately $2,000
• Must meet signage standards: $20,557 - $46,775

Ongoing Equipment Standards:

💡

"You will likely need additional amounts to comply with our equipment and technology standards and requirements that we adopt from time to time, which may require you to replace your cardio and strength equipment."

Expected Replacement Timeline:

• Selective cardio equipment: 5-7 years
• Strength equipment: approximately 10 years
• Factors affecting timing: current standards, member usage, new innovations, brand enhancement, industry trends

2. Facility Maintenance and Renovation

Club Enhancement Program:

• Recommended: $1,000 per month set aside for remodeling
• Franchisor reserves right to require these payments be made to them to hold for you
• Purpose: Remodel center to current standards as condition for renewal

Renovation Obligations:

• Must upgrade center as condition to renew franchise
• Club enhancement fees may cover some or all costs
• No guarantee these amounts will be sufficient
• Actual costs vary based on:
  • Condition of center
  • Construction costs in your market
  • Franchisor's requirements at renewal time

3. Compliance Inspections

Inspection Fees:

• Franchisor reserves right to conduct inspections after opening
• $50 - $100 per inspection
• If you fail initial inspection: center will be re-inspected
• Must reimburse costs of additional inspections until center passes
• No fee if you pass initial inspection

Pre-Transfer/Renewal Technology Inspection:

• $300 fee for ProVision inspection
• Determines compliance with system standards
• Required before renewal or transfer

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Reporting Requirements

1. Financial Reporting

Revenue Reporting:

• Must report all revenue through designated systems
• Personal training (PT) revenue must be reported through:
  • Designated club management software, OR
  • Mandated billing platform
• Failure to report PT revenue: $500 per month penalty

Fee Collection Method:

• Most fees collected automatically by billing vendor from member receipts
• Billing vendor subtracts fees before remitting balance to franchisee
• Includes: Monthly Fee, General Advertising Fee, Base Technology Fee, Coaching Suite Fee

2. Operational Reporting

Technology and Data Requirements:

• Must use mandatory Club Management Software
• Must comply with PCI Data Security Standard (PCI DSS)
• Must comply with data privacy and protection laws
• Must maintain member information security

Documentation Requirements:

• For on-site training: Must provide club performance documents 14 days in advance
• Failure to provide documents: Must re-book training and pay $1,500 re-booking fee

3. Reporting Frequency

Monthly Obligations:

• Revenue reporting (continuous through billing system)
• Fee payments (1st of each month)
• Local marketing spend tracking
• PT revenue reporting

As Required:

• Grand Opening and Ramp Up Program receipts
• Local marketing receipts and proof of performance
• Insurance and bond documentation
• Compliance documentation

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Technology and POS Requirements

1. Mandatory Technology System

Initial Purchase from ProVision (Affiliate):

Additional Equipment:

• May purchase additional equipment to enhance base system
• May be required to purchase additional equipment if club is larger than average

2. Ongoing Technology Fees

Base Technology Fee:

• Currently: $799 per month per center
• Franchisor reserves right to periodically increase
• Covers:
  • Proprietary access control software support
  • Development and release updates
  • SmartCoaching and business management resources
  • Email hosting
  • Fitness scanning/monitoring
  • Sound system services
  • Cellular communications
  • Security monitoring services
  • Technology and software support

Important Limitations:

• Does NOT include support for third-party software
• Does NOT include malicious software protection
• May NOT include digital media content rights for in-club display
• Service on non-ProVision installed equipment: $150 per hour

3. Billing and Payment Processing

Mandatory Vendor:

• Must use franchisor's designated billing and payment processing vendor
• Vendor is not an affiliate but franchisor receives rebates
• Agreement attached as Exhibit P

Functions:

• Collects member fees
• Processes payments
• Subtracts franchisor fees before remitting balance
• Maintains reciprocity system integrity

4. Club Management Software

Mandatory Requirement:

• Must purchase from designated vendor(s)
• Franchisor reserves right to terminate designated vendors
• Used for revenue reporting and operational management

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Marketing and Advertising Obligations

1. Grand Opening and Ramp Up Program

Mandatory Spending (New Franchisees Opening New Centers):

Timeline:

• Begins: 60 days prior to scheduled opening
• Ends: 60 days following opening
• Total window: 120 days

Compliance Requirements:

• Must use franchisor's preferred vendors
• May be required to submit plans for prior approval
• Must submit receipts to verify minimum spend
• Must show proof of performance
• If you fail to spend minimum: Franchisor may require you to pay difference into General Advertising and Marketing Fund

2. Ongoing Marketing Requirements

General Advertising and Marketing Fee

Monthly Contribution:

• Currently: $600 per month per center
• Begins when you open
• Can increase to greater of $600 or 2% of Gross Revenue
• Requires 60 days' written notice for increases

Payment Method:

• Due on or before 1st of each month
• Billing vendor subtracts from member receipts

Local Marketing Spend (After Grand Opening)

Mandatory Monthly Spending:

Current Requirements:

• Not currently paid to franchisor
• May be required to provide receipts to verify spending
• If you fail to spend minimum: May be required to pay difference into General Advertising and Marketing Fund
• Marketing materials purchased after Grand Opening count toward this requirement

Future Possibility:

• Franchisor may require you to pay minimum amount to them
• Plus current one-time setup fee: $350
• Franchisor would conduct local advertising on your behalf

3. Marketing Materials

Initial Purchase:

• Currently: $5,000 for first year of operations
• Required for promotions franchisor mandates

Ongoing:

• Amount varies based on needs
• Counts against Local Marketing Spend requirement after first year

4. Marketing Restrictions

Prohibited Activities:

• May not create digital or electronic media using franchisor's Marks without approval
• Includes: websites, web pages, review/opinion pages, social media, social networking sites, channels, avatars, profiles, online business profiles, accounts, hashtags, usernames, applications

Required Approvals:

• Must obtain prior approval for advertising materials you prepare
• Must comply with brand specifications for format and content

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Continuing Education Requirements

1. Continuing Engagement Credits (CEC)

Annual Requirement:

• Must complete 1,200 continuing engagement credits per year
• Requirement prorated during first year of operation

Penalty for Non-Compliance:

• Up to $1,200 for each year you fail to complete 1,200 CECs
• Fee contributed to General Advertising and Marketing Fund
• Due during first quarter of each calendar year
• Billing vendor subtracts from member receipts

2. Conference Attendance

Mandatory Attendance:

• Principal Owner must attend franchisor's Conference
• Required in years when Conference is scheduled
• Fee applies for one center regardless of how many centers you own

Conference Fees:

• Early registration: $459
• Regular registration: $689
• Must pay even if you don't attend
• Gives registration for one Principal Owner

3. Customer Service Training

Remedial Training:

• Required if you fail to meet customer service standards
• Must take customer service webinar
• Fee: $250
• Additional $250 per month if you don't complete within required timeframe

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Insurance and Bonding Requirements

1. Required Insurance Coverage

General Liability Insurance:

• Complete operations coverage
• Broad form contractual liability coverage
• Property damage coverage
• Minimum limits:
  • $1,000,000 per person
  • $1,000,000 per occurrence
  • $3,000,000 in the aggregate

Additional Requirements:

• Must name franchisor and affiliates as additional insureds
• Carrier must have minimum rating acceptable to franchisor
• Must maintain coverage at all times during franchise term

Estimated Annual Cost: $2,900 - $3,450 (initial estimate)

Additional Insurance (Not included in estimate):

• Worker's compensation insurance
• Employer's liability insurance
• Automobile liability insurance
• Any insurance required by landlord

⚠️ Important Note:

💡

"Before you make a decision to purchase the franchise, you should confirm that insurance is available for a fitness center of the type you intend to operate, given that you will not staff the premises all of the time."

2. Surety Bond

Purpose:

• Secures obligations to pre-paid members for membership fees
• Secures pre-paid personal training revenue

Requirements:

• Must purchase from designated surety bond vendor
• Base rate: **$250

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Anytime Fitness Franchise Training Programme (Item 11 - Part 2)

Overview

IMPORTANT NOTE: The FDD provided does not contain Item 11 content. The document structure indicates that Item 11 ("FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING") exists in the Table of Contents (page 30), but the actual content of Item 11 was not included in the provided FDD text.

Based on the available information scattered throughout other sections of the FDD, I can provide the following limited analysis of training-related provisions:

Available Training Information

Initial Training Requirements

From the limited references in the FDD, the following training requirements can be identified:

Who Must Attend Training

• Principal Operator: The person designated as the "Principal Operator" must attend mandatory initial training
• Principal Owner: If the Principal Operator is not a Principal Owner (someone owning more than 10% interest), then a Principal Owner must also attend and complete training to the franchisor's satisfaction before opening
• Location: Training is conducted in Woodbury, Minnesota, or such other place as designated by the franchisor

Training Costs

Coaching Suite Training

The Coaching Suite is described as a required element of the Anytime Fitness system:

For New Franchisees

Key Points:

• The Coaching Suite is mandatory for all Anytime Fitness centers
• New franchisees receive this training as part of their initial training program at no additional cost
• Existing franchisees who haven't completed the training must attend separately and pay $250 per person

On-Site Training and Additional Assistance

On-Site Relaunch Training

Coverage:

• Training for franchisee and staff in club operations
• Length of training at franchisor's discretion (2-6 days)
• Travel costs, room and board for corporate staff included in fee

When Required:

• New franchisee purchasing an existing club
• When franchisee requests additional assistance
• When franchisor determines additional assistance is needed

Training Cancellation and No-Show Fees

Cancellation Fee Structure:

• 30+ days advance notice: No cancellation fee
• Less than 30 days advance notice: 100% cancellation fee (no refund)

Customer Service Training

Training Timeline (Based on Available Information)

Continuing Education Requirements

Continuing Engagement Credits (CEC)

Key Details:

• Franchisees must complete 1,200 continuing engagement credits annually
• Failure to complete results in fees up to $1,200
• Fees are contributed to the General Advertising and Marketing Fund
• The requirement is prorated during the first year of operation
• Additional details on how to earn credits would be in the Operations Manual (not provided in this FDD)

Conference Attendance

Important Points:

• A Principal Owner (person owning more than 10% interest and guaranteeing the franchise agreement) must attend
• Fee applies to one center regardless of how many centers owned
• Fee charged even if franchisee does not register for the Conference
• Fee provides registration for one Principal Owner

Information Not Available in Provided FDD

The following critical training information is NOT available in the provided FDD excerpt because Item 11 content was not included:

Missing Information:

1. Initial Training Programme Details:

   • Specific duration of initial training
   • Detailed curriculum and topics covered
   • Daily schedule and hours of instruction
   • Mix of classroom vs. hands-on training
   • Instructional materials provided
   • Assessment or testing requirements
   • Pass/fail criteria

2. Training Curriculum:

   • Specific subjects covered (e.g., equipment operation, member services, sales, safety, technology systems)
   • Hours allocated to each subject
   • Instructors' qualifications
   • Training methodology

3. Online vs. In-Person Training:

   • Which components are online vs. in-person
   • Online training platform details
   • Accessibility and ongoing availability of online training

4. Employee Training:

   • Requirements for training employees
   • Materials or programs provided for employee training
   • Costs for employee training
   • Ongoing employee training requirements

5. Certification Requirements:

   • Any certifications required for franchisee or staff
   • CPR/AED certification requirements (mentioned elsewhere but not detailed)
   • Personal trainer certifications
   • Renewal requirements for certifications

6. Refresher Training:

   • Availability of refresher training
   • Costs for refresher training
   • When refresher training is required or recommended

7. Ongoing Training Opportunities:

   • Regular training updates
   • New product or service training
   • Technology updates training
   • Regional training events

Analysis Based on Available Information

Positive Indicators

✅ No Cost for Initial Training: The franchisor does not charge for initial training tuition, which is favorable compared to many franchise systems

✅ Comprehensive On-Site Support: The availability of on-site training for new club purchases and additional assistance demonstrates commitment to franchisee success

✅ Included Travel Costs for On-Site Training: The $3,000 on-site training fee includes travel, room, and board for corporate staff

✅ Virtual Training Options: The availability of virtual Coaching Suite training provides flexibility

✅ Continuing Education Structure: The CEC requirement suggests an ongoing commitment to franchisee development

Red Flags and Concerns

⚠️ CRITICAL: Missing Item 11 Content: The most significant issue is that the actual Item 11 content is not included in the provided FDD. This is a major gap that prevents comprehensive analysis of:

• Training duration and curriculum
• Specific topics covered
• Training quality and comprehensiveness
• Detailed training schedule
• Assessment methods

⚠️ Limited Training Cost Information: While initial training is free, travel expenses of $1,500-$1,875 may be underestimated depending on:

• Distance from Woodbury, Minnesota
• Length of training (not specified)
• Number of people required to attend
• Accommodation costs in the area

⚠️ Vague Training Duration: The FDD does not specify how long initial training lasts, making it difficult to:

• Plan time away from other commitments
• Budget accurately for travel and accommodation
• Assess training comprehensiveness

⚠️ On-Site Training Costs: At $3,000 per visit, additional on-site training can become expensive, particularly if:

• Multiple visits are required
• Franchisor determines additional training is "necessary"
• Training is required (not optional)

⚠️ Discretionary Training Length: On-site training is "2 to 6 days" at the franchisor's discretion, creating uncertainty about:

• Actual time commitment
• Total costs
• Planning requirements

⚠️ Strict Cancellation Policies:

• 100% cancellation fee with less than 30 days' notice
• $1,500 re-booking fee if documents not provided 14 days in advance
• These policies are quite strict and could result in significant costs

⚠️ Mandatory Conference Attendance:

• Required attendance even if not beneficial for specific franchisee
• Fee charged even if not attending ($459-$689)
• Additional travel costs not included in fee

⚠️ Customer Service Webinar Penalty Structure: The escalating penalty ($250 initial, then $250/month) for failing to complete the webinar is punitive

⚠️ Vague CEC Requirements: Without details on how to earn the 1,200 annual credits, it's difficult to assess:

• Time commitment required
• Costs involved
• Difficulty of compliance

Practical Implications for Potential Franchisees

Before Signing the Franchise Agreement

CRITICAL ACTION REQUIRED:

1. Request Complete Item 11: Potential franchisees MUST obtain and review the complete Item 11 content before making any franchise decision. This should include:

   • Complete training schedule with hours and topics
   • Detailed curriculum
   • Training materials samples
   • Assessment criteria
   • All training-related policies

2. Clarify Training Duration: Determine exactly how long initial training will last to properly budget for:

   • Time away from current employment
   • Travel and accommodation costs
   • Dependent care or other personal obligations

3. Understand CEC Requirements: Request detailed information about:

   • How credits are earned
   • Available credit-earning opportunities
   • Time and cost commitments
   • Difficulty of achieving 1,200 credits annually

4. Assess Total Training Costs: Calculate total training investment including:

   • Travel and accommodation (potentially higher than $1,875 estimate)
   • Lost wages during training
   • Coaching Suite training if applicable ($250)
   • Potential on-site training needs ($3,000+)
   • Annual conference attendance ($459-$689 plus travel)
   • CEC compliance (up to $1,200 if not completed)

Questions to Ask Current Franchisees

When speaking with current Anytime Fitness franchisees (listed in Item 20), ask:

1. Initial Training:

   • How long was initial training?
   • What topics were covered?
   • How well did training prepare you for opening?
   • What was missing from training?
   • What were your actual travel and accommodation costs?

2. Ongoing Training:

   • How easy is it to earn 1,200 CEC credits annually?
   • What time commitment is required?
   • Are there additional costs for CEC activities?
   • How valuable is the ongoing training?

3. On-Site Training:

   • Have you needed on-site training?
   • How many days did it last?
   • Was it helpful?
   • Were there hidden costs?

4. Conference:

   • Is the annual conference valuable?
   • What are total costs including travel?
   • Is attendance truly necessary?

5. Coaching Suite:

   • How comprehensive was the Coaching Suite training?
   • Was additional training needed?
   • How long did it take to implement effectively?

Budget Considerations

Based on available information, potential franchisees should budget for the following training-related costs:

Note: These figures do not include:

• Lost wages during training
• Additional on-site training that may be required
• Travel costs for annual conference
• Costs of activities to earn CEC credits
• Employee training costs

Comparison to Industry Standards

Without the complete Item 11 content, a full comparison to industry standards is not possible. However, based on available information:

Favorable Aspects:

• No tuition charge for initial training (many franchises charge $5,000-$15,000)
• On-site support available for new club purchases
• Virtual training options for some components

Areas of Concern:

• Lack of detailed training information in provided FDD
• Strict cancellation policies
• Mandatory conference attendance with fees
• Punitive structure for non-compliance with training requirements

Recommendations

For Potential Franchisees:

1. DO NOT PROCEED without obtaining and thoroughly reviewing the complete Item 11 content

2. Request Additional Documentation:

   • Sample training schedule and curriculum
   • Training materials or syllabus
   • Operations Manual sections on training
   • CEC earning opportunities and requirements

3. Speak with Multiple Franchisees about their training experiences, particularly:

   • Recent franchisees (within last 2 years)
   • Franchisees in similar markets
   • Multi-unit franchisees

4. Budget Conservatively for training costs, assuming:

   • Higher travel and accommodation costs than estimated
   • Potential need for on-site training
   • Full conference attendance costs
   • Some CEC compliance costs

5. Assess Your Learning Style:

   • If you require extensive hands-on training, determine if Anytime Fitness provides this
   • If you prefer online learning, confirm availability and quality
   • Consider whether training duration is sufficient for your needs

6. Evaluate Ongoing Support:

   • Determine if ongoing training opportunities justify CEC requirements
   • Assess value of annual conference
   • Understand availability of support after initial training

Critical Questions for the Franchisor:

1. Why is Item 11 content not included in this FDD?
2. What is the exact duration of initial training?
3. What is the detailed curriculum with hours per topic?
4. What are the pass/fail criteria for training?
5. What percentage of franchisees require additional on-site training?
6. What is the average cost franchisees incur for CEC compliance?
7. Can you provide testimonials from recent franchisees about training quality?
8. What ongoing support is available after initial training?

Conclusion

**INCOMPLETE INFORMATION

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Anytime Fitness Vendor Requirements & Supply Chain (Item 8)

Overview

Critical Finding: Item 8 of the Anytime Fitness FDD was not found in the provided documentation. The FDD structure indicates that Item 8 content is missing, with "found": false and no content summary available.

However, the Table of Contents and other sections reference Item 8 ("RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES") on page 21, and partial content from Item 8 appears at the end of the provided text.

Available Information from Partial Item 8 Content

Based on the limited Item 8 content that appears in the document, here's what we can determine:

Specification Requirements

Scope of Specifications: All branded items, marketing materials, equipment, furnishings, fixtures, signs, uniforms, billing and processing services, software, software support, security monitoring services, insurance, and supplies must meet franchisor specifications covering:

• Minimum standards for delivery
• Performance requirements
• Design specifications
• Appearance standards
• Quality requirements

Percentage of Controlled Purchases:

• Startup Phase: Over 90% of total purchases must meet franchisor specifications
• Ongoing Operations: Approximately 70% of total expenses must meet specifications

Mandatory Vendor Requirements

The FDD identifies three categories of vendors:

Specific Mandatory Vendors Identified

1. Billing and Payment Processing Services

Vendor: Mandatory vendor (not an affiliate)

• Requirement: Must use for all billing and payment processing
• Franchisor Interest: Receives rebates from vendor
• Documentation: Agreement attached as Exhibit P
• Rationale: Maintains integrity of reciprocity system for member benefits

2. Technology System - ProVision

Vendor: ProVision (franchisor affiliate)

• Requirement: Must purchase complete Technology System
• Components Include:
  • Computer hardware
  • iPads
  • Software and networking equipment
  • Door readers
  • Key fobs (hardware or digital)
  • Security and surveillance system
  • Fitness scanning/monitoring equipment
  • Sound system
  • CCTV systems

Cost: $32,051 to $38,960 (includes 38% for taxes, shipping, installation)

Ongoing Fees: Base Technology Fee of $799/month for:

• Proprietary access control software support
• Software updates and releases
• SmartCoaching access
• Business management resources
• Email hosting
• Fitness scanning/monitoring services
• Sound system services
• Cellular communications
• Security monitoring
• Technology support

Additional Charges:

• Hourly support for non-ProVision installed equipment: $150/hour
• Does not include third-party software support
• May not include digital media content rights (could become required)

3. Healthy Contributions (Affiliate)

Vendor: Healthy Contributions SPV LLC (franchisor affiliate)

• Services: Transfer, processing, and distribution of funds/data for fitness incentive programs
• Required Programs:
  • Group memberships
  • Reimbursement programs
  • Voucher programs

Optional Programs:

• Physical assessments
• Pay-per-visit programs

Fee Structure:

Payment Terms: Generally 40-45 days after month-end via ACH

Program Offerings:

• Anytime Fitness Group Memberships (exclusive arrangements)
• Reimbursement Programs (employer/insurer funded)
• Voucher/Promotional Programs
• Physical Assessments (optional)
• Pay-Per-Visit Programs (optional)

Other Required Vendors

Grand Opening and Ramp Up Program

• Requirement: Must use franchisor's preferred vendors
• Franchisor Role: May include franchisor or affiliates
• Approval: Plans require prior approval
• Verification: Must submit receipts and proof of performance

Club Management Software

• Status: Mandatory
• Source: Must purchase from designated vendor(s)
• Flexibility: Franchisor reserves right to change vendors

Retail Products

• Source: SEB Distribution (affiliate) and other approved vendors
• Restriction: Cannot create or sell Anytime Fitness branded products without approval
• Requirement: May be required to purchase apparel and products for use and retail sale

Vendor Approval Process

For Franchisees Seeking New Suppliers

Process:

1. Submit written notification to franchisor
2. Provide samples and information for testing
3. No fee charged to franchisee
4. Franchisor reviews against specifications

Timeline: Generally 45-60 days for approval decision

For Suppliers Seeking Approval

Application Fee: $300 (nonrefundable)

• Paid by supplier, not franchisee
• Intended to offset franchisor's review costs

Additional Requirements:

• May require supplier agreement with franchisor

Evaluation Criteria:

• Consistency with concept and brand
• Brand enhancement potential
• Member experience improvement
• Revenue increase potential for franchisees
• Operational efficiency improvements
• Competitive pricing benefits
• Commercial quality and durability
• Alignment with franchisor values
• Market demand from franchisees
• Business trend alignment
• National service capability

Revocation: Franchisor may revoke approval with written notice

Marketing and Advertising Restrictions

Brand Control

• Specifications: Must comply with format and content requirements for local advertising
• Prior Approval: Required for all advertising materials franchisee prepares
• Digital Presence: Franchisees cannot create:
  • Websites or web pages
  • Review or opinion pages
  • Social media accounts
  • Social networking profiles
  • Online business profiles
  • Hashtags or usernames
  • Applications (web-based or otherwise)
  • Any digital medium using franchisor's Marks

Future Requirements

• Franchisor may require use of designated vendors for local marketing services
• May include digital and traditional paid media management
• Vendors may include franchisor or affiliates

Insurance Requirements

Mandatory Coverage:

• General liability insurance
• Complete operations coverage
• Broad form contractual liability coverage
• Property damage coverage

Minimum Limits:

• $1,000,000 per person
• $1,000,000 per occurrence
• $3,000,000 aggregate

Additional Requirements:

• Must name franchisor and affiliates as additional insureds
• Carrier must meet minimum rating acceptable to franchisor

Construction and Design Vendors

Architectural Services

Designated Vendor: Required for Construction Documents

• Fee if Using Other Vendor: $2,700 review fee
• Included Services:
  • Complete construction documents
  • Permit acquisition
  • Local code compliance

Construction Management (Optional - May Become Mandatory)

• Cost: $13,500
• Status: Currently optional
• Future: May transition to mandatory program

Equipment Purchases

Fitness Equipment

Cost Range: $123,310 to $151,866

• Flexibility: Some choice in equipment selection
• Requirements: Must meet franchisor specifications
• Factors Affecting Cost:
  • Center size
  • Equipment type selected
  • Whether purchasing from recommended sources

Replacement Schedule (Based on Current Standards):

• Selective cardio equipment: 5-7 years
• Strength equipment: Approximately 10 years
• Timing depends on:
  • Current standards
  • Member usage
  • Technology innovations
  • Brand enhancement needs
  • Industry trends

Signage

Cost Range: $20,557 to $46,775

• Specifications: Must meet franchisor requirements
• Variables:
  • Location size
  • Local zoning requirements
• Package: Reflects recommended package

Franchisor Financial Interests in Supply Chain

Direct Affiliate Relationships

Total Estimated Affiliate Revenue Per Location

First Year:

• Technology equipment: $32,051 - $38,960
• Base Technology Fee: $9,588
• Coaching Suite Fee (if applicable): $1,788 - $3,588
• Estimated Total: $43,427 - $52,136

Ongoing Annual (Years 2+):

• Base Technology Fee: $9,588
• Coaching Suite Fee (if applicable): $1,788 - $3,588
• Retail products: Variable
• Healthy Contributions fees: Variable
• Estimated Minimum: $11,376 - $13,176

Rebates and Commissions

Disclosed Rebate Relationships:

1. Billing/Payment Processor: Franchisor receives rebates (amount not disclosed)

Undisclosed Relationships:

• The FDD states vendors "may pay vendor rebates" to franchisor
• Specific amounts and percentages not disclosed
• No comprehensive list of rebate relationships provided

Pricing Transparency and Controls

Transparency Issues

Limited Disclosure:

• ❌ Rebate percentages from billing processor not disclosed
• ❌ Other potential rebate relationships not itemized
• ❌ Markup percentages on affiliate products not disclosed
• ❌ Comparative pricing to open market not provided
• ✅ Fixed monthly fees clearly stated
• ✅ Initial equipment costs disclosed

Price Control Mechanisms

Franchisor Controls:

1. Mandatory Vendors: No competitive bidding possible
2. Designated Vendors: Limited to approved list
3. Specification Requirements: May limit vendor options
4. Approval Process: 45-60 days creates barrier to new vendors
5. Affiliate Preference: Built-in advantage for franchisor-owned vendors

Franchisee Protections:

• Can request approval of alternative vendors
• No fee charged to franchisee for approval process
• Franchisor must respond within reasonable timeframe

Flexibility in Purchasing Decisions

Can You Choose Your Own Suppliers?

The Short Answer: Very limited flexibility

Detailed Breakdown by Category

Requesting Alternative Suppliers

Process Requirements:

1. Written notification to franchisor
2. Submit samples and information
3. Wait 45-60 days for decision
4. Supplier pays $300 application fee
5. Supplier may need to sign agreement with franchisor

Practical Barriers:

• Time delay (45-60 days)
• Supplier may be unwilling to pay fee or sign agreement
• Subjective evaluation criteria
• Franchisor has complete discretion
• No appeal process disclosed

Impact on Profit Margins

Cost of Goods Sold (COGS) Impact

Estimated COGS Comparison

Note: Without access to competitive pricing data, we cannot provide definitive comparisons. However, we can estimate the structural impact:

Margin Pressure Points

High-Impact Areas:

1. Technology Costs (Highest Impact)

   • Mandatory affiliate purchase
   • No competitive bidding
   • Ongoing monthly fees
   • Equipment replacement requirements
   • Estimated impact: $17,786-$20,968 annually

2. Billing Processing (Medium-High Impact)

   • Mandatory vendor
   • Franchisor receives undisclosed rebates
   • No ability to negotiate rates
   • Estimated impact: Unknown but significant

3. Marketing Restrictions (Medium Impact)

   • Must use preferred vendors for grand opening
   • May be required to use designated vendors for ongoing marketing
   • Limited ability to leverage local relationships
   • Estimated impact: Variable

4. Equipment Replacement (Long-term Impact)

   • Must replace per franchisor standards
   • 5-7 year cardio replacement cycle
   • 10 year strength equipment cycle
   • Limited vendor flexibility
   • Estimated impact: $20,000-$30,000 every 5-10 years

Cumulative Financial Impact

Conservative Estimate (per location, annual):

• Affiliate technology fees: $17,786-$20,968
• Billing processing premium (estimated): $1,200-$2,400
• Marketing vendor premium (estimated): $600-$1,200
• Total Estimated Annual Premium: $19,586-$24,568

As Percentage of Revenue:

• Assuming $500,000 annual revenue: 3.9%-4.9%
• Assuming $750,000 annual revenue: 2.6%-3.3%
• Assuming $1,000,000 annual revenue: 2.0%-2.5%

Quality Specifications

Disclosed Standards

The FDD indicates specifications cover:

• Delivery standards
• Performance requirements
• Design specifications
• Appearance standards
• Quality requirements

Documentation: Specifications provided in Operations Manual or separately

Scope: Applies to all branded items, marketing, equipment, furnishings, fixtures, signs, uniforms, billing services, software, security services, insurance, and supplies

Specification Enforcement

Compliance Mechanisms:

• Pre-opening inspection
• Ongoing inspections (fee: $50-$100 if failed)
• Re-inspection fees until compliance achieved
• Default fees up to $1,000 per violation (Peer Compliance Committee)
• Standard default fees up to $500 per violation

Red Flags and Concerns

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Anytime Fitness Franchise Brand Strength & Market Position

Overview

Important Disclosure Limitation: The FDD provided does not contain specific information about brand recognition metrics, market positioning data, competitive analysis, awards, media coverage, or customer satisfaction indicators. The following analysis is based on available information from the FDD structure and operational details, with clear notation where specific data is not available in the provided documents.

Brand Recognition and Market Presence

System Size and Geographic Footprint

Based on the FDD structure, Anytime Fitness operates as part of a larger portfolio of fitness brands under Purpose Brands Holdings, LLC. However, specific data on the total number of locations, geographic distribution, and market penetration is not provided in the sections of the FDD made available.

What We Know:

• The franchise has been operating since 2002 (under predecessor Anytime Fitness, LLC)
• Current franchisor entity (Anytime Fitness Franchisor LLC) was formed in October 2021
• International presence confirmed through affiliate Anytime Fitness Iberia, SLU operating in Spain (37 franchised centers and 4 company-owned centers as of December 31, 2023)
• Part of a multi-brand portfolio including Waxing the City, Basecamp Fitness, The Bar Method, and OrangeTheory (acquired April 2024)

Data Not Available in Provided FDD:

• Total number of U.S. locations
• Year-over-year growth rates
• Market share data
• Brand awareness metrics
• Member satisfaction scores
• Net Promoter Score (NPS) or similar metrics

Unique Value Proposition

The FDD reveals several distinctive brand elements:

24/7 Access Model

• Proprietary access and security system allowing members to access any Anytime Fitness center 24 hours a day
• Reciprocal benefits between centers (members can use any location)
• Developed through affiliate ProVision Security Solutions

Hybrid Staffing Approach

• Minimum staffed hours required (specific hours not disclosed in provided sections)
• Telephone answering service during unstaffed hours
• Balance between cost efficiency and member support

Comprehensive Service Offering

• One-on-one personal training
• Small and large group training
• Coaching services
• Recovery services
• Mandatory Coaching Suite implementation (proprietary training platform)

Market Positioning Analysis

Pricing Tier Assessment

Based on Investment Requirements:

Market Position Interpretation:

• Mid-Market Positioning: The investment range and fee structure suggest Anytime Fitness positions itself between budget gyms (Planet Fitness model) and premium boutique studios
• Convenience-Focused: The 24/7 access model targets time-constrained consumers willing to pay moderate premiums for flexibility
• Hybrid Model: Combines self-service access with coached training, appealing to diverse member preferences

Fee Structure Comparison

⚠️ Red Flag - Fixed Fee Structure Risk: The flat-fee royalty structure ($799/month) benefits high-volume locations but creates significant pressure on lower-performing locations. A location generating $30,000/month pays 2.7% effective royalty, while a location generating $15,000/month pays 5.3% effective royalty.

Competitive Advantages

Documented Strengths

1. Reciprocal Access Network

• Proprietary technology enabling members to access any location
• Creates network effect value proposition
• Differentiates from independent gyms and some competitors

2. Integrated Technology Platform

• Comprehensive Technology System through ProVision affiliate
• Includes security, access control, member management, and monitoring
• Mandatory integration ensures system-wide consistency

3. Multi-Brand Portfolio Synergies

• Part of Purpose Brands Holdings with complementary fitness concepts
• Potential for cross-brand marketing and operational efficiencies
• Existing franchisee discounts for multi-brand ownership

4. Flexible Development Options

• Area Development Agreements for multi-unit operators
• Tiered pricing for veterans and existing franchisees
• Club Purple and Club Platinum programs rewarding high performers

5. Coaching Suite Platform

• Proprietary training and coaching system
• Mandatory implementation ensures service consistency
• Generates additional revenue streams beyond membership fees

Documented Weaknesses and Concerns

1. Complex Fee Structure

• Multiple mandatory fees beyond basic royalty
• Technology fees ($799/month) add significant fixed costs
• Coaching Suite fees for older agreements
• Potential for fee increases with limited franchisee control

2. High Vendor Concentration

• Mandatory purchases from affiliate ProVision for technology
• Mandatory billing processor (non-affiliate, but exclusive)
• Mandatory use of Healthy Contributions for certain programs
• Limited franchisee negotiating power

3. Financial Condition Concerns The FDD includes this specific risk warning:

💡

"Financial Condition. The Franchisor's guarantor's financial condition as reflected in its financial statements (see Item 21) calls into question the Franchisor's financial ability to provide services and support to you."

⚠️ Critical Red Flag: This disclosure suggests potential financial instability at the parent/guarantor level that could impact franchisor support capabilities.

4. Litigation History

• Spanish subsidiary litigation involving franchisee disputes
• Historical franchise law violations by affiliate The Bar Method
• Indicates potential for franchisee-franchisor conflicts

5. Bankruptcy in Leadership History

• CEO Thomas Leverton's previous company (CEC Entertainment/Chuck E. Cheese) filed Chapter 11 in 2020
• CFO R. John Pindred's previous company (Family Christian, LLC) filed Chapter 11 in 2015
• While both occurred after executives departed, indicates experience with distressed operations

Marketing and Advertising Effectiveness

Marketing Support Structure

National Marketing Fund:

• $600/month per location contribution to General Advertising and Marketing Fund
• Franchisor reserves right to increase to greater of $600 or 2% of Gross Revenue
• No specific data provided on how funds are allocated or campaign effectiveness

Local Marketing Requirements:

Marketing Support Provided:

• Approved vendor list for Grand Opening and Ramp Up Program
• Brand specifications for local advertising format and content
• Prior approval required for franchisee-created materials
• Potential mandatory use of designated vendors for local marketing services (franchisor reserves this right)

Marketing Restrictions:

• Franchisees cannot create websites, social media accounts, or digital presence using Anytime Fitness marks without approval
• All advertising must meet brand specifications
• Limited franchisee autonomy in marketing execution

⚠️ Concern - Marketing Control vs. Investment: Franchisees must spend $11,000-$23,000 on grand opening plus $600-$1,000/month ongoing, but have limited control over creative execution and channel selection. Effectiveness data not provided in FDD.

Social Media and Digital Presence

Information Not Available in Provided FDD Sections:

• Corporate social media follower counts
• Engagement metrics
• Digital marketing performance data
• Online review ratings or reputation scores
• Website traffic statistics

Known Digital Requirements:

• Franchisees prohibited from creating independent digital presence
• Must use approved materials and channels
• Technology System includes digital components for member engagement

Customer Satisfaction Indicators

No customer satisfaction data is provided in the sections of the FDD made available. Typical metrics that would be relevant but are not disclosed include:

• Member retention rates
• Net Promoter Score (NPS)
• Online review ratings
• Member survey results
• Complaint resolution data
• Cancellation rates

Industry Awards and Recognition

No awards, recognition, or industry rankings are disclosed in the provided FDD sections.

Media Coverage and Reputation

No information about media coverage, press mentions, or reputation metrics is provided in the available FDD sections.

SWOT Analysis

Competitive Comparison

Major Competitors (Estimated Positioning)

Note: Specific competitive data is not provided in the FDD. The following represents general industry knowledge:

Competitive Positioning Analysis

Anytime Fitness Competitive Position:

Advantages vs. Budget Competitors (Planet Fitness, Crunch):

• 24/7 access provides greater convenience
• Smaller footprint = lower real estate costs
• Coaching and training services = higher revenue per member
• Reciprocal access across all locations

Advantages vs. Big-Box Competitors (LA Fitness, 24 Hour Fitness):

• Lower initial investment and overhead
• More flexible location options (smaller footprint)
• Technology-enabled unstaffed hours reduce labor costs
• Faster to build and open

Advantages vs. Boutique Competitors (Orangetheory, F45, Barry's):

• Lower membership price point (broader market)
• 24/7 access vs. class-schedule limitations
• Self-service option for cost-conscious members
• Reciprocal access network

Disadvantages vs. All Competitors:

• Higher fixed fee burden than percentage-based royalties
• Limited disclosed performance data
• Financial condition concerns
• Less brand recognition than category leaders (data not provided, but likely)

Brand Value Assessment for Franchisees

Quantifiable Brand Value Elements

1. Access to Established Systems

• 20+ years of operational refinement
• Proven site selection criteria
• Standardized build-out specifications
• Comprehensive training programs

2. Technology Infrastructure

• Proprietary access control system
• Integrated member management software
• Security and monitoring systems
• Coaching Suite platform

3. Purchasing Power

• Negotiated vendor relationships
• Equipment pricing through approved suppliers
• Technology package pricing through ProVision

4. Marketing Support

• National advertising fund contributions
• Approved marketing materials and templates
• Brand guidelines and specifications
• Grand opening program structure

Non-Quantifiable Brand Value Elements

Positive Factors:

• Association with established fitness brand
• Member recognition and trust (extent unknown)
• Reciprocal access network appeal to members
• Multi-brand portfolio credibility

Negative Factors:

• Financial condition concerns may impact brand perception
• Litigation history may indicate franchisee satisfaction issues
• Limited disclosed performance data reduces confidence
• High fixed costs may pressure franchisee profitability

Brand Value ROI Considerations

Investment Required for Brand Access:

Critical Question for Prospective Franchisees: Does the Anytime Fitness brand, systems, and support justify $174,380 in fees over 5 years compared to:

• Operating an independent gym?
• Joining a competitor franchise system?
• Investing in a different business category?

⚠️ Major Concern - Lack of Performance Data: The FDD sections provided do not include Item 19 (Financial Performance Representations) data, making it impossible to assess whether the brand value justifies the investment. Prospective franchisees should:

1. Request and carefully review Item 19 data
2. Validate claims with existing franchisees (Item 20)
3. Compare performance to competitor systems
4. Analyze break-even scenarios given fixed fee structure

Key Considerations for Prospective Franchisees

Critical Due Diligence Items

1. Financial Stability Verification

• Review Item 21 financial statements carefully
• Understand implications of financial condition warning
• Assess risk of franchisor's ability to provide ongoing support
• Consider impact of parent company's financial structure

2. Franchisee Validation

• Contact multiple franchisees (Item 20 list)
• Ask about actual brand value received
• Inquire about fee increases over time
• Understand profitability relative to fixed fee burden
• Assess satisfaction with affiliate vendor relationships

3. Performance Analysis

• Obtain and analyze Item 19 financial performance data
• Model scenarios at different revenue levels
• Calculate break-even member counts
• Assess impact of fixed fees on profitability
• Compare to competitor

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Anytime Fitness Franchise Growth Trends & System Health

Overview

Critical Notice: The FDD provided does not contain Item 20 data, which is the primary source for historical franchise unit counts, openings, closures, and transfers. Without this information, we cannot provide a complete analysis of growth trends and system health. The following analysis is based on limited information available in the FDD.

Available Growth Information

What We Know From This FDD

Based on the limited information in this FDD document (dated April 3, 2024, as amended November 11, 2024):

Corporate Structure Changes:

• November 2021: Major restructuring through a "Securitization Transaction"
  • Anytime Fitness Franchisor LLC was formed (October 25, 2021)
  • All existing U.S. franchise agreements transferred from predecessor Anytime Fitness, LLC
  • Current franchisor began offering franchises in November 2021
  • Predecessor (Anytime Fitness, LLC) offered franchises from October 2002 to November 2021

Ownership Changes:

• April 2, 2024: Became indirect wholly-owned subsidiary of Purpose Brands Holdings, LLC
• Purpose Brands Holdings is jointly owned by Anytime Worldwide, LLC and Ultimate Fitness Holdings, LLC
• This represents a significant ownership transition during the current FDD period

International Presence

The FDD provides limited international data:

Spain Operations (Anytime Fitness Iberia, SLU):

• As of December 31, 2023:
  • 37 franchised centers
  • 4 company-owned centers
  • Operating since October 2012
  • Offering franchises since 2013

Note: The FDD mentions international operations but does not provide comprehensive global unit counts or growth trends.

⚠️ Critical Data Gaps

Missing Information Required for Complete Analysis

The following critical information is NOT available in the provided FDD excerpts:

1. Historical Unit Counts (typically found in Item 20)

   • Total franchised units by year (5-10 year history)
   • Total company-owned units by year
   • Year-over-year growth rates
   • Net unit growth (openings minus closures)

2. System Performance Metrics

   • Number of franchises opened in last 3-5 years
   • Number of franchises closed/terminated
   • Transfer rates
   • Renewal rates
   • Franchise failure rates

3. Geographic Distribution

   • State-by-state unit counts
   • Market saturation data
   • Regional growth patterns
   • Domestic vs. international breakdown

4. Development Pipeline

   • Number of Area Development Agreements signed
   • Number of franchises under development
   • Projected openings

5. System-Wide Revenue

   • Total system revenue trends
   • Average revenue per unit
   • Revenue growth rates

What We Can Infer

Positive Indicators

1. Established Brand History

• Predecessor operated since 2002 (22+ years in franchising)
• Current franchisor represents continuation of established system
• Long operational track record suggests market acceptance

2. Multi-Brand Portfolio

• Part of Self Esteem Brands/Purpose Brands family including:
  • Waxing the City (150 franchised studios as of Dec 31, 2023)
  • Basecamp Fitness (16 franchised studios as of Dec 31, 2023)
  • The Bar Method (73 franchised studios as of Dec 31, 2023)
  • OrangeTheory (1,289 franchised + 22 affiliate-owned studios as of Dec 31, 2023)
• Portfolio diversification may provide operational expertise and resources

3. Sophisticated Infrastructure

• Proprietary technology systems (ProVision)
• Established billing and payment processing
• Comprehensive support systems
• International licensing arrangements

4. Multiple Pricing Tiers

• Veteran discounts (10% off standard fees)
• Multi-unit developer incentives
• Existing franchisee discounts
• Suggests active recruitment and expansion focus

Concerns and Red Flags

1. Recent Corporate Restructuring

• Securitization transaction in November 2021
• Ownership change in April 2024
• Multiple corporate structure changes may indicate:
  • Financial restructuring
  • Debt obligations
  • Strategic repositioning
  • Potential operational disruptions

2. Financial Condition Warning The FDD includes this specific risk disclosure:

💡

"Financial Condition. The Franchisor's guarantor's financial condition as reflected in its financial statements (see Item 21) calls into question the Franchisor's financial ability to provide services and support to you."

This is a significant red flag that prospective franchisees must investigate thoroughly.

3. Unopened Franchises Warning The FDD also includes:

💡

"Unopened Franchises. The Franchisor has signed a significant number of Franchise Agreements with franchisees who have not yet opened their outlets. If other franchisees are experiencing delays in opening their outlets, you may also experience delays in opening your own outlet."

This suggests:

• Potential development pipeline issues
• Possible franchisee challenges in opening
• May indicate market saturation or operational hurdles

4. Litigation in Spain

• Active lawsuit against affiliate Anytime Fitness Iberia (filed November 2021)
• Former franchisee alleging breach of duties and untruthful disclosures
• Seeking €1.1 million in damages
• While dismissed by trial court, case is under appeal as of February 2024

5. CEO Bankruptcy History

• Current CEO Thomas Leverton was CEO of CEC Entertainment (Chuck E. Cheese)
• CEC Entertainment filed Chapter 11 bankruptcy in June 2020
• While this occurred after Leverton left (February 2020), it's part of his recent business history

Pricing Structure Analysis

Initial Franchise Fees

The franchise fee structure provides insights into expansion strategy:

Analysis:

• Aggressive multi-unit discounts: Up to 47% discount for top-performing franchisees (Club Platinum)
• Volume incentives: 5th+ locations at $22,500-$27,500 (47-35% off standard fee)
• Existing franchisee benefits: Suggests focus on expanding with proven operators
• Veteran program: 10% discount indicates targeted recruitment strategy

Implications:

• System may be prioritizing multi-unit operators over single-unit franchisees
• Significant discounts for high performers may indicate competitive market pressures
• Lower fees for additional units suggest push for market density

Ongoing Fee Structure

Monthly Recurring Fees (Per Location)

Additional Required Spending:

• Local Marketing: $600-$1,000/month (depending on market tier)
• Club Enhancement: $1,000/month (recommended, may become required)

Total Monthly Obligations: $3,798-$4,347 per location

Fee Structure Concerns

1. Conversion Risk: Franchisor reserves right to convert fixed $799 monthly fee to percentage-based royalty

   • Could significantly increase costs for high-performing locations
   • No cap specified on potential percentage rate
   • Only requires 30 days' notice

2. Fee Escalation: Multiple fees subject to increase:

   • Monthly Fee: CPI adjustments
   • General Advertising: Can increase to 2% of gross revenue
   • Base Technology Fee: Can be "periodically increased"
   • Coaching Suite: Can increase up to $300/month

3. High Fixed Costs: $2,198-$2,347/month in fixed fees before revenue generation

   • Creates significant break-even pressure
   • Less favorable than percentage-based royalties for struggling locations

Market Positioning Analysis

Competitive Landscape

Based on FDD Statements:

💡

"The market for fitness centers is a developed market in most areas. Your customers will be the general public. Your competitors include other national fitness chains, personal training studios and local fitness centers."

Interpretation:

• Mature market: "Developed market" suggests limited greenfield opportunities
• Intense competition: National chains, boutique studios, local gyms all competing
• Market saturation risk: Particularly in urban/suburban areas

Market Tier System

The franchise uses a three-tier market classification:

Analysis:

• Higher-density markets require 109% more grand opening investment than smaller markets
• Ongoing marketing costs 67% higher in Tier 1 vs. Tier 3
• May indicate greater competition and customer acquisition costs in larger markets

Development Requirements

Area Development Agreements

Minimum Commitment: 2 locations

Development Fee Structure:

• Paid upfront for all committed locations
• Fees range from $45,000 (2 locations, Club Platinum) to $130,000 (4 locations, new franchisee)
• Non-refundable

Liquidated Damages:

• $10,000 per location if development deadlines not met
• Significant penalty suggests franchisor has experienced development failures

Opening Timeline:

• 12 months from Franchise Agreement signing to open
• Monthly Fee waived if actively working with real estate team
• Suggests potential site selection challenges

Technology and System Requirements

Mandatory Technology Investment

Initial Technology Package: $32,051-$38,960

• Must purchase from affiliate ProVision
• Includes: hardware, software, security systems, door readers, key fobs, surveillance, sound system
• 38% of cost is taxes, shipping, installation

Ongoing Technology Fees: $799/month

• Security monitoring
• Software updates and support
• Access control system
• Email hosting
• Fitness scanning/monitoring

Total Technology Investment (First Year): $41,639-$48,548

Technology Dependency Risk

Concerns:

1. Single-source requirement: Must purchase from affiliate ProVision
2. No competitive bidding: Cannot shop for better pricing
3. Ongoing dependency: $799/month creates perpetual revenue stream for affiliate
4. Upgrade requirements: May require additional purchases for system updates

System Health Indicators

Positive Health Signals

1. Long Operating History

• 22+ years in franchising (since 2002)
• Suggests proven business model and market acceptance

2. Multi-Unit Operator Focus

• Aggressive discounts for additional locations
• Club Purple/Platinum programs reward high performers
• May indicate strong franchisee satisfaction among successful operators

3. Comprehensive Support Infrastructure

• Proprietary technology systems
• Billing and payment processing
• Marketing support
• Training programs

4. International Expansion

• Operations in Spain (41 total locations)
• Licensing arrangements suggest brand has international appeal

Warning Signs

1. Financial Condition Disclosure

• FDD explicitly warns about franchisor's financial ability
• This is highly unusual and a major red flag
• Suggests potential issues with:
  • Support services delivery
  • Long-term viability
  • Vendor relationships
  • System investments

2. Unopened Franchise Backlog

• "Significant number" of signed agreements not yet opened
• Indicates potential problems:
  • Site selection difficulties
  • Financing challenges for franchisees
  • Market saturation
  • Operational complexity

3. Recent Corporate Instability

• Securitization in 2021 (often indicates debt restructuring)
• Ownership change in 2024
• Multiple corporate structure changes
• May signal financial stress or strategic uncertainty

4. Fee Structure Flexibility

• Franchisor reserves right to convert to percentage-based royalties
• Multiple fees subject to increase
• Suggests potential for significant cost increases

5. High Default Fees

• Peer Compliance Committee fines up to $1,000
• Standard default fees up to $500/month
• Suggests system may have compliance issues

Comparison to Industry Standards

Franchise Fee Comparison

Anytime Fitness: $42,500 (standard)

Typical Fitness Franchise Range: $20,000-$50,000

Analysis: Mid-to-high range for fitness franchises

Royalty Structure Comparison

Anytime Fitness: $799/month fixed (may convert to percentage)

Industry Standard: 5-8% of gross revenue

Analysis:

• Fixed fee benefits high-revenue locations
• Disadvantages lower-revenue locations
• Conversion risk creates uncertainty

Total Initial Investment Comparison

Anytime Fitness: $397,516-$973,121

Typical 24-Hour Fitness Franchise: $300,000-$800,000

Analysis: Higher end of typical range, particularly at maximum investment

Geographic Expansion Analysis

Information Not Available

The FDD does not provide:

• State-by-state unit counts
• Regional growth patterns
• Market saturation data by geography
• Domestic vs. international unit breakdown (except Spain)

What This Means for Prospects

Without geographic data, potential franchisees cannot assess:

1. Market saturation in their target area
2. Regional performance trends
3. Competitive density
4. Growth opportunities by region

Recommendation: Request Item 20 data directly from franchisor showing:

• Unit counts by state
• Openings and closures by region
• Transfer rates by geography
• Performance metrics by market

Future Outlook Assessment

Factors Supporting Growth

1. 24/7 Access Model

• Differentiator in fitness market
• Appeals to convenience-focused consumers
• Lower staffing costs than traditional gyms

2. Established Brand Recognition

• 22+ years in operation
• International presence
• Part of larger fitness brand portfolio

3. Technology Integration

• Proprietary access control system
• Digital member management
• Coaching Suite platform

4. Recurring Revenue Model

• Membership-based income
• Predictable cash flow
• Multiple revenue streams (memberships, training, retail)

Factors Limiting Growth

1. Market Saturation

• "Developed market" acknowledgment
• Intense competition
• Unopened franchise backlog suggests limited opportunities

2. Financial Concerns

• Explicit warning about franchisor's financial condition
• Recent restructuring and ownership changes
• May limit system investments and support

3. High Operating Costs

• $3,798-$4,347/month minimum obligations
• Significant break-even requirements
• May challenge franchisee profitability

4. Regulatory Environment

• State-specific membership contract regulations
• Staffing requirements in some jurisdictions
• AED and safety equipment mandates
• May increase costs and complexity

5. Economic Sensitivity

• Fitness memberships often discretionary spending
• Economic downturns may impact membership retention
• Competition from low-cost

---

Anytime Fitness Franchise Trademark & Intellectual Property (Item 13)

⚠️ Critical Notice: Missing Item 13 Data

This is a significant limitation in our analysis. Item 13 of the Franchise Disclosure Document, which contains detailed information about trademarks and intellectual property, was not found in the provided FDD documentation. This represents a critical gap in the disclosure materials available for review.

What Should Be in Item 13

Item 13 typically contains essential information about:

• Principal trademarks used in the franchise system
• Registration status with the United States Patent and Trademark Office (USPTO)
• Registration numbers and dates
• International trademark registrations
• Pending applications
• Limitations on trademark use
• Agreements affecting trademark rights
• Infringement or opposition proceedings
• Franchisor's obligations to protect trademarks

Available Information from Other Sections

While Item 13 is missing, we can extract some limited trademark and intellectual property information from other sections of the FDD:

Primary Trademark

Based on Item 1, the franchise operates under the trademark:

"Anytime Fitness®"

The registered trademark symbol (®) indicates this mark is registered with the USPTO, though specific registration details are not provided in the available documentation.

Corporate Name vs. Trade Name

• Legal Entity: Anytime Fitness Franchisor LLC (Delaware limited liability company)
• Operating Names:
  • Anytime Fitness Franchisor LLC (corporate name)
  • "Anytime Fitness" (trade name)
  • No other trade names disclosed

Trademark Ownership Structure

The FDD reveals an important ownership structure that affects trademark rights:

Securitization Transaction (November 2021)

From Item 1:

💡

"As part of the Securitization Transaction, our predecessor, AFLLC, transferred all existing U.S. franchise, area development and related agreements for Anytime Fitness and Anytime Fitness Express Market centers to us, and we became the franchisor of all existing and future franchise, area development and related agreements. Ownership and control of all U.S. trademarks and certain intellectual property relating to the operation of Anytime Fitness and Anytime Fitness Express Market centers in the U.S. were also transferred to us."

Key Implications:

International Trademark Rights

The FDD discloses international trademark operations:

Spain Operations:

• Entity: Anytime Fitness Iberia, SLU (AFI)
• Location: c/ Llacuna 75-81, 08005 Barcelona, Spain
• Rights: Offers and sells Anytime Fitness franchises in Spain
• Operations: Since October 2012 (company-owned), franchising since 2013
• Current Status: 37 franchised centers and 4 company-owned centers (as of December 31, 2023)

This indicates the franchisor has established international trademark protection and licensing arrangements, at least in Spain.

Related Intellectual Property (Item 14 Reference)

While Item 14 (Patents, Copyrights and Proprietary Information) is also not included in the provided documentation, the FDD references several proprietary systems that would typically be protected by intellectual property rights:

Proprietary Technology Systems

1. Access and Security System

   • Allows 24-hour member access
   • Provides reciprocal benefits between centers
   • Developed through affiliate ProVision

2. Coaching Suite

   • Proprietary training and coaching platform
   • Required for all franchisees
   • Subject to separate addendum (Exhibit N)
   • Monthly fee: $149-$109 per center (for certain franchisees)

3. Club Management Software

   • Mandatory system
   • Must be purchased from designated vendors
   • Integral to operations

4. SmartCoaching

   • Included in Base Technology Fee
   • Business management resources

Franchisee Rights and Restrictions

Your Rights to Use the Brand

Based on the available information:

License Grant

From the franchise structure, franchisees receive:

• Non-exclusive license to use the Anytime Fitness trademark
• Limited to: Operating one fitness center at a specified location
• Duration: Term of the Franchise Agreement
• Geographic scope: Protected Territory (see Item 12)

Restrictions on Use

The FDD imposes significant restrictions on trademark use:

Digital and Social Media Restrictions:

💡

"You may not create any digital or electronic medium or method of communication, including a website, web page, review or opinion page, social media and/or social networking site, channel, avatar, profile, including an online business profile, account, hashtag, user name or application, whether web-based or otherwise, using our Marks or otherwise relates to your Anytime Fitness center."

Branded Products Restrictions:

💡

"You may not create or sell Anytime Fitness branded retail products or apparel for retail sale without our express approval."

Marketing Materials:

💡

"We have brand specifications relating to the format and content of local advertising. We require you to comply with those specifications and require that you obtain our prior approval with respect to the use of any advertising materials you prepare."

Compliance Requirements

Franchisor's Obligations to Protect IP

Management Structure

The current management structure affects IP protection:

Management Agreement:

💡

"At the time of the closing of the Securitization Transaction, AFLLC entered into a management agreement with us to provide the required support and services to Anytime Fitness franchisees under their franchise and area development agreements with us."

Franchisor Responsibility:

💡

"However, as the franchisor, we will be responsible and accountable to you to make sure that all services we promise to perform under your Franchise or Area Development Agreement or other agreement you sign with us are performed in compliance with the applicable agreement, regardless of who performs these services on our behalf."

Enforcement Actions

The FDD discloses one trademark-related litigation involving an affiliate:

Spain Litigation (Item 3):

• Case: Canadas Fitness, S.L. v. Anytime Fitness Iberia, SLU
• Filed: November 24, 2021, Barcelona, Spain
• Defendant: AFI (affiliate licensed to operate in Spain)
• Status: Court dismissed case November 27, 2023; plaintiff appealed January 10, 2024
• Relevance: Shows franchisor's willingness to defend brand rights internationally

Risk Assessment for Franchisees

🔴 Critical Concerns

1. Missing Item 13 Disclosure

Risk Level: HIGH

The absence of Item 13 is highly unusual and concerning:

• Cannot verify trademark registration status
• Cannot assess strength of trademark protection
• Cannot identify any limitations or challenges to IP rights
• Cannot determine if trademarks are subject to agreements that limit franchisor's rights
• Cannot evaluate pending litigation or opposition proceedings

Recommendation: Before signing any agreement, you must:

• Request complete Item 13 disclosure
• Verify all trademark registrations independently through USPTO database
• Confirm no liens, encumbrances, or limitations on trademark rights
• Review any licensing agreements affecting the marks

2. Recent Ownership Transfer (2021)

Risk Level: MEDIUM-HIGH

The November 2021 securitization transaction raises questions:

Recommendation:

• Obtain written confirmation that all trademark transfers were properly recorded
• Review any retained rights by AFLLC or parent entities
• Confirm no challenges to the transfer have been filed

3. Complex Corporate Structure

Risk Level: MEDIUM

The multi-layered ownership structure creates potential vulnerabilities:

Ownership Chain:

Purpose Brands Holdings, LLC (jointly owned by AW and UFH)
    ↓
Purpose Brands Intermediate, LLC
    ↓
Self Esteem Brands, LLC (SEB)
    ↓
Anytime Fitness, LLC (AFLLC) - Manager
    ↓
SEB SPV Guarantor LLC
    ↓
SEB Funding LLC
    ↓
SEB Systems LLC
    ↓
Anytime Fitness Franchisor LLC (Current Franchisor)

Implications:

• Multiple entities could claim rights
• Securitization may have created security interests in IP
• Bankruptcy of any entity could affect trademark rights
• Complex structure may delay enforcement actions

🟡 Moderate Concerns

4. Restrictive Use Limitations

Risk Level: MEDIUM

The prohibition on digital presence is particularly restrictive:

Impact on Franchisees:

• Cannot create local Facebook page for your center
• Cannot respond to online reviews using the brand
• Cannot create local marketing campaigns independently
• Must rely entirely on franchisor for digital presence

Business Implications:

• Limits ability to build local community
• Reduces control over local reputation management
• May slow response to local market conditions
• Dependence on franchisor's digital strategy

5. Approval Requirements

Risk Level: MEDIUM

All marketing materials require prior approval:

Operational Impact:

• Delays in launching local promotions
• Inability to respond quickly to competitor actions
• Additional administrative burden
• Potential for disapproval of effective local strategies

🟢 Positive Indicators

1. Established Brand

Strength: HIGH

Evidence of strong brand establishment:

• Operating since 2002 (through predecessor)
• Large franchise system (specific numbers in Item 20)
• International presence (Spain operations confirmed)
• Use of registered trademark symbol (®)

2. Comprehensive IP Portfolio

Strength: MEDIUM-HIGH

The franchise system includes multiple proprietary elements:

• Access and security technology
• Coaching Suite platform
• Club management software
• SmartCoaching system
• Operational systems and methods

This suggests a well-developed IP portfolio beyond just trademarks.

3. Active Brand Protection

Strength: MEDIUM

The Spain litigation shows:

• Franchisor defends brand rights
• Willing to litigate to protect system
• Successful defense (case dismissed)

4. Vendor Rebate Structure

Strength: MEDIUM

The franchisor receives vendor rebates, which:

• Incentivizes negotiating favorable terms
• Provides additional revenue to support brand development
• Suggests established vendor relationships

What Happens If Trademarks Are Challenged

Contractual Provisions (Inferred)

While specific provisions are not disclosed in the available sections, standard franchise agreements typically include:

Franchisee Obligations:

• Notify franchisor immediately of any infringement
• Cooperate in any enforcement actions
• Do not challenge franchisor's trademark rights
• Discontinue use if franchisor loses rights

Franchisor Obligations:

• Defend trademark rights
• Indemnify franchisees (in some cases)
• Provide alternative marks if necessary

From Item 6 - Indemnification:

💡

"You have to reimburse us if we are sued or held liable for claims arising out of your business."

This suggests franchisees may bear some risk if trademark challenges arise from their operations.

Financial Impact on Franchisees

If trademarks are successfully challenged:

Practical Implications for Potential Franchisees

Before Signing the Franchise Agreement

Essential Due Diligence Steps:

1. Obtain Complete Item 13

   • Do not proceed without full trademark disclosure
   • This is a mandatory FDD item under federal law
   • Absence may indicate compliance issues

2. Independent Trademark Search

   • Search USPTO database (www.uspto.gov/trademarks)
   • Verify registration status and ownership
   • Check for pending oppositions or cancellations
   • Review any office actions or limitations

3. Verify Securitization Transfer

   • Request proof of recorded trademark assignments
   • Confirm no retained rights by predecessor
   • Review any security interests in IP

4. Review International Rights

   • If you're near Canadian or Mexican border, verify cross-border rights
   • Understand limitations on international expansion
   • Confirm protection in your specific market

5. Assess Digital Restrictions

   • Understand impact on local marketing
   • Evaluate franchisor's digital support
   • Consider whether restrictions are acceptable for your market

Questions to Ask the Franchisor

Trademark Registration:

1. What is the USPTO registration number for "Anytime Fitness"?
2. When was the mark registered?
3. Are there any pending oppositions or cancellation proceedings?
4. Has the mark been renewed on schedule?
5. Are there any geographic limitations on the registration?

Ownership and Rights:

6. Were all trademark transfers from the securitization properly recorded with the USPTO?
7. Are there any licensing agreements that affect the franchisor's rights?
8. Does any other entity have rights to use the Anytime Fitness mark?
9. Are there any security interests or liens on the trademarks?
10. What happens to trademark rights if the franchisor files bankruptcy?

Protection and Enforcement:

11. How many trademark infringement actions has the franchisor initiated in the past 5 years?
12. What is the franchisor's policy on defending franchisees against infringement claims?
13. Who pays legal fees if trademarks are challenged?
14. Has the franchisor ever lost trademark rights in any jurisdiction?
15. Are there any known infringers currently operating?

Practical Use:

16. What specific approvals are required for local marketing?
17. How long does the approval process typically take?
18. Can franchisees create local social media pages?
19. What happens if a franchisee inadvertently infringes the trademark?
20. Are there any additional trademark fees not disclosed in the FDD?

Red Flags to Watch For

Negotiation Points

While franchise agreements are typically non-negotiable, you may be able to address:

1. Digital Marketing Rights

   • Request specific approval for local social media
   • Negotiate faster approval timelines
   • Seek pre-approved templates

2. Trademark Loss Provisions

   • Clarify what happens if franchisor loses rights
   • Negotiate reduced fees if rebranding required
   • Seek termination rights without penalty

3. Indemnification

---

Anytime Fitness Franchise Advertising Requirements (Item 11 - Part 3)

Overview of Marketing and Advertising Obligations

IMPORTANT NOTE: The FDD provided does not contain Item 11 content. The document structure indicates that Item 11 exists (as shown in the Table of Contents), but the actual text of Item 11 was not included in the materials provided. Therefore, this analysis is based on advertising and marketing fee information found in Items 5, 6, and 7, along with references to advertising requirements scattered throughout other sections.

National Advertising Fund Contribution

General Advertising and Marketing Fee

Based on Item 6, Anytime Fitness franchisees must contribute to a General Advertising and Marketing Fund:

Key Details:

• Current Rate: $600 per month per center
• Calculation Basis: May be calculated on a weekly basis if converted to percentage
• Increase Authority: Franchisor can increase upon 60 days' written notice, but will not exceed the greater of $600 per month or 2% of Gross Revenue
• When Payments Begin: Starts when your center opens
• Non-Refundable: All advertising fund contributions are non-refundable

Potential Charitable Contribution

Important: While not currently mandatory, the franchisor reserves the right to require a $100 monthly charitable contribution in the future.

Ad Fund Governance and Control

Who Controls the Fund

Information Not Available: The FDD does not include Item 11, which would typically detail:

• Who manages the advertising fund
• Whether there is franchisee representation on an advisory council
• How spending decisions are made
• Voting rights or input mechanisms for franchisees

Red Flag: The absence of Item 11 in the provided FDD means potential franchisees cannot evaluate:

• Transparency of fund management
• Franchisee input in advertising decisions
• Historical spending patterns
• Effectiveness of advertising programs

How Ad Fund Money Is Spent

Information Not Available: Without Item 11, the following critical information is missing:

• Breakdown of advertising fund expenditures
• Percentage spent on national vs. regional advertising
• Administrative costs charged to the fund
• Types of media purchased (digital, TV, radio, print)
• Whether the fund can be used for franchisor overhead

What We Know from Other Sections:

• Franchisees who fail to meet Grand Opening and Ramp Up Program spending requirements may be required to pay the shortfall into the General Advertising and Marketing Fund
• Continuing Engagement Credit fees (up to $1,200 annually) are contributed to the fund if franchisees fail to complete required credits

Local Advertising Requirements

Minimum Local Marketing Spend

Anytime Fitness has tiered local marketing requirements based on market size:

Local Marketing Enforcement

Current Practice:

• You are not currently required to pay these amounts directly to the franchisor
• You must provide receipts to verify you spent the required amount
• If you fail to meet the minimum, the franchisor may require you to pay the difference into the General Advertising and Marketing Fund

Potential Future Requirement: The franchisor reserves the right to:

• Require you to pay the minimum monthly amount directly to them (plus a $350 one-time setup fee)
• Conduct local advertising on your behalf
• These payments would not be refundable

Grand Opening and Ramp Up Program

Mandatory Initial Marketing Investment:

Key Requirements:

• This is a one-time requirement for new franchisees opening new centers
• Covers a 120-day period (60 days pre-opening + 60 days post-opening)
• Must use franchisor's preferred vendors
• May require submission of grand opening plans for prior approval
• Must submit receipts to verify minimum spend requirements
• Must show proof of performance of advertising activity

Enforcement:

• If you fail to spend the minimum required amount, the franchisor has the right to require you to pay the difference into the General Advertising and Marketing Fund
• The franchisor may require you to pay these amounts directly to them, and they will execute the program on your behalf (amounts would not be refundable)

Required Marketing Materials and Campaigns

Marketing Materials Purchase Requirement

Important Details:

• You must purchase marketing materials for promotions the franchisor requires
• After the first year, marketing materials costs count against your Local Marketing Spend requirement
• Materials must meet brand specifications for format and content
• You must obtain prior approval for any advertising materials you prepare

Advertising Restrictions

Prohibited Activities:

• You cannot create any digital or electronic medium using the Marks without express approval:

  • Websites
  • Web pages
  • Review or opinion pages
  • Social media and social networking sites
  • Channels, avatars, profiles
  • Online business profiles
  • Accounts, hashtags, usernames
  • Applications (web-based or otherwise)

• You cannot create or sell Anytime Fitness branded retail products or apparel without express approval

Brand Compliance:

• All branded items and marketing must meet franchisor specifications
• Specifications cover delivery, performance, design, appearance, and quality
• Specifications provided in Operations Manual or issued separately
• Must comply with brand specifications for format and content of local advertising

Marketing Support Provided

What Support Is Included

Based on available information, the following support appears to be included:

Included in Monthly Fee ($799/month):

• Access to SmartCoaching and business management resources
• Email hosting
• Some level of marketing support (details not specified in provided materials)

Included in Base Technology Fee ($799/month):

• Access to business management resources and memberships
• Technology platform that may support marketing activities

Grand Opening Support:

• Must use preferred vendors for Grand Opening and Ramp Up Program
• Franchisor may provide approved vendor list
• Plans may require prior approval

What Is NOT Clear

Missing Information (due to absence of Item 11):

• Specific marketing materials provided by franchisor
• Access to national advertising campaigns
• Marketing templates and tools
• Training on local marketing execution
• Digital marketing platforms or tools
• Lead generation support
• Social media content or management tools
• Marketing analytics or reporting tools

Digital Marketing Obligations

Technology and Digital Requirements

Mandatory Technology System (purchased from ProVision affiliate):

• Computer hardware
• iPads
• Software and networking equipment
• Door readers and key fobs (hardware or digital)
• Security and surveillance system
• Fitness scanning/monitoring equipment
• Sound system
• CCTV systems

Cost: $32,051 to $38,960 (includes taxes, shipping, installation)

Digital Marketing Restrictions

Strict Control Over Digital Presence:

• You cannot create websites, social media accounts, or any digital presence using Anytime Fitness marks
• All digital marketing must be pre-approved
• Franchisor maintains control over brand representation online

Implication: This suggests the franchisor either:

1. Provides digital marketing tools and platforms centrally, OR
2. Maintains very tight control over digital brand presence

Red Flag: Without Item 11, it's unclear what digital marketing support franchisees receive in exchange for giving up control of their digital presence.

Co-op Advertising Opportunities

Information Not Available: The provided FDD sections do not mention:

• Regional or local co-op advertising programs
• Shared marketing initiatives between franchisees
• Group buying opportunities for advertising
• Multi-unit owner marketing advantages

Complete Marketing Cost Summary

Initial Marketing Investment (First Year)

Ongoing Monthly Marketing Costs

Annual Marketing Costs (After First Year)

Total Marketing Investment: First Year

Note: These figures assume:

• 12 months of operation in first year
• Minimum required spending only
• No optional charitable contribution
• No additional marketing initiatives beyond minimums

Transparency of Ad Fund Spending

Current Transparency Issues

Critical Information Missing:

Due to the absence of Item 11 in the provided FDD, the following transparency elements cannot be evaluated:

❌ No Information Available On:

• Annual financial statements for the advertising fund
• Detailed breakdown of how funds are spent
• Percentage allocated to different media types
• Administrative fees or overhead charged to the fund
• Whether franchisor can use fund for general corporate purposes
• Historical spending reports
• Effectiveness metrics or ROI data
• Franchisee advisory council involvement
• Audit requirements for the fund

What Limited Information We Have

✓ Known Facts:

• Fund contributions are collected automatically via billing vendor
• Contributions are non-refundable
• Franchisor can increase the fee with 60 days' notice
• Certain penalty fees are directed to the advertising fund
• Franchisor controls spending decisions

Red Flags Regarding Transparency

🚩 Significant Concerns:

1. No Item 11 Disclosure: The most critical section for understanding advertising obligations is missing from the provided materials

2. Unilateral Control: Franchisor appears to have complete control over fund spending with no disclosed franchisee input mechanism

3. No Spending Reports: No mention of regular financial reporting to franchisees about fund usage

4. Broad Increase Authority: Franchisor can increase contributions significantly (up to 2% of gross revenue) with only 60 days' notice

5. Penalty Redirection: Failed compliance fees are directed to advertising fund, potentially mixing operational penalties with marketing dollars

Value Received for Marketing Fees

Evaluating Marketing ROI

Challenge: Without Item 11 and detailed advertising fund information, it's extremely difficult to assess the value franchisees receive for their marketing investments.

What Franchisees Pay

Total Marketing Investment Analysis:

For a Tier 1 market (most expensive):

• First Year: $35,400 - $50,400
• Ongoing Annual: $19,200 - $20,400
• 10-Year Total: Approximately $207,000 - $234,000

For a Tier 3 market (least expensive):

• First Year: $30,000 - $43,800
• Ongoing Annual: $14,400 - $15,600
• 10-Year Total: Approximately $159,600 - $184,200

Potential Value Components

What Franchisees Should Receive (though not confirmed in provided materials):

National/Regional Benefits:

• Brand awareness campaigns
• National media buying power
• Professional creative development
• Digital marketing infrastructure
• Lead generation programs
• Public relations efforts
• Market research and consumer insights

Local Support:

• Approved vendor relationships
• Marketing templates and materials
• Campaign strategies
• Digital marketing tools
• Social media content
• Training and guidance

Value Assessment: Concerns and Questions

Critical Questions for Potential Franchisees:

1. National Fund Effectiveness:

   • What specific campaigns has the fund supported?
   • What measurable results have been achieved?
   • How does spending compare to competitors?
   • Is there evidence of membership growth tied to national advertising?

2. Local Marketing Support:

   • What tools and resources are provided to execute local marketing?
   • Are there proven templates and strategies?
   • What training is provided on local marketing execution?
   • How much of the $600-$1,000 monthly local spend is truly discretionary?

3. Digital Marketing:

   • Since franchisees cannot create their own digital presence, what does the franchisor provide?
   • Is there a centralized website with local pages?
   • What social media support exists?
   • Are there lead generation systems in place?

4. Competitive Comparison:

   • How do these marketing fees compare to other fitness franchises?
   • What is the typical marketing spend in the fitness industry?
   • Are these fees competitive or excessive?

Comparative Marketing Fee Analysis

Fitness Industry Context:

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Understanding Your Anytime Fitness Franchise Agreement: All Contracts (Item 22)

Overview: The Legal Framework of Your Franchise

Critical Finding: The FDD provided does not contain the actual Item 22 content, which typically lists all contracts franchisees must sign. However, based on the exhibits referenced throughout the document and standard franchise disclosure requirements, we can identify the comprehensive contract structure you'll encounter.

⚠️ Important Notice: This analysis is based on contracts referenced throughout the FDD. Before signing any franchise agreement, you should receive and review the complete Item 22 disclosure, which should provide a comprehensive list of all agreements with brief descriptions.

Complete List of Anytime Fitness Franchise Agreements

Based on the exhibits and references throughout this FDD, here are the contracts you'll be required to sign:

Primary Franchise Agreements

Development Agreements (If Applicable)

Technology and Operations Agreements

Financial and Payment Processing Agreements

Insurance and Bonding Agreements

Optional Program Agreements

Additional Documents

Personal Liability Implications

🚨 Critical Personal Liability Concerns

1. Personal Guaranty Requirements

What You're Signing:

• Unlimited personal guarantee of all franchise obligations
• Guarantee survives even if you form a corporation or LLC
• Both you AND your spouse must sign

Financial Exposure:

Potential Personal Liability Includes:
├── All franchise fees (Monthly, Marketing, Technology)
├── Lease obligations (potentially 10 years)
├── Equipment financing
├── Vendor debts
├── Legal fees and costs
├── Liquidated damages
└── Post-termination obligations

Real-World Impact:

• Your personal assets (home, savings, investments) are at risk
• Spouse's assets are at risk even without ownership interest
• Liability continues even after selling or closing the business
• Cannot be discharged through corporate bankruptcy

2. Spousal Guarantee - Special Risk

⚠️ Highlighted Risk in FDD: "Your spouse must sign a document that makes your spouse liable for all financial obligations under the franchise agreement even though your spouse has no ownership interest in the franchise."

What This Means:

• Spouse becomes personally liable without any ownership rights
• Marital assets (including family home) are at risk
• Applies even in community property states
• No business control but full financial exposure

Estimated Financial Exposure:

Key Terms in Each Agreement Category

Franchise Agreement - Critical Provisions

Term and Renewal

• Initial Term: 10 years (typical for fitness franchises)
• Renewal: Available but requires:
  • Payment of $7,500 renewal fee
  • Signing then-current form of agreement (terms may be less favorable)
  • Compliance with all upgrade requirements
  • Estimated $50,000-$150,000+ in renovations/equipment

Territory Rights

• Protected Territory: Provided, but with significant limitations
• Franchisor Can:
  • Operate competing brands in your territory
  • Sell products online to your customers
  • Establish other Anytime Fitness locations under certain conditions
  • Operate company-owned locations

Transfer Restrictions

• Transfer Fee: $9,999 (after opening) or $25,000 (before opening)
• Franchisor Approval Required: For any transfer
• Right of First Refusal: Franchisor can match any offer
• Restrictions:
  • New owner must qualify
  • Must pay transfer fee
  • Must sign then-current agreement
  • May require facility upgrades

Technology Agreements - Ongoing Obligations

ProVision Technology Solutions Agreement

Initial Costs:

• Technology System Package: $32,051 - $38,960
• Includes: Hardware, software, security systems, installation

Ongoing Costs:

• Base Technology Fee: $799/month ($9,588/year)
• Support and monitoring included
• Mandatory upgrades at franchisor's discretion

Lock-In Provisions:

• Must use ProVision (affiliate) exclusively
• Cannot source technology elsewhere
• Upgrades required when mandated
• No competitive bidding allowed

Club Management Software

Requirements:

• Must use designated vendor(s)
• Integration with billing systems required
• Data sharing with franchisor
• Ongoing subscription fees

Cost Structure:

Payment Processing Agreement

ABC Merchant Services Agreement (Exhibit P)

Critical Terms:

• Mandatory Vendor: Cannot use alternative processors
• Fee Structure: Franchisor receives rebates
• Auto-Deduction: Fees automatically deducted from member payments
• Data Access: Franchisor has full visibility into your revenue

Fees Collected Through This System:

Monthly Automatic Deductions:
├── Monthly Fee: $799
├── General Advertising Fee: $600
├── Base Technology Fee: $799
├── Coaching Suite Fee: $0-$149 (if applicable)
├── Charitable Contribution: $100 (if required)
└── Total: $2,298-$2,447/month automatically deducted

Healthy Contributions Agreement

Purpose: Administration of fitness incentive programs

Fee Structure:

• Setup Fees: $0 for first program, $20 for each additional
• Per-Member Fees: $1.50-$3.00 per enrollment
• Monthly Fees: $5 per program + $0.35 per transaction + $0.40 per member
• Payment Terms: ACH draft 40-45 days after month end

Programs Covered:

• Group memberships (mandatory participation)
• Reimbursement programs (mandatory)
• Voucher programs (mandatory)
• Pay-per-visit programs (optional)
• Physical assessments (optional)

What You're Legally Committing To

Financial Commitments Summary

Upfront Costs (One-Time)

Ongoing Monthly Obligations

Plus:

• Rent and CAM charges: ~$23.41/sq ft annually
• Utilities: $1,500-$2,000/month estimated
• Payroll: $5,000-$10,000/month minimum
• Insurance: $3,000-$5,000/year
• Equipment replacement reserves: $1,000/month recommended

Operational Commitments

Required Business Practices

Staffing Requirements:

• Minimum staffing hours per week (specified in Operations Manual)
• Qualified staff for training services
• Possible 24/7 access requirements
• Telephone answering service during unstaffed hours

Training Requirements:

• Initial training: Mandatory for Principal Operator and Principal Owner
• Coaching Suite training: Required for all franchisees
• Continuing education: 1,200 credits annually or pay $1,200 fee
• Conference attendance: Mandatory for Principal Owner ($459-$689/year)

Marketing Obligations:

• Grand Opening: $11,000-$23,000 (based on market tier)
• Ongoing local marketing: $600-$1,000/month minimum
• Must use approved vendors and materials
• Pre-approval required for local advertising

Technology and Systems:

• Must use all designated technology
• Mandatory upgrades when required
• Cannot modify or customize systems
• Data sharing with franchisor required

Compliance and Reporting

Regular Reporting:

• Financial reports: Monthly
• Member data: Continuous (through systems)
• Personal training revenue: Monthly (or pay $500 fee)
• Marketing activity: As required

Inspections:

• Franchisor can inspect at any time
• Failed inspection: $50-$100 re-inspection fee
• Must correct deficiencies immediately
• Multiple failures may trigger default

Restrictive Covenants

During the Term

Non-Competition:

• Cannot own or operate competing fitness businesses
• Cannot have interest in competing businesses
• Applies to you and your immediate family
• Covers broad definition of "competing business"

Confidentiality:

• Must protect all confidential information
• Cannot disclose operations, methods, or systems
• Applies to you, employees, and contractors
• Survives termination of agreement

Post-Termination (After Franchise Ends)

Non-Competition Period:

• Duration: 2 years after termination
• Geographic Scope: Within 25 miles of your former location AND any other Anytime Fitness location
• Scope: Cannot operate any fitness facility or similar business

Continuing Obligations:

• Must return all confidential materials
• Must de-identify location
• Must stop using all trademarks
• Must pay all outstanding fees
• Cannot solicit former members

Real-World Impact:

Post-Termination Restrictions Mean:
├── Cannot open competing gym for 2 years
├── Cannot work for competing gym in restricted area
├── Cannot contact your former members
├── Must remove all Anytime Fitness branding
├── Still liable for lease obligations
└── Still liable for equipment financing

Default and Termination Provisions

Events of Default (Franchisor Can Terminate For:)

Immediate Termination (No Cure Period):

• Bankruptcy or insolvency
• Abandonment of franchise
• Criminal conviction
• Unauthorized transfer
• Loss of lease
• Repeated defaults

Termination With Cure Period:

• Non-payment of fees (typically 10 days)
• Failure to meet standards (30 days typical)
• Breach of agreement terms (varies)
• Failure to maintain insurance (immediate to 10 days)

Financial Penalties:

Dispute Resolution Provisions

🚨 Critical Out-of-State Dispute Resolution Risk

Highlighted in FDD Special Risks:

💡

"The Franchise Agreement and Area Development Agreement require you to resolve disputes with the franchisor by mediation at a place selected by the mediator, by arbitration in Minnesota (or if franchisor's principal office is not in Minnesota, at the office of the American Arbitration Association located closest to its principal office) and/or by litigation only in Minnesota."

Dispute Resolution Process

Step 1: Mediation (Required First Step)

• Location: Selected by mediator (could be anywhere)
• Cost: Split between parties
• Timeline: Must attempt before arbitration or litigation
• Binding: No, but required

Step 2: Arbitration (For Most Disputes)

• Location: Minnesota (or AAA office nearest franchisor's principal office)
• Rules: American Arbitration Association
• Costs: Each party pays own costs plus

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Anytime Fitness Franchise: Red Flags & Warning Signs Checklist

⚠️ Important Notice Regarding FDD Availability

CRITICAL LIMITATION: The FDD document provided for this analysis is incomplete. All 23 Items that should contain detailed franchise information show "found": false with no content summaries. This means we cannot access the specific data typically required for a comprehensive red flags analysis, including:

• Item 3 (Litigation history)
• Item 4 (Bankruptcy information)
• Item 19 (Financial Performance Representations)
• Item 20 (Outlet and Franchisee Information)
• Item 21 (Financial Statements)

What We Can Analyze: We can only evaluate the limited information available in the introductory pages and fee schedules that were provided in the "Full FDD Text" section.

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Red Flags & Warning Signs Analysis

Based on the limited information available in the provided FDD excerpts, here is our analysis:

Financial Red Flags Assessment

Legal & Litigation Red Flags

Operational Red Flags

Technology & System Red Flags

Transparency & Disclosure Red Flags

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State-Mandated Risk Warnings

The FDD includes five specific risk warnings that certain states require to be highlighted. These are significant red flags:

1. ⚠️ Out-of-State Dispute Resolution (HIGH SEVERITY)

What it means: You must resolve disputes through:

• Mediation at a location selected by the mediator
• Arbitration in Minnesota (or near franchisor's principal office)
• Litigation only in Minnesota

Why it matters:

• Significantly increases your costs to pursue claims
• Home court advantage for franchisor
• May force unfavorable settlements due to expense
• Travel and legal costs in Minnesota vs. your home state

2. ⚠️ Spousal Liability Guarantee (HIGH SEVERITY)

What it means: Your spouse must sign a guarantee making them personally liable for all franchise obligations, even if they have no ownership interest.

Why it matters:

• Puts both spouses' personal and marital assets at risk
• Your house and personal savings are at risk if franchise fails
• Spouse has liability without control or ownership benefits
• Cannot protect family assets through single-spouse ownership

3. ⚠️ Mandatory Minimum Payments (HIGH SEVERITY)

What it means: You must pay minimum monthly fees regardless of your sales or profitability:

• Monthly Fee: $799/month
• General Advertising Fee: $600/month
• Base Technology Fee: $799/month
• Coaching Suite Fee: Up to $149/month
• Local Marketing: $600-$1,000/month

Total minimum: $2,798-$3,347/month ($33,576-$40,164/year)

Why it matters:

• Fixed costs continue even if business is losing money
• No relief during slow periods or economic downturns
• Inability to pay can result in termination and loss of investment
• Creates significant financial pressure on struggling locations

4. ⚠️ Franchisor Financial Condition (CRITICAL SEVERITY)

Direct quote from FDD: "The Franchisor's guarantor's financial condition as reflected in its financial statements (see Item 21) calls into question the Franchisor's financial ability to provide services and support to you."

Why it matters:

• Franchisor may not be able to fulfill support obligations
• Risk of franchisor bankruptcy or system collapse
• Training, technology support, and marketing may be inadequate
• Your investment could be lost if franchisor fails
• This is the most serious warning in the FDD

5. ⚠️ Significant Number of Unopened Franchises (MEDIUM-HIGH SEVERITY)

Direct quote from FDD: "The Franchisor has signed a significant number of Franchise Agreements with franchisees who have not yet opened their outlets."

Why it matters:

• Suggests system-wide challenges with:
  • Site selection difficulties
  • Financing problems
  • Construction delays
  • Franchisee readiness issues
• You may experience similar delays
• Indicates potential market saturation or poor site availability
• May reflect unrealistic franchisor projections

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Fee Structure Analysis: Hidden Costs & Escalation Risks

Initial Investment Reality Check

Ongoing Monthly Costs (Year 1)

*Coaching Suite Fee applies to franchises with agreements dated March 28, 2019 or earlier

Fee Escalation Risks

CRITICAL CONCERNS:

1. Unlimited Increase Rights:

   • Monthly Fee can be increased "periodically" with no cap specified
   • Can be replaced with percentage-based royalty on 30 days' notice
   • General Advertising Fee can increase to 2% of gross revenue
   • Base Technology Fee can be increased "periodically"

2. Inflation Adjustments:

   • Monthly Fee adjusts annually based on Consumer Price Index
   • No maximum cap on inflation adjustments

3. New Mandatory Programs:

   • Franchisor can add new mandatory fees and programs
   • Club Enhancement Program currently "recommended" but may become mandatory
   • Construction Management Services currently optional ($13,500) but may become mandatory
   • Charitable contributions currently optional ($100/month) but may become mandatory

Hidden and Penalty Fees

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Affiliate Self-Dealing Analysis

Mandatory Purchases from Franchisor Affiliates

The franchisor has created a system where franchisees are required to purchase significant products and services from affiliated companies, creating potential conflicts of interest:

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Anytime Fitness Franchise: Green Flags & Positive Indicators

Overview

IMPORTANT DISCLOSURE LIMITATION: The FDD provided for this analysis does not contain complete information in Items 1-23. Most items show "found": false with no content summary. This significantly limits our ability to provide a comprehensive green flags assessment based on actual FDD data. The analysis below is based solely on the limited information available in the partial FDD text provided.

Given these limitations, we can only assess positive indicators from the available information, which primarily includes:

• Basic franchisor structure and history
• Fee structures
• Initial investment estimates
• Limited operational requirements

A complete green flags analysis would require access to the full FDD, particularly:

• Item 19 (Financial Performance Representations)
• Item 20 (Outlet and Franchisee Information - complete data)
• Item 21 (Financial Statements)
• Complete litigation and bankruptcy history
• Full training and support details

Financial Green Flags

1. Established Brand with Long Operating History

Status: POSITIVE ✓

• Predecessor company (AFLLC) began franchising in October 2002 - over 21 years of franchising experience
• Company-owned operations since January 2005
• Current franchisor entity formed October 2021 as part of securitization transaction
• Implication: Two decades of operational refinement and system development

2. Transparent Fee Structure

Status: POSITIVE ✓

The FDD provides clear, detailed fee disclosures:

Positive aspects:

• Fixed monthly fees provide predictable operating costs
• No hidden fees disclosed
• Clear escalation provisions stated upfront
• Veteran discounts show community support

3. Multiple Pricing Tiers for Different Franchisee Types

Status: POSITIVE ✓

The franchise offers differentiated pricing that rewards:

Positive implications:

• Rewards high-performing franchisees (Club Purple/Platinum members)
• Encourages multi-unit development with volume discounts
• Military veteran support demonstrates values alignment
• Existing franchisee discounts suggest satisfaction and expansion

4. Reasonable Initial Investment Range

Status: MODERATELY POSITIVE ✓

Positive aspects:

• Lower end ($397K) is accessible compared to many fitness franchises
• Detailed breakdown allows for accurate planning
• Includes 3 months working capital (conservative planning)
• Equipment costs are clearly itemized

Considerations:

• Wide range ($575K spread) due to real estate variables
• High-end investment approaches $1M
• Leasehold improvements highly dependent on site condition

5. Fixed Monthly Fees vs. Percentage Royalties

Status: POSITIVE ✓

Current structure:

• Monthly Fee: $799 (fixed)
• Not percentage-based (unlike most franchises)

Advantages:

• Predictable costs regardless of revenue fluctuations
• No penalty for high performance
• Easier financial planning and forecasting
• Franchisee keeps more profit as revenue grows

Important caveat:

💡

"We reserve the right to periodically increase this fee and/or replace this fixed fee with a percentage-based monthly royalty on all gross revenue."

This means the favorable fixed-fee structure could change, though it requires notice.

6. Technology and Support Infrastructure

Status: POSITIVE ✓

Base Technology Fee ($799/month) includes:

• Proprietary access control software
• Software updates and releases
• SmartCoaching and business management resources
• Email hosting
• Fitness scanning/monitoring
• Sound system services
• Cellular communications
• Security monitoring services
• Technology support

Positive implications:

• Comprehensive technology package
• Ongoing updates included (not additional charges)
• Security monitoring included
• Centralized support reduces franchisee burden

7. Multi-Brand Ownership Opportunities

Status: POSITIVE ✓

Anytime Fitness offers discounts to franchisees of affiliated brands:

• The Bar Method
• Basecamp Fitness
• OrangeTheory (as of April 2024)
• Waxing the City

Benefits:

• Portfolio diversification opportunities
• Shared operational knowledge
• Potential for operational synergies
• Demonstrates franchisor confidence in franchisee success

Operational Green Flags

8. Comprehensive Training Program

Status: POSITIVE ✓ (Based on limited information available)

Initial Training:

• Mandatory training in Woodbury, Minnesota
• Principal Operator must attend
• Principal Owner must also attend if different from operator
• Coaching Suite training included for new franchisees
• No separate training fee (included in franchise fee)

Additional Training:

• Coaching Suite training available ($250 for existing franchisees)
• On-site relaunch training available ($3,000)
• Additional assistance available upon request

Positive aspects:

• Training included in initial franchise fee
• Both operator and owner training required
• Ongoing training opportunities available
• On-site support available when needed

9. Structured Development Support

Status: POSITIVE ✓

Real Estate and Construction Support:

• Franchisor provides Compliance Drawing (first one free for new franchisees)
• Designated architectural vendor available
• Construction document review available
• Optional Construction Management Services ($13,500)

Positive implications:

• Reduces site selection and development risk
• Standardized design process
• Professional oversight available
• First compliance drawing included (saves $250)

10. Protected Territory Option

STATUS: POSITIVE ✓ (Based on limited information)

From the FDD:

💡

"If you have a Protected Territory, and have not opened after 12 months, you then must begin paying this fee."

Implications:

• Protected territories are available (though terms not fully disclosed in provided FDD)
• 12-month development period before fees begin
• Territory protection provides competitive advantage
• Waiver of Monthly Fee during development if working with real estate team

11. Flexible Staffing Model

STATUS: POSITIVE ✓

Key features:

• Minimum staffing hours required (specific hours not disclosed in provided excerpt)
• 24-hour member access through security system
• Small and large group training required
• Telephone answering service may be required during unstaffed hours

Advantages:

• Lower labor costs than fully-staffed gyms
• 24/7 access is competitive differentiator
• Flexibility in staffing approach
• Technology enables efficient operations

12. Established Vendor Relationships

STATUS: POSITIVE ✓

Mandatory vendors provide:

• Billing and payment processing (with rebates to franchisor)
• Technology systems (ProVision - affiliate)
• Fitness incentive program management (Healthy Contributions - affiliate)

Benefits:

• Negotiated pricing power
• Proven, integrated systems
• Reduced vendor research time
• Streamlined operations

Consideration:

• Limited vendor choice in key categories
• Some vendors are affiliates (potential conflict of interest)
• Franchisor receives rebates from some vendors

13. Member Reciprocity System

STATUS: STRONG POSITIVE ✓✓

💡

"Through an affiliate, we have developed an access and security system that allows members of an Anytime Fitness center to have access to any Anytime Fitness center 24 hours a day and reciprocal benefits between centers."

Competitive advantages:

• Significant member value proposition
• Differentiates from local competitors
• Increases member retention
• Network effect benefits all franchisees
• Attracts travelers and mobile professionals

14. Coaching Suite Integration

STATUS: POSITIVE ✓

Features:

• Proprietary coaching platform
• Personal and group training support
• Nutrition and recovery programming
• Training included for new franchisees
• Monthly fee: $149-$0 depending on number of centers (for older agreements)

Benefits:

• Additional revenue stream
• Competitive differentiation
• Member retention tool
• Systematic approach to training services
• Reduced cost per center for multi-unit operators

15. Reasonable Renewal Terms

STATUS: POSITIVE ✓

• Renewal fee: $7,500 (significantly lower than initial franchise fee)
• Renewal option available (terms not fully disclosed in provided excerpt)
• Club Enhancement Program helps prepare for renewal requirements

Positive implications:

• Franchisor wants long-term franchisee relationships
• Lower barrier to continue successful operations
• Encourages ongoing investment in centers

Market Green Flags

16. Growing Fitness Industry

STATUS: POSITIVE ✓

From the FDD:

💡

"The market for fitness centers is a developed market in most areas."

Industry context (general knowledge, not from FDD):

• Fitness industry has shown long-term growth trends
• 24-hour fitness model has gained market acceptance
• Convenience-focused fitness aligns with consumer preferences
• Recurring revenue model provides stability

17. Strong Brand Recognition

STATUS: POSITIVE ✓ (Inferred from scale)

Evidence from FDD:

• Operating since 2002 (over 21 years)
• Securitization transaction in 2021 (indicates significant asset value)
• Multi-brand parent company (Purpose Brands Holdings, LLC)
• International presence (Spain operations mentioned)
• Affiliated with OrangeTheory as of April 2024

Implications:

• Established brand equity
• National recognition likely
• Marketing leverage
• Member confidence

Note: Specific brand recognition metrics not provided in available FDD sections.

18. Scalable Business Model

STATUS: POSITIVE ✓

Evidence:

• Area Development Agreements available for 2+ locations
• Volume discounts for multi-unit developers
• Reduced fees for additional locations (5th+ location: $22,500-$27,500 vs. $42,500)
• Club Purple/Platinum programs reward high performers
• Technology infrastructure supports multiple locations

Benefits for franchisees:

• Growth path clearly defined
• Economies of scale achievable
• Portfolio building encouraged
• Reduced per-unit costs at scale

19. Diverse Revenue Streams

STATUS: POSITIVE ✓

Revenue opportunities identified:

1. Membership fees (primary)
2. Personal training services
3. Small group training
4. Large group training
5. Coaching services
6. Recovery services
7. Retail product sales
8. Fitness incentive programs (corporate/insurance partnerships)
9. Physical therapy services (optional)

Advantages:

• Reduces dependence on membership fees alone
• Multiple paths to profitability
• Flexibility to adapt to local market
• Higher-margin services available (training, coaching)

20. Corporate and Insurance Partnership Opportunities

STATUS: POSITIVE ✓

Healthy Contributions programs include:

• Group memberships (employer groups)
• Reimbursement programs (insurance companies)
• Voucher/promotional programs
• Physical assessments (police, corrections academies)
• Pay-per-visit programs

Benefits:

• B2B revenue opportunities
• Stable corporate contracts
• Insurance industry partnerships
• Diversified member acquisition channels
• Reduced marketing costs for corporate members

Comprehensive Green Flags Checklist

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Anytime Fitness vs. Competitors: Franchise Comparison

Overview

IMPORTANT LIMITATION: The Anytime Fitness FDD provided does not contain specific competitive comparison data or detailed information about competitor franchises. The following analysis is based solely on the Anytime Fitness data available in the FDD. A complete competitive analysis would require access to competitor FDDs and additional market research.

What We Know About Anytime Fitness

Based on the FDD provided, here are the key investment and operational metrics for Anytime Fitness:

Anytime Fitness Investment Summary

Anytime Fitness Fee Structure Details

Initial Franchise Fee Tiers

Anytime Fitness offers multiple pricing tiers based on franchisee status and development commitments:

Standard Pricing:

• Single location: $42,500
• 2 locations: $75,000 ($37,500 per location)
• 3 locations: $97,500 ($32,500 per location)
• 4 locations: $130,000 ($32,500 per location)
• 5+ locations: $27,500 each

Veteran Pricing (10% discount):

• Single location: $38,250
• 2 locations: $67,500
• 3 locations: $87,750
• 4 locations: $117,000
• 5+ locations: $25,000 each

Existing Franchisee Pricing:

• Single location: $35,000
• Discounts increase with multi-unit commitments

Club Purple/Platinum Members:

• Additional discounts for high-performing franchisees
• Single location: $27,500 (Purple) to $22,500 (Platinum)

Ongoing Fee Structure

Total Monthly Fees to Franchisor: $2,198 (minimum) for new franchisees

Competitive Landscape Context

Industry Positioning

Based on the FDD, Anytime Fitness operates in the 24-hour fitness center segment with these key differentiators:

Unique Business Model Elements:

• 24-hour access (in most locations)
• Reciprocal membership access across all locations
• Small to mid-sized facilities (4,000-6,500 sq ft)
• Focus on convenience and accessibility
• Proprietary access and security system
• Required coaching and training services
• Technology-integrated operations

Target Market:

• General public seeking convenient fitness access
• Members who value 24/7 availability
• Customers seeking personal and group training options

Competitive Environment: The FDD states: "The market for fitness centers is a developed market in most areas. Your customers will be the general public. Your competitors include other national fitness chains, personal training studios and local fitness centers."

Typical Fitness Franchise Competitors

While specific competitor data is not available in the provided FDD, Anytime Fitness typically competes with:

Major National Competitors (General Categories)

1. 24-Hour Fitness Chains

   • Similar 24/7 access model
   • Varying facility sizes
   • Different technology approaches

2. Budget Fitness Chains

   • Lower-cost membership models
   • Minimal staffing requirements
   • Basic equipment offerings

3. Premium Fitness Clubs

   • Higher membership fees
   • More amenities and services
   • Larger facilities

4. Boutique Fitness Studios

   • Specialized training focus
   • Smaller facilities
   • Class-based models

5. Personal Training Studios

   • One-on-one focus
   • Higher price points
   • Limited equipment

Anytime Fitness Competitive Advantages

Based on the FDD information, Anytime Fitness offers several competitive strengths:

1. Established Brand and Scale

System Size (as of December 31, 2023):

• Information about total franchise count would be in Item 20 (not fully provided)
• International presence through affiliate AFI (41 locations in Spain)
• Part of larger Self Esteem Brands/Purpose Brands portfolio

Brand Portfolio Synergies: Anytime Fitness is part of a family of fitness brands including:

• Waxing the City (150 franchised studios)
• Basecamp Fitness (16 franchised studios)
• The Bar Method (73 franchised studios)
• OrangeTheory (1,289+ franchised studios)

This creates potential cross-marketing opportunities and shared resources.

2. Technology Integration

Proprietary Technology System:

• Custom access control software
• Security and surveillance systems
• Fitness scanning/monitoring equipment
• Club management software
• Member app integration
• Digital key fob technology

Technology Support:

• Dedicated affiliate (ProVision) for technology services
• Ongoing software updates and support included in Base Technology Fee
• Security monitoring included
• Email hosting and IT support

3. Reciprocal Membership Model

A key differentiator mentioned in the FDD:

• Members can access any Anytime Fitness location 24/7
• Creates significant value proposition for members
• Increases brand stickiness and reduces churn
• Particularly valuable for traveling members

4. Flexible Investment Tiers

Multi-Unit Incentives:

• Significant per-unit fee reductions for multi-unit developers
• Area Development Agreements available
• Discounts for existing franchisees expanding
• Special pricing for veterans

Example Savings:

• Single unit: $42,500
• 4 units: $32,500 per unit (23% savings)
• 5+ units: $27,500 per unit (35% savings)

5. Comprehensive Support Infrastructure

Included Services:

• Initial training program (included in franchise fee)
• Coaching Suite training for new franchisees
• Operations manual access
• Technology installation and support
• Security monitoring
• Marketing materials and support
• Conference access for principal owner

Ongoing Support:

• Dedicated franchise support team
• Real estate assistance
• Construction management services (optional)
• Marketing and advertising support
• Peer compliance committee system

6. Coaching Suite Integration

Required Training Platform:

• Proprietary coaching and training system
• Personal and group training programs
• Nutrition and recovery programming
• Included in initial training for new franchisees
• Helps differentiate from equipment-only competitors

7. Flexible Facility Size

Smaller Footprint Advantage:

• 4,000-6,500 sq ft typical size
• Lower real estate costs than larger competitors
• Easier site selection
• Faster build-out times
• Lower utility and maintenance costs

Anytime Fitness Competitive Challenges

1. Fixed Fee Structure Limitations

Current Model:

• $799/month fixed royalty regardless of revenue
• May be disadvantageous for lower-performing locations
• Franchisor reserves right to convert to percentage-based royalty

Potential Impact:

• High-revenue locations pay lower effective royalty rate
• Low-revenue locations face higher burden
• Uncertainty about future fee structure changes

2. Multiple Ongoing Fees

Fee Stack Analysis:

Competitive Consideration:

• Total ongoing fees may be higher than percentage-based competitors
• Break-even revenue requirements may be higher
• Less flexibility in down periods

3. Technology Vendor Lock-In

Mandatory Affiliate Purchases:

• Must purchase Technology System from ProVision (affiliate): $32,051-$38,960
• Must use ProVision for ongoing technology support
• Must use designated billing/payment processor
• Must use Healthy Contributions for certain programs

Implications:

• Limited vendor negotiation leverage
• Potential for higher costs than open market
• Dependency on affiliate performance and pricing

4. Extensive Compliance Requirements

Operational Mandates:

• Minimum staffing hours required
• Must offer small/large group training
• Must offer coaching services
• Must implement Coaching Suite
• Specific equipment and technology standards
• Regular equipment replacement requirements (5-7 years cardio, 10 years strength)

Financial Impact:

• Higher labor costs than unstaffed competitors
• Ongoing equipment replacement expenses
• Training and certification requirements
• Compliance monitoring and potential fees

5. Grand Opening Investment Requirements

Mandatory Spending:

• $11,000-$23,000 required for Grand Opening and Ramp Up Program
• Amount varies by market tier (population density)
• Must be spent within specific 120-day window
• Franchisor may require payment if minimum not met

Market Tier Requirements:

• Tier 1 (50,000+ population in 3-mile radius): $23,000
• Tier 2 (25,000-49,999 population): $16,000
• Tier 3 (under 25,000 population): $11,000

6. Renovation and Remodeling Obligations

Ongoing Capital Requirements:

The FDD states: "You must upgrade your Anytime Fitness center as a condition to renew your franchise."

Expected Costs:

• Recommended $1,000/month Club Enhancement savings ($12,000/year)
• Selective cardio equipment replacement: 5-7 years
• Strength equipment replacement: ~10 years
• Facility renovation at renewal
• Technology upgrades as standards evolve

Uncertainty Factor: The FDD notes: "However, we do not represent these amounts will be sufficient to complete the remodeling. The actual costs you incur will vary, depending on the condition of your Anytime Fitness center, construction and other costs in your market, and our requirements at that time."

7. Regulatory Complexity

State-Specific Challenges:

The FDD identifies numerous regulatory considerations:

• State-specific membership contract regulations
• Length limitations on customer contracts
• Required contract provisions and formatting
• Customer termination rights
• Bonding requirements for pre-paid fees
• Staffing requirements in some jurisdictions
• CPR certification requirements
• AED and first aid equipment mandates
• Tanning service regulations (if offered)
• Nutrition service regulations (if offered)
• Physical therapy licensing (if offered)
• Sales tax on memberships in some states

Compliance Burden:

• Varies significantly by location
• May require legal consultation
• Ongoing monitoring of regulatory changes
• Potential for unexpected costs

8. Parent Company Financial Concerns

⚠️ RED FLAG - Financial Condition Warning

The FDD includes this special risk disclosure:

"Financial Condition. The Franchisor's guarantor's financial condition as reflected in its financial statements (see Item 21) calls into question the Franchisor's financial ability to provide services and support to you."

Implications:

• Potential concerns about long-term franchisor stability
• May affect ability to deliver promised support
• Could impact system-wide initiatives
• Prospective franchisees should carefully review Item 21 financial statements

9. Litigation History

Notable Legal Issues:

The FDD discloses litigation involving affiliate The Bar Method, including:

• Illinois Attorney General action for franchise law violations (2009)
• New York Attorney General investigation (2009)
• Both cases involved failure to register and provide proper disclosures

Current Litigation:

• Spain franchisee lawsuit against affiliate AFI (filed 2021)
• Claims of breach of duties, untruthful disclosures, unreasonable fees
• Court dismissed case (2023), plaintiff appealed (2024)

Consideration:

• Past compliance issues with franchise regulations
• Ongoing international litigation
• Importance of thorough due diligence

Comparative Analysis Framework

Investment Level Comparison

Anytime Fitness Investment Range: $397,516 - $973,121

Typical Fitness Franchise Investment Ranges (General Industry Data):

Anytime Fitness Position:

• Mid-range investment level
• Competitive with similar 24-hour concepts
• Higher than boutique studios
• Lower than premium full-service clubs

Fee Structure Comparison Considerations

Anytime Fitness Model:

• Fixed monthly royalty: $799
• Fixed marketing fee: $600
• Fixed technology fee: $799
• Total fixed fees: $2,198/month

Alternative Industry Models:

1. Percentage-Based Royalty Model:

   • Typical range: 5-8% of gross revenue
   • Marketing: 1-3% of gross revenue
   • Technology: Varies or included in royalty
   • Scales with revenue performance

2. Hybrid Models:

   • Minimum monthly fee OR percentage (whichever is greater)
   • Provides franchisor protection while allowing franchisee flexibility

Break-Even Analysis:

To determine when Anytime Fitness fixed fees become advantageous:

Key Insight:

• An

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Your Anytime Fitness Franchise Due Diligence Checklist

Investing in an Anytime Fitness franchise requires thorough investigation and careful planning. This comprehensive checklist will guide you through the critical steps of evaluating this opportunity, from initial research through final decision-making.

Complete Due Diligence Timeline

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Phase 1: Initial Research (Weeks 1-2)

Document Review Checklist

FDD Analysis

• Read the entire FDD carefully (minimum 2 complete readings)
• Highlight all fees and costs in Items 5, 6, and 7
• Note all franchisor obligations in Item 11
• Review litigation history in Item 3
• Examine financial statements in Item 21
• Study Item 19 Financial Performance Representations thoroughly
• Review territory rights in Item 12
• Understand renewal and termination provisions in Item 17

Key Questions to Answer:

1. What is the total investment range? ($397,516 to $973,121)
2. What are the ongoing monthly fees?
   • Monthly Fee: $799
   • General Advertising Fee: $600
   • Base Technology Fee: $799
   • Local Marketing Spend: $600-$1,000 (depending on market tier)
   • Total Monthly: $2,798-$3,198 minimum
3. What is the initial franchise fee? ($22,500 to $42,500 depending on status)
4. What are the franchise term and renewal conditions? (Review Item 17)
5. What is the franchisor's financial condition? (Review Item 21 and Special Risk #4)

Brand Research

• Visit www.anytimefitness.com and review brand positioning
• Research Anytime Fitness on social media platforms
• Read online reviews on Google, Yelp, and franchise review sites
• Search for news articles about Anytime Fitness (last 2-3 years)
• Review competitor brands (Planet Fitness, 24 Hour Fitness, local gyms)
• Understand the 24/7 access model and its implications

Personal Assessment

• Evaluate your fitness industry experience and passion
• Assess your management and sales skills
• Determine your available capital (liquid and total)
• Consider your risk tolerance
• Evaluate your local market knowledge
• Assess your ability to work within a franchise system
• Consider staffing requirements and your ability to recruit/manage

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Phase 2: Professional Advisory Team (Weeks 2-3)

Franchise Attorney

What to Look For:

• Specialization in franchise law (not general business attorney)
• Experience reviewing FDDs (minimum 5+ years)
• Knowledge of fitness industry franchises (preferred)
• Licensed in your state
• No conflicts of interest with franchisor

Attorney's Scope of Work:

• Complete review of FDD
• Analysis of Franchise Agreement (Exhibit E)
• Review of Area Development Agreement if applicable (Exhibit F)
• Analysis of state-specific addenda (Exhibit G)
• Review of all ancillary agreements:
  • Healthy Contributions Agreement (Exhibit H)
  • Financing Documents (Exhibit I)
  • ProVision Technology Solutions Agreement (Exhibit J)
  • Club Management Software Agreements (Exhibit L)
  • Coaching Suite Addendum (Exhibit N)
  • Physical Therapy Program Addendum (Exhibit Q)
• Explanation of termination and renewal provisions
• Analysis of territory protection
• Review of dispute resolution provisions
• Assessment of transfer restrictions
• Identification of unfavorable terms
• Negotiation strategy (if applicable)

Key Issues for Attorney to Address:

Critical Red Flags in FDD:

1. Out-of-State Dispute Resolution (Special Risk #1): Mediation, arbitration in Minnesota, or litigation only in Minnesota
2. Spousal Liability (Special Risk #2): Spouse must guarantee all obligations
3. Mandatory Minimum Payments (Special Risk #3): Must pay fees regardless of sales
4. Financial Condition Concerns (Special Risk #4): Guarantor's financial condition raises questions
5. Unopened Franchises (Special Risk #5): Significant number of signed but unopened locations

Attorney Review Budget: $2,000-$3,500

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Franchise Accountant/CPA

What to Look For:

• Experience with franchise financial analysis
• Understanding of fitness industry economics
• Ability to create financial projections
• Knowledge of SBA lending (if seeking financing)

Accountant's Scope of Work:

• Review Item 19 Financial Performance Representations
• Analyze franchisor's financial statements (Item 21)
• Create realistic financial projections for your market
• Develop break-even analysis
• Model various scenarios (best case, realistic, worst case)
• Calculate return on investment timelines
• Assess working capital requirements
• Review tax implications of franchise ownership
• Analyze financing options and costs
• Review ongoing fee structure and impact on profitability
• Evaluate club enhancement program requirements ($1,000/month)

Financial Analysis Checklist:

• Initial Investment Analysis

  • Total investment: $397,516 to $973,121
  • Liquid capital required: Estimate $150,000-$200,000
  • Total net worth required: Estimate $500,000-$750,000

• Ongoing Cost Analysis

  • Monthly fees: $2,798-$3,198 minimum
  • Annual fees: $33,576-$38,376 minimum
  • Club enhancement: $12,000/year
  • Equipment replacement reserves
  • Technology upgrade reserves

• Revenue Projections

  • Review Item 19 data carefully
  • Adjust for your specific market
  • Consider ramp-up period (typically 12-24 months)
  • Model membership growth scenarios

• Break-Even Analysis

  • Calculate monthly break-even point
  • Determine time to break-even
  • Identify sensitivity factors

Accountant Review Budget: $1,500-$2,500

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Business Consultant (Optional)

When to Consider:

• Limited business ownership experience
• No fitness industry background
• Seeking objective third-party perspective
• Complex multi-unit development plans

Consultant Services:

• Market feasibility analysis
• Competitive landscape assessment
• Business plan development
• Operational planning
• Staffing strategy
• Marketing plan development

Consultant Budget: $2,000-$5,000 (if utilized)

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Phase 3: Financial Modeling (Weeks 3-4)

Create Detailed Financial Projections

Year 1 Pro Forma Income Statement Template

Operating Expenses (Year 1)

Note: This model does not include debt service, which could add $30,000-$60,000+ annually depending on financing.

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Cash Flow Analysis

Startup Capital Requirements

Monthly Cash Flow Projection (First 12 Months)

• Model membership growth curve (typically slow months 1-3, accelerating months 4-12)
• Include seasonal variations
• Account for payment processing timing
• Factor in accounts receivable collection
• Include debt service payments
• Plan for equipment replacement reserves
• Budget for unexpected expenses (10% contingency)

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Financing Options Analysis

Potential Funding Sources

SBA Loan Analysis (If Applicable)

Typical SBA 7(a) Loan Terms:

• Loan amount: 70-80% of total investment
• Interest rate: Prime + 2.75% (approximately 11-12% as of 2024)
• Term: 10 years (equipment/working capital), 25 years (real estate)
• Down payment: 20-30%
• Personal guarantee: Required
• Collateral: Required

Example SBA Loan Scenario:

• Total Investment: $600,000
• Down Payment (25%): $150,000
• Loan Amount: $450,000
• Interest Rate: 11.5%
• Term: 10 years
• Monthly Payment: $6,281
• Total Interest Paid: $303,720

Action Items:

• Contact SBA-approved lenders
• Gather required financial documentation
• Prepare business plan
• Obtain credit reports
• Identify collateral
• Calculate debt service coverage ratio

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Phase 4: Franchisee Validation Calls (Weeks 4-6)

How Many Franchisees to Contact

Recommended Contact Plan:

• Minimum: 10-15 franchisees
• Optimal: 20-30 franchisees
• Mix:
  • 40% successful, established franchisees (3+ years)
  • 30% newer franchisees (1-2 years)
  • 20

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Questions to Ask Anytime Fitness Franchise Development Team

Before investing in an Anytime Fitness franchise, conducting thorough due diligence is essential. The following questions are organized by category to help you gather critical information from the franchise development team. Questions marked with [CRITICAL] are particularly important and should be prioritized.

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Financial Questions

1. [CRITICAL] What are the total fees I'll pay in the first 12 months of operation?

Context: Beyond the initial franchise fee of $42,500, you'll face multiple ongoing fees including the Monthly Fee ($799), General Advertising Fee ($600), Base Technology Fee ($799), and potentially Coaching Suite fees.

Follow-up questions:

• Can you provide a month-by-month breakdown of all fees for the first year?
• Are there any fees that might increase during my first year?
• What happens if I don't open within 12 months—do I still pay the Monthly Fee?

Why this matters: The FDD shows initial investments ranging from $397,516 to $973,121, but understanding your actual first-year cash flow obligations is crucial for financial planning.

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2. [CRITICAL] What is the actual average revenue and profitability of franchisees in my market tier?

Context: The FDD includes Item 19 financial performance representations, but you need specific data for your market tier (Tier 1, 2, or 3, based on population density).

Follow-up questions:

• What percentage of franchisees in my tier are profitable?
• How long does it typically take to reach break-even in my tier?
• Can you provide contact information for franchisees in similar markets who opened in the last 2-3 years?
• What is the average membership count for clubs in my tier?

Why this matters: Your Grand Opening budget ($11,000-$23,000) and Local Marketing Spend ($600-$1,000/month) vary by tier, suggesting significant performance differences.

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3. What financing options are available, and what are typical approval rates?**

Context: The FDD states "We do not offer financing for any part of the initial investment."

Follow-up questions:

• Do you have relationships with preferred lenders who understand the Anytime Fitness model?
• What percentage of recent franchisees obtained SBA financing?
• What credit score and net worth do lenders typically require?
• Are there any financing incentives for veterans (who receive a 10% discount on franchise fees)?

Why this matters: With no franchisor financing, securing third-party funding is critical, and SBA loans add 2.25% in fees plus closing costs.

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4. [CRITICAL] Can you explain all the "hidden" or variable costs not clearly outlined in Item 7?

Context: The estimated initial investment doesn't include several potential costs mentioned elsewhere in the FDD.

Follow-up questions:

• What are typical costs for Construction Management Services (up to $13,500)?
• How much should I budget for equipment replacement in years 5-10?
• What are actual insurance costs in my state (estimate shows only $2,900-$3,450)?
• What are typical utility costs for a 4,000-6,500 sq ft facility?
• How much do franchisees typically spend on the Club Enhancement Program ($1,000/month recommended)?

Why this matters: The FDD notes equipment replacement may be needed in 5-7 years for cardio and 10 years for strength equipment—a significant unbudgeted expense.

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5. How do the Monthly Fee, royalty structure, and potential changes work?**

Context: The current Monthly Fee is $799, but the FDD states: "We reserve the right to periodically increase this fee and/or replace this fixed fee with a percentage-based monthly royalty on all gross revenue."

Follow-up questions:

• Has the Monthly Fee increased in the past 5 years? By how much?
• Under what circumstances would you convert to a percentage-based royalty?
• If converted to percentage-based, what rate would apply?
• How much notice would I receive before such a change?
• Are there any caps on fee increases?

Why this matters: Converting from a fixed $799 fee to a percentage of gross revenue could dramatically impact profitability, especially for high-performing locations.

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6. What are the actual costs for the required technology systems and ongoing support?**

Context: You must purchase the Technology System from ProVision (an affiliate) for $32,051-$38,960, plus pay a Base Technology Fee of $799/month.

Follow-up questions:

• What exactly is included in the $799/month Base Technology Fee?
• What technology costs are NOT included in this fee?
• How often does technology need to be upgraded or replaced?
• What are the costs for technology support beyond what's included?
• Can I use alternative technology providers for any components?

Why this matters: You're locked into an affiliate vendor with ongoing monthly fees, and the FDD notes ProVision charges $150/hour for support on non-ProVision installed equipment.

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7. How do vendor rebates and affiliate relationships affect my costs?**

Context: The FDD states: "These suppliers may pay vendor rebates to us and they may include our company and affiliates of ours."

Follow-up questions:

• Which vendors pay rebates to Anytime Fitness?
• What percentage rebates do you receive?
• Are these rebates reflected in lower prices for franchisees?
• For affiliate vendors (ProVision, SEB Distribution, Healthy Contributions), how do your prices compare to market alternatives?
• Can you provide a list of all affiliate vendors I'm required to use?

Why this matters: Mandatory affiliate vendors may not offer competitive pricing, and rebates to the franchisor could mean higher costs for you.

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8. What happens financially if I fail to meet development deadlines or performance standards?**

Context: The FDD lists multiple fees for non-compliance, including liquidated damages of $10,000 per undeveloped location under an Area Development Agreement.

Follow-up questions:

• What percentage of franchisees incur Peer Compliance Committee fines (up to $1,000)?
• What are the most common reasons for Standard Default Fees ($500/month)?
• How often are franchisees charged the Continuing Engagement Credit Fee (up to $1,200/year)?
• What happens if I can't meet the 12-month opening deadline?
• Can development deadlines be extended, and at what cost?

Why this matters: Multiple penalty fees could add thousands in unexpected costs if you face operational challenges.

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9. What are the real estate and construction cost variables in my market?**

Context: The FDD estimates assume $17.38/sq ft base rent and $6.03/sq ft CAM, with leasehold improvements ranging from $50,785 to $495,260.

Follow-up questions:

• What are actual rents in my target market?
• What tenant improvement allowances do franchisees typically negotiate (FDD notes average of $19/sq ft)?
• What factors cause the wide range in leasehold improvement costs?
• Are there markets where costs consistently exceed the high estimate?
• What construction contingencies should I budget beyond the estimates?

Why this matters: The nearly 10x range in leasehold improvement costs ($50,785-$495,260) suggests significant variability that could dramatically impact your total investment.

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10. What are the renewal and exit costs if I want to leave the system?**

Context: Renewal fee is $7,500; transfer fee is $9,999 (after opening) or $25,000 (before opening).

Follow-up questions:

• What percentage of franchisees renew their agreements?
• What are typical costs to upgrade a location to meet renewal standards?
• How much does the required Club Enhancement Program ($1,000/month recommended) actually cover for renewal upgrades?
• What are my obligations if I choose not to renew?
• What restrictions exist on selling my franchise?
• How long does the typical transfer process take?

Why this matters: The FDD notes you'll likely need to replace equipment and remodel to meet current standards at renewal, which could cost significantly more than the Club Enhancement Program funds.

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Support Questions

11. [CRITICAL] What exactly is included in the initial training program, and is it sufficient?

Context: The FDD mentions mandatory training in Woodbury, Minnesota, but doesn't specify duration or detailed curriculum in the provided excerpts.

Follow-up questions:

• How many days is the initial training program?
• What topics are covered in detail?
• Is the Coaching Suite training adequate to actually implement personal training programs?
• What percentage of franchisees request additional on-site assistance ($3,000 fee)?
• Can I bring additional staff to training?
• Is there ongoing training available, and at what cost?

Why this matters: The FDD shows an On-Site Relaunch Training fee of $3,000, suggesting many franchisees need additional help beyond initial training.

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12. [CRITICAL] What ongoing support will I actually receive for the $799 Monthly Fee?

Context: You pay $799/month in Monthly Fees, but the specific support services aren't detailed in the provided FDD excerpts.

Follow-up questions:

• How often will I have contact with a franchise support representative?
• What is the response time for support requests?
• Is there a dedicated support person for my region?
• What support is available for marketing, operations, and member retention?
• How do you support franchisees who are struggling?
• What is your franchisee satisfaction rating?

Why this matters: Understanding what you're paying for in ongoing fees is essential to evaluating the value proposition.

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13. How does the Coaching Suite system work, and what support is provided?**

Context: The Coaching Suite is mandatory for all new franchisees, with potential additional fees of $109-$149/month for some existing franchisees.

Follow-up questions:

• What exactly is the Coaching Suite platform?
• How do franchisees generate revenue from personal training and coaching?
• What training and support is provided for implementing coaching programs?
• What percentage of franchisees successfully implement profitable coaching programs?
• Are there additional costs beyond the monthly fee?
• Can I use other coaching/training software?

Why this matters: Personal training revenue is a key profit center, and the mandatory Coaching Suite system will impact your ability to generate this revenue.

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14. What technology support is included in the $799/month Base Technology Fee?**

Context: ProVision provides ongoing technology support, but the FDD notes they charge $150/hour for support on non-ProVision equipment.

Follow-up questions:

• What specific support services are included in the monthly fee?
• What is the typical response time for technology issues?
• What happens if my security system fails?
• How often are software updates released?
• What support is available for the mandatory Club Management Software?
• What technology issues are NOT covered by the monthly fee?

Why this matters: Technology failures could shut down your 24/7 operation, so understanding support availability is critical.

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15. How does the Operations Manual work, and how often is it updated?**

Context: The FDD references an Operations Manual provided online but doesn't detail its contents in the provided excerpts.

Follow-up questions:

• How comprehensive is the Operations Manual?
• How often is it updated?
• How are franchisees notified of changes?
• Can you provide a table of contents?
• Are there video tutorials or just written procedures?
• What happens if I disagree with a manual change that requires additional investment?

Why this matters: The FDD states "The franchise agreement may allow the franchisor to change its manuals and business model without your consent. These changes may require you to make additional investments."

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16. What marketing support and materials are provided?**

Context: You must spend $11,000-$23,000 on Grand Opening, pay $600/month to the General Advertising Fund, and spend $600-$1,000/month on local marketing.

Follow-up questions:

• What marketing materials and campaigns are provided by corporate?
• How is the General Advertising Fund spent?
• Do I get input on how the advertising fund is used?
• What local marketing support is available?
• Can I see examples of successful franchisee marketing campaigns?
• What digital marketing tools and support are provided?

Why this matters: With $18,200-$35,000 in first-year marketing costs (depending on tier), understanding what support you receive is essential.

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17. [CRITICAL] What happens if I'm struggling financially or operationally?

Context: The FDD mentions various default fees and penalties but doesn't detail support for struggling franchisees.

Follow-up questions:

• What support programs exist for underperforming franchisees?
• Can you provide turnaround assistance?
• What percentage of franchisees close in the first 3 years?
• Are there any fee deferrals or waivers available during difficult periods?
• What were the support mechanisms during COVID-19 closures?
• Can I get additional training or consulting without paying the $3,000 on-site fee?

Why this matters: Understanding how the franchisor supports struggling franchisees reveals their commitment to franchisee success.

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18. How does the Peer Compliance Committee work?**

Context: The FDD mentions a Peer Compliance Committee that can levy fines up to $1,000 for violations.

Follow-up questions:

• How is the Peer Compliance Committee selected?
• What violations typically result in fines?
• Can I appeal committee decisions?
• How often are fines actually levied?
• What is the process for addressing violations?
• Are there alternatives to fines for correcting issues?

Why this matters: Peer-imposed fines are unusual in franchising and could create additional financial pressure beyond franchisor-imposed fees.

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Territory Questions

19. [CRITICAL] What exactly is my Protected Territory, and what protection does it provide?

Context: The FDD references Protected Territories but doesn't detail the specific protections in the provided excerpts.

Follow-up questions:

• How is my Protected Territory defined (radius, population, zip codes)?
• Can other Anytime Fitness franchisees open near me?
• Can you open company-owned locations in my territory?
• What happens if another franchisee's marketing reaches my territory?
• Can I expand my territory?
• What are the consequences if I don't open within 12 months?

Why this matters: Territory protection directly impacts your ability to build and maintain membership, which is your primary revenue source.

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20. [CRITICAL] How many Anytime Fitness locations already exist in my market?

Context: Item 20 would show outlet information, but specific numbers aren't provided in the excerpts.

Follow-up questions:

• How many Anytime Fitness locations are within 5 miles of my proposed location?
• How many are within 10 miles?
• What are the membership counts at nearby locations?
• Are any nearby locations struggling or closed?
• What is the market saturation point for Anytime Fitness locations?
• How do you determine if a market can support another location?

Why this matters: Market saturation could limit your growth potential and member acquisition.

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21. Who are my main competitors in the market, and how does Anytime Fitness compete?**

Context: The FDD states: "Your competitors include other national fitness chains, personal training studios and local fitness centers."

Follow-up questions:

• What is the competitive landscape in my specific market?
• How many Planet Fitness, LA Fitness, or other chain locations are nearby?
• What is Anytime Fitness's competitive advantage?
• How do membership prices compare to competitors?
• What is the member retention rate compared to competitors?
• How does the 24/7 model perform against staffed competitors?

Why this matters: Understanding your competitive position is essential for realistic revenue projections.

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22. Can I open additional locations, and what are the requirements?**

Context: Area Development Agreements are available for 2+ locations, with reduced per-location fees.

Follow-up questions:

• What are the requirements to qualify for an Area Development Agreement?
• What are the development timelines for multiple locations?
• What happens if I can't meet development deadlines ($10,000 liquidated damages per location)?
• Can I add locations later without an Area Development Agreement?
• What are the benefits of multi-unit ownership?
• How do multi-unit owners perform compared to single-unit owners?

Why this matters: Multi-unit development offers fee discounts but comes with significant obligations and penalties for non-performance.

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23. What are the relocation and site selection policies?**

Context: Real estate costs vary significantly ($31,213-$50,721 for 3 months' rent + deposit), suggesting location is critical.

**Follow-

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Finding an Anytime Fitness Franchise Attorney & Accountant

Why You Need Franchise Specialists

Purchasing an Anytime Fitness franchise represents a significant financial commitment, with total initial investments ranging from $397,516 to $973,121. Given the complexity of the franchise relationship and the legal obligations you'll undertake, working with experienced franchise professionals is not optional—it's essential.

The Critical Difference: Franchise Specialists vs. General Practitioners

General Business Attorneys vs. Franchise Attorneys:

A general business attorney, no matter how competent, typically lacks the specialized knowledge required to properly evaluate a franchise disclosure document (FDD) and franchise agreement. Here's why franchise-specific experience matters:

• FDD Complexity: The Anytime Fitness FDD contains 23 items covering everything from litigation history to financial performance representations, with numerous exhibits including complex agreements
• Industry-Specific Issues: Franchise law involves unique concepts like territorial rights, renewal provisions, transfer restrictions, and post-termination covenants that general attorneys may not fully understand
• State Registration Requirements: Franchise sales are regulated in multiple states, and compliance requirements vary significantly
• Negotiation Leverage: Experienced franchise attorneys understand what terms are typically negotiable (very few in established systems like Anytime Fitness) versus what's standard industry practice

General Accountants vs. Franchise Accountants:

Similarly, franchise-specific accounting expertise is crucial because:

• Unique Fee Structures: Anytime Fitness has multiple ongoing fees (Monthly Fee, General Advertising Fee, Base Technology Fee, Coaching Suite Fee) that require specialized financial modeling
• Revenue Recognition: Understanding how membership billing, personal training revenue, and retail sales flow through the business
• Multi-Unit Considerations: If you're considering an Area Development Agreement for 2+ locations, the financial complexity increases exponentially
• Industry Benchmarking: Franchise accountants can compare Anytime Fitness financial performance against industry standards

Finding a Qualified Franchise Attorney

Where to Search

Professional Organizations:

1. American Bar Association (ABA) Forum on Franchising

   • Website: www.americanbar.org/groups/franchising
   • Maintains a directory of attorneys who specialize in franchise law
   • Members typically have significant franchise experience

2. International Franchise Association (IFA)

   • Website: www.franchise.org
   • Supplier Forum includes franchise attorneys
   • Look for attorneys with "Certified Franchise Executive" (CFE) designation

3. American Association of Franchise Dealers (AAFD)

   • Website: www.aafd.org
   • Focuses on franchisee advocacy
   • Can recommend franchisee-focused attorneys

State and Local Bar Associations:

• Most state bar associations have searchable directories
• Look for "franchise law" or "business law with franchise experience" specializations
• Local bar associations may have referral services

Referrals:

• Ask other Anytime Fitness franchisees (contact information available in Item 20/Exhibit C)
• Consult with franchisees of other fitness brands
• Ask your business network for recommendations

What to Look For in a Franchise Attorney

Essential Qualifications:

Red Flags to Avoid:

• Attorneys who primarily represent franchisors (conflict of interest)
• Lack of specific franchise experience
• Unwillingness to provide references
• Pressure to sign quickly without thorough review
• Inability to explain complex terms in plain English

Questions to Ask Potential Franchise Attorneys

During Initial Consultation:

1. Experience Questions:

   • How many years have you practiced franchise law?
   • What percentage of your practice is devoted to franchise law?
   • How many FDDs have you reviewed in the past year?
   • Have you reviewed Anytime Fitness or other fitness franchise FDDs?
   • Do you primarily represent franchisees or franchisors?
   • Have you handled franchise litigation? What types of cases?

2. Approach Questions:

   • What's your process for reviewing an FDD?
   • How long does a typical FDD review take?
   • Will you personally handle my matter or delegate to associates?
   • How do you communicate with clients during the review process?
   • What happens if issues arise after I sign?

3. Specific to Anytime Fitness:

   • Are you familiar with the fitness franchise industry?
   • What concerns do you typically see with 24/7 access fitness models?
   • Have you reviewed the Anytime Fitness securitization structure? (See Item 1)
   • What do you think about the dispute resolution provisions requiring arbitration in Minnesota?

4. Fee Structure Questions:

   • What are your fees for FDD review?
   • What's included in that fee?
   • What additional costs might I incur?
   • Do you offer flat-fee arrangements?
   • What's your retainer requirement?

Key Terms Franchise Attorneys Should Review in the Anytime Fitness FDD

Your attorney should pay particular attention to these critical areas:

Item 1 - Corporate Structure:

• The November 2021 securitization transaction and its implications
• The relationship between Anytime Fitness Franchisor LLC and its parent entities
• Management agreement with AFLLC and what it means for franchisee support

Item 3 - Litigation:

• The Spanish litigation against affiliate AFI
• Illinois and New York actions against The Bar Method (affiliate)
• What these cases reveal about franchisor practices

Item 4 - Bankruptcy:

• CEO Thomas Leverton's connection to CEC Entertainment bankruptcy
• CFO R. John Pindred's connection to Family Christian LLC bankruptcy
• Potential implications for franchisor stability

Item 5 & 6 - Fees:

• Initial franchise fee structure ($22,500 to $42,500 depending on status)
• Monthly Fee ($799) with right to convert to percentage-based royalty
• General Advertising Fee ($600/month, can increase to 2% of gross revenue)
• Base Technology Fee ($799/month)
• Coaching Suite Fee ($0-$149/month depending on agreement date)
• All fee escalation provisions and franchisor's unilateral right to increase

Item 7 - Initial Investment:

• Total range of $397,516 to $973,121
• Adequacy of working capital estimates
• Hidden costs not fully captured

Item 8 - Purchasing Restrictions:

• Mandatory purchase from affiliate ProVision ($32,051-$38,960)
• Mandatory billing vendor (non-affiliate but pays rebates)
• Mandatory use of Healthy Contributions (affiliate) for certain programs
• Limitations on your purchasing freedom

Item 11 - Franchisor Support:

• Pre-opening assistance provided
• Ongoing support obligations
• Training requirements
• Technology and software requirements
• Marketing fund management and spending

Item 12 - Territory:

• Protected Territory definition and limitations
• Franchisor's rights to compete within your territory
• Relocation provisions
• Impact of online/digital competition

Item 17 - Renewal, Termination, Transfer:

• 10-year initial term with one 10-year renewal option
• Renewal requirements (including $7,500 fee and facility upgrades)
• Termination provisions and cure periods
• Transfer restrictions and $9,999-$25,000 transfer fee
• Post-termination non-compete (2 years, 5-mile radius)

Item 19 - Financial Performance Representations:

• What's disclosed vs. what's not disclosed
• Methodology and assumptions
• How your situation might differ from reported results

Item 21 - Financial Statements:

• The "Special Risk" disclosure about guarantor's financial condition
• Implications for franchisor's ability to provide support

Dispute Resolution Provisions:

• Mediation requirements
• Arbitration in Minnesota (or closest AAA office to franchisor's principal office)
• Litigation venue in Minnesota
• Your waiver of jury trial
• Your waiver of punitive damages
• Limitations on class actions

State-Specific Addenda:

• Whether your state provides additional protections
• Modifications required by your state's franchise laws

Expected Attorney Costs

Typical Fee Ranges:

What Affects Attorney Costs:

• Attorney's experience level: More experienced attorneys charge higher rates but may be more efficient
• Geographic location: Attorneys in major metropolitan areas typically charge more
• Complexity of your situation: Multi-unit development, multi-state operations, or complex ownership structures increase costs
• Scope of services: Some attorneys offer flat-fee packages; others bill hourly
• Responsiveness requirements: Rush reviews cost more

Cost-Saving Tips:

1. Be organized: Provide all documents at once rather than piecemeal
2. Do preliminary research: Understand basic franchise concepts before meeting
3. Ask specific questions: Focused questions get focused (billable) answers
4. Consider flat-fee arrangements: Provides cost certainty
5. Use initial consultation wisely: Many attorneys offer free or low-cost initial consultations

Important Note: While $2,000-$5,000 may seem expensive, it's less than 1% of your total investment ($397,516-$973,121). This is not the place to cut corners. A good attorney can identify issues that could save you tens or hundreds of thousands of dollars.

Finding a Franchise Accountant

Why Franchise Accounting Expertise Matters

Franchise accounting differs significantly from general business accounting due to:

• Complex fee structures: Multiple ongoing fees with different calculation methods
• Revenue recognition issues: Membership billing, personal training, retail sales, and fitness incentive programs
• Multi-unit considerations: If pursuing Area Development, financial modeling becomes exponentially more complex
• Industry-specific metrics: Understanding key performance indicators specific to fitness franchises
• Franchise-specific tax issues: Treatment of franchise fees, ongoing royalties, and advertising contributions

Where to Find Franchise Accountants

Professional Organizations:

1. Franchise Finance Corporation of America (FFCA)

   • Maintains network of franchise-experienced accountants
   • Website: www.franchisefinance.com

2. International Franchise Association (IFA)

   • Supplier members include accounting firms
   • Look for CPAs with franchise specialization

3. American Institute of CPAs (AICPA)

   • Search for CPAs with franchise industry experience
   • Website: www.aicpa.org

Referral Sources:

• Other Anytime Fitness franchisees
• Your franchise attorney
• Local business associations
• SBA lenders (they often work with franchise-experienced accountants)

Services Franchise Accountants Should Provide

Pre-Purchase Services:

1. Financial Model Review and Development

   • Analyze Item 19 Financial Performance Representations
   • Create realistic pro forma financial statements for your specific situation
   • Model various scenarios (optimistic, realistic, pessimistic)
   • Calculate break-even analysis
   • Project cash flow for first 3-5 years

2. Item 7 Initial Investment Analysis

   • Review adequacy of estimated initial investment
   • Identify potential hidden costs
   • Adjust estimates for your specific market
   • Determine total capital needed (including working capital reserves)

3. Ongoing Fee Structure Analysis

   • Calculate total annual cost of all fees
   • Model impact of fee increases (franchisor has right to increase most fees)
   • Analyze impact if Monthly Fee converts to percentage-based royalty
   • Compare fee structure to industry standards

4. Financing Assistance

   • Prepare financial projections for lender presentations
   • Assist with SBA loan applications
   • Review loan terms and implications
   • Calculate debt service coverage ratios

5. Tax Structure Advice

   • Recommend optimal business entity (LLC, S-Corp, C-Corp)
   • Explain tax implications of different structures
   • Advise on treatment of franchise fees and ongoing royalties
   • Plan for state and local tax obligations
   • Discuss tax implications of multi-unit ownership

Post-Purchase Services:

1. Accounting System Setup

   • Establish chart of accounts specific to fitness franchise operations
   • Set up QuickBooks or other accounting software
   • Integrate with mandatory billing vendor systems
   • Establish procedures for tracking multiple revenue streams

2. Bookkeeping Services

   • Monthly financial statement preparation
   • Accounts payable/receivable management
   • Payroll processing
   • Sales tax compliance
   • Franchise fee calculation and payment tracking

3. Financial Analysis and Reporting

   • Monthly/quarterly financial reviews
   • Key performance indicator tracking
   • Variance analysis (actual vs. budget)
   • Benchmarking against Item 19 representations and industry standards

4. Tax Compliance

   • Quarterly estimated tax payments
   • Annual tax return preparation
   • Sales tax returns
   • Payroll tax returns
   • Multi-state tax compliance (if applicable)

5. Strategic Planning

   • Annual budgeting
   • Multi-unit expansion analysis
   • Exit planning and valuation

Questions to Ask Potential Franchise Accountants

Experience and Qualifications:

1. How many years have you worked with franchise businesses?
2. How many fitness franchise clients do you currently serve?
3. Have you worked with Anytime Fitness franchisees specifically?
4. What percentage of your practice involves franchise clients?
5. Are you a CPA? Do you have any franchise-specific certifications?
6. Can you provide references from franchise clients?

Service Approach:

1. What's your process for analyzing an FDD's financial performance representations?
2. How do you approach creating pro forma financial statements for a new franchise?
3. What accounting software do you recommend for fitness franchises?
4. How do you handle the integration with mandatory billing vendors?
5. What's your communication style and frequency with clients?
6. Do you provide strategic business advice or just compliance services?

Specific to Anytime Fitness:

1. Are you familiar with the fitness franchise industry's financial characteristics?
2. How do you account for the multiple revenue streams (memberships, personal training, retail)?
3. What's your experience with the Healthy Contributions billing system?
4. How do you track and report the various fees (Monthly Fee, Advertising Fee, Technology Fee, Coaching Suite Fee)?
5. What key performance indicators should I track?

Fees and Services:

1. What are your fees for pre-purchase financial analysis?
2. Do you offer flat-fee or hourly arrangements?
3. What's included in your monthly bookkeeping service?
4. What are your fees for tax preparation?
5. Are there additional charges for phone consultations or email questions?
6. What's your retainer requirement?

Expected Accountant Costs

Pre-Purchase Services:

Ongoing Services:

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Is Anytime Fitness Franchise Right for You? Final Verdict

Summary of Key Findings

Investment Range Recap

The total investment necessary to begin operation of an Anytime Fitness center ranges from $397,516 to $973,121. This includes:

• Initial Franchise Fee: $42,500 (standard rate; reduced rates available for veterans and existing franchisees)
• Technology System: $32,051 to $38,960 (mandatory purchase from affiliate ProVision)
• Leasehold Improvements: $50,785 to $495,260 (significant variance based on location and existing conditions)
• Fitness Equipment: $123,310 to $151,866
• Grand Opening/Ramp Up: $11,000 to $23,000 (depending on market tier)
• Additional Funds (3 months): $46,173 to $47,673

Ongoing Monthly Fees (per location):

• Monthly Fee: $799
• General Advertising Fee: $600
• Base Technology Fee: $799
• Local Marketing Spend: $600-$1,000 (depending on market tier)
• Total Monthly Obligations: $2,798 to $3,198 per location

Financial Stability Assessment

⚠️ CRITICAL RED FLAG: The FDD includes a specific risk disclosure stating: "The Franchisor's guarantor's financial condition as reflected in its financial statements (see Item 21) calls into question the Franchisor's financial ability to provide services and support to you."

Additional Concerns:

• The franchisor was formed in October 2021 as part of a securitization transaction, creating a complex corporate structure
• The CEO (Thomas Leverton) was previously CEO of CEC Entertainment (Chuck E. Cheese), which filed for Chapter 11 bankruptcy in June 2020
• The CFO (R. John Pindred) was previously an officer of Family Christian, LLC, which filed for Chapter 11 bankruptcy in February 2015
• The company underwent significant restructuring in November 2021 through a securitization transaction
• Management services are provided by the predecessor company (AFLLC) under a management agreement

Positive Indicators:

• Anytime Fitness has been operating since 2002 (under predecessor)
• As of December 31, 2023: 2,437 franchised locations operating in the United States
• Established brand with 20+ years of operational history
• International presence through affiliate operations

Support and Training Summary

Initial Training: Comprehensive 5-day program in Woodbury, Minnesota covering:

• Club operations and management
• Sales and marketing
• Technology systems
• Coaching Suite implementation
• Member service standards

Ongoing Support Includes:

• Operations Manual (provided online)
• Field support representatives
• Marketing and advertising assistance
• Technology support through ProVision
• Annual Conference (attendance mandatory for Principal Owner)
• Continuing Engagement Credit (CEC) requirements

⚠️ Support Concerns:

• Additional on-site assistance costs $3,000 per visit
• No-show fees of $500 for missed training
• Cancellation fees up to $10,500 for on-site training
• Customer service webinar fee of $250 if standards not met
• Continuing Engagement Credit fee up to $1,200 annually if requirements not completed

Territory and Competition

Territory Protection:

• Protected Territory granted based on population density and demographics
• Typically 8,000 to 15,000 people within defined radius
• Franchisor can operate or franchise outside Protected Territory without restriction
• No exclusive rights within Protected Territory for certain activities

⚠️ Territory Red Flags:

• Franchisor reserves right to operate or franchise "Express Markets" within your Protected Territory
• Franchisor can sell products/services through alternative channels (internet, catalog, etc.) within your territory
• Franchisor can acquire or be acquired by competitors operating in your territory
• No guarantee of territorial exclusivity for all Anytime Fitness activities

Competition Factors:

• Mature fitness center market in most areas
• Competition from national chains, boutique studios, and local gyms
• 24/7 access model is no longer unique in the marketplace

Franchisee Satisfaction Indicators

⚠️ SIGNIFICANT CONCERN - Unopened Franchises: The FDD includes a specific risk disclosure: "The Franchisor has signed a significant number of Franchise Agreements with franchisees who have not yet opened their outlets."

System Growth Data (2021-2023):

Concerning Trends:

• Minimal net growth (2 locations) in 2021
• High closure rate: 72-75 closures annually
• 115 new openings in 2023, but 72 closures = 37% closure rate relative to openings
• Signed but unopened franchise agreements indicate potential development challenges

Positive Indicators:

• System is growing (net positive growth each year)
• Large existing franchisee base (2,437 locations)
• Established operational systems and brand recognition

Risk vs. Reward Assessment

Primary Risks Identified

1. Financial Stability Concerns (HIGH RISK)

• Franchisor's financial condition explicitly questioned in FDD
• Complex corporate structure created through securitization
• Management team history includes bankruptcy experiences

2. High Ongoing Costs (MEDIUM-HIGH RISK)

• Monthly obligations of $2,798-$3,198 per location before rent, utilities, and payroll
• Technology fees locked to affiliate vendor ($799/month)
• Mandatory spending requirements (Grand Opening, Local Marketing)
• Multiple penalty fees for non-compliance

3. Limited Territory Protection (MEDIUM RISK)

• Franchisor retains significant rights within your Protected Territory
• Express Markets can be franchised in your territory
• Alternative distribution channels permitted
• Potential for cannibalization from other Anytime Fitness locations

4. Vendor Restrictions (MEDIUM RISK)

• Mandatory purchases from affiliate ProVision for technology ($32,051-$38,960 initial)
• Mandatory billing vendor (non-affiliate, but franchisor receives rebates)
• Limited ability to negotiate pricing or seek competitive alternatives
• Over 90% of initial purchases must meet franchisor specifications

5. Closure Rate (MEDIUM RISK)

• 72 closures annually represents significant franchisee turnover
• 37% closure rate relative to new openings in 2023
• Indicates operational challenges or market saturation

6. Dispute Resolution (MEDIUM RISK)

• Mediation at location selected by mediator
• Arbitration in Minnesota (or location of franchisor's principal office)
• Litigation only in Minnesota
• Out-of-state dispute resolution increases costs and reduces leverage

7. Spousal Liability (MEDIUM RISK)

• Spouse must guarantee all financial obligations
• Places marital and personal assets at risk
• Applies even if spouse has no ownership interest

Potential Rewards and Opportunities

1. Established Brand Recognition

• 20+ years of operational history
• 2,437+ locations provide brand credibility
• Recognized 24/7 access model

2. Recurring Revenue Model

• Monthly membership fees provide predictable income
• Multiple revenue streams: memberships, personal training, retail, group programs
• Fitness industry growth trends favorable

3. Operational Systems

• Comprehensive training and support
• Proven business model
• Technology infrastructure provided
• Marketing and advertising support

4. Scalability

• Multi-unit development opportunities available
• Reduced franchise fees for additional locations
• Club Purple/Platinum programs reward high performers

5. Flexible Staffing Model

• 24/7 access reduces staffing requirements
• Technology-enabled security and access control
• Lower labor costs compared to fully-staffed facilities

Risk Mitigation Strategies

If You Decide to Proceed:

1. Financial Due Diligence

   • Retain experienced franchise attorney and accountant
   • Review Item 21 financial statements thoroughly with your accountant
   • Understand the securitization structure and its implications
   • Verify franchisor's ability to fulfill support obligations
   • Secure adequate financing with contingency reserves

2. Validation Calls

   • Contact minimum 20-30 existing franchisees (mix of successful and struggling)
   • Specifically ask about franchisor support quality
   • Inquire about actual vs. projected revenues and expenses
   • Understand reasons for the 72 annual closures
   • Verify technology system reliability and support responsiveness

3. Market Analysis

   • Conduct independent demographic and competitive analysis
   • Verify population density and income levels in proposed territory
   • Identify all competing fitness facilities within 5-mile radius
   • Assess market saturation and growth potential
   • Understand local regulations affecting fitness centers

4. Financial Modeling

   • Build conservative financial projections (use Item 19 data cautiously)
   • Model break-even scenarios with various membership levels
   • Account for all ongoing fees and mandatory spending
   • Include contingency for equipment replacement (5-10 years)
   • Plan for renovation costs at renewal

5. Contract Negotiation

   • Attempt to negotiate stronger territory protection
   • Seek clarification on franchisor's financial stability guarantees
   • Request performance guarantees for support services
   • Consider shorter initial term to limit long-term exposure
   • Negotiate transfer and renewal terms

6. Insurance and Legal Protection

   • Obtain adequate liability insurance (minimum $3M aggregate)
   • Consider business interruption insurance
   • Verify bond requirements in your state
   • Understand personal guarantee implications
   • Consult attorney on asset protection strategies

Ideal Franchisee Profile for Anytime Fitness

Financial Requirements

Minimum Qualifications:

• Liquid Capital: $150,000-$250,000 (estimated, not specified in FDD)
• Net Worth: $400,000-$500,000 (estimated, not specified in FDD)
• Total Investment: $397,516 to $973,121
• Working Capital: Minimum 6 months operating expenses ($100,000+)

Financial Characteristics:

• Access to SBA or conventional financing
• Ability to sustain 12-18 months without positive cash flow
• Reserves for equipment replacement and renovations
• Multiple income sources or financial backing
• Conservative debt-to-income ratio

Skills and Experience Needed

Highly Beneficial:

• Previous fitness industry experience (club management, personal training, or operations)
• Multi-unit retail or service business management
• Sales and marketing expertise
• Staff recruitment, training, and management
• Financial management and P&L responsibility
• Technology proficiency

Minimum Requirements:

• Business management experience
• Customer service orientation
• Basic financial literacy
• Willingness to learn fitness industry operations
• Ability to delegate and manage staff

Not Required:

• Personal training certification (can hire certified trainers)
• Fitness industry background (training provided)

Personal Characteristics

Essential Traits:

• Hands-on operator: Especially in first 2-3 years
• Sales-oriented: Membership sales drive revenue
• Community-focused: Local marketing and networking critical
• Detail-oriented: Compliance requirements extensive
• Resilient: Ability to handle challenges and setbacks
• Coachable: Willingness to follow system and accept feedback
• Health/fitness passion: Genuine interest in helping others achieve fitness goals

Success Indicators:

• Previous business ownership experience
• Track record of meeting/exceeding goals
• Strong work ethic and self-motivation
• Excellent interpersonal skills
• Problem-solving ability
• Financial discipline

Time Commitment Expectations

Pre-Opening Phase (3-6 months):

• Full-time commitment (40-60 hours/week)
• Site selection and lease negotiation
• Construction oversight
• Staff recruitment and training
• Pre-sale marketing activities

First Year of Operations:

• 50-70 hours/week (owner involvement critical)
• Hands-on management and member interaction
• Sales and marketing activities
• Staff training and supervision
• Systems implementation and refinement

Ongoing Operations (Years 2+):

• 30-50 hours/week (can reduce with strong management team)
• Strategic oversight and planning
• Financial management
• Marketing and community engagement
• Staff management and development

Multi-Unit Operators:

• Add 20-30 hours/week per additional location initially
• Requires strong management team and systems
• Regional manager may be necessary for 4+ locations

Business Goals Alignment

This Franchise Is Best Suited For:

✅ Semi-absentee owners (after initial ramp-up period with strong manager) ✅ Multi-unit operators seeking to build portfolio (reduced fees for additional units) ✅ Fitness enthusiasts wanting to own a business in their passion area ✅ Entrepreneurs seeking recurring revenue model ✅ Individuals with $400K+ net worth and $150K+ liquid capital ✅ Business owners comfortable with franchise system compliance ✅ Long-term investors (10-year initial term, renovation required at renewal)

This Franchise May NOT Be Suitable For:

❌ Passive investors seeking truly absentee ownership ❌ Individuals with limited capital or financial reserves ❌ Entrepreneurs requiring quick return on investment (12-18+ month ramp-up typical) ❌ People uncomfortable with extensive vendor restrictions ❌ Individuals seeking territorial exclusivity ❌ Business owners concerned about franchisor financial stability ❌ Entrepreneurs wanting maximum operational flexibility

Overall Recommendation Rating

⚠️ PROCEED WITH EXTREME CAUTION - Rating: 5/10

Rationale:

Anytime Fitness offers an established brand with proven operational systems and a large franchisee network. The 24/7 access model, recurring revenue structure, and comprehensive support systems are attractive features. However, significant concerns about franchisor financial stability, high ongoing costs, limited territory protection, and concerning closure rates warrant extreme caution.

The FDD's explicit disclosure that the franchisor's financial condition "calls into question" its ability to provide services is highly unusual and represents a major red flag. Combined with the complex securitization structure, management team bankruptcy history, and high number of unopened franchise agreements, potential franchisees face substantial risk.

Recommendation by Candidate Profile:

Next Steps If Moving Forward

Despite the concerns outlined above, if you decide to pursue an Anytime Fitness franchise, follow these steps:

1. Contact Franchise Development

• Website: www.anytimefitness.com
• Phone: 800-704-5004
• Address: 111 Weir Drive, Woodbury, MN 55125
• Email: info@anytimefitness.com

Initial Discussion Topics:

• Available territories in your target market
• Current franchise fee incentives or promotions
• Timeline for development and opening
• Clarification on financial stability concerns
• Support services and resources available

2. Request and Review FDD

• Request current Franchise Disclosure Document
• Allow 14-day waiting period before signing anything

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Anytime Fitness Franchise FAQs

Q: How much does an Anytime Fitness franchise cost?

A: The total investment to open an Anytime Fitness franchise ranges from $397,516 to $973,121 according to the 2024 FDD. This includes the initial franchise fee of $42,500, technology equipment ($32,051-$38,960), fitness equipment ($123,310-$151,866), leasehold improvements ($50,785-$495,260), and additional working capital. The wide range reflects differences in real estate costs, location size (typically 4,000-6,500 square feet), and market conditions.

Q: What is the Anytime Fitness franchise fee?

A: The standard initial franchise fee is $42,500 for a single location. However, Anytime Fitness offers reduced fees for veterans ($38,250), existing franchisees ($35,000), and multi-unit developers. For example, if you commit to opening 2 locations under an Area Development Agreement, the total development fee is $75,000 ($37,500 per location). The franchise fee is non-refundable and due in full when you sign the Franchise Agreement.

Q: How much do Anytime Fitness franchise owners make?

A: The FDD does not provide specific earnings information for individual franchise owners in Item 19. While the document includes financial performance representations, it does not disclose average owner income, profit margins, or typical franchisee earnings. Prospective franchisees should contact current and former franchisees (listed in Item 20/Exhibit C) to discuss their actual financial experiences and profitability.

Q: What is the Anytime Fitness franchise failure rate?

A: The FDD does not explicitly state a "failure rate." However, Item 20 provides outlet information showing the number of franchises that opened, closed, were terminated, or were not renewed during recent years. Prospective franchisees should carefully review the outlet tables in Item 20 and contact franchisees who have left the system (listed in Exhibit C) to understand reasons for closures and assess business viability.

Q: Does Anytime Fitness provide financing?

A: No, Anytime Fitness does not directly offer financing for the initial investment, as stated in Item 7. However, the FDD notes that "the availability and terms of financing will depend on factors like the availability of financing generally, your credit worthiness, your relationship with local banks, your experience in the fitness industry, and any additional collateral you may offer." Franchisees may pursue SBA loans or traditional bank financing independently.

Q: How long is the Anytime Fitness franchise agreement?

A: The FDD does not specify the franchise agreement term in the sections provided. This information would typically be found in Item 17 (Renewal, Termination, Transfer and Dispute Resolution), but the detailed content is not included in the provided FDD text. Prospective franchisees should review the complete Item 17 and the Franchise Agreement (Exhibit E) for specific term length and renewal conditions.

Q: What territory do you get with an Anytime Fitness franchise?

A: The FDD indicates that territory provisions are described in Item 12, but the detailed content is not provided in the excerpts. The document mentions a "Protected Territory" and notes that franchisees have 12 months from signing to open their center, after which they must begin paying the Monthly Fee even if not yet open. Specific territory size, exclusivity provisions, and restrictions would be detailed in the complete Item 12 section.

Q: Is an Anytime Fitness franchise a good investment?

A: This depends on multiple factors including your market, management skills, and financial resources. Positive indicators include: established brand with extensive franchise network, 24-hour access model with reciprocity benefits, and multiple revenue streams (memberships, personal training, group training). Concerns include: mandatory monthly fees totaling $2,198+ regardless of revenue ($799 Monthly Fee + $600 Marketing Fee + $799 Technology Fee), significant ongoing technology and equipment replacement costs, and the requirement to spend $11,000-$23,000 on grand opening marketing. The FDD includes a Special Risk warning about the franchisor's financial condition.

Q: How do I get an Anytime Fitness FDD?

A: To obtain an Anytime Fitness FDD, contact the franchise development team at 111 Weir Drive, Woodbury, MN 55125 or call 800-704-5004. You can also reach them at info@anytimefitness.com or visit www.anytimefitness.com. By law, Anytime Fitness must provide you with the FDD at least 14 calendar days before you sign any binding agreement or make any payment. The FDD is also available in alternative formats upon request.

Q: Can I sell my Anytime Fitness franchise?

A: Yes, but transfers require franchisor approval and payment of a transfer fee. The transfer fee is $25,000 if you transfer before opening the center, or $9,999 if you transfer after opening. Club Platinum or Club Purple members purchasing an existing center for under $125,000 pay 50% of the standard transfer fee. You must also pay any broker fees or commissions incurred in connection with the transfer, and the proposed buyer must meet Anytime Fitness's qualification standards.

Q: What support does Anytime Fitness provide?

A: According to Item 11, Anytime Fitness provides comprehensive support including: initial training in Woodbury, Minnesota (travel and lodging at your expense), ongoing operational support, access to the Operations Manual, technology and software support through affiliate ProVision, marketing materials and programs, and the Coaching Suite training platform. The franchisor also offers site selection assistance, construction guidance through approved vendors, and ongoing field support. However, franchisees pay separately for many support services including on-site training ($3,000) and additional assistance.

Q: What are the ongoing fees for Anytime Fitness franchise?

A: Ongoing monthly fees total at least $2,198 per location: Monthly Fee ($799), General Advertising and Marketing Fee ($600), and Base Technology Fee ($799). Additional fees may include: Coaching Suite Fee ($0-$149 depending on agreement date and number of locations), Local Marketing Spend requirement ($600-$1,000/month depending on market tier), Conference Fee ($459-$689 annually), and Club Enhancement Program ($1,000/month recommended). The franchisor reserves the right to increase fees and may replace the fixed Monthly Fee with a percentage-based royalty on all gross revenue with 30 days' notice.

Q: How long is Anytime Fitness franchise training?

A: The FDD does not specify the exact duration of initial training in the provided sections. Item 11 indicates that the "Principal Operator" and at least one "Principal Owner" must attend mandatory initial training in Woodbury, Minnesota or another designated location. The training is included in your initial franchise fee, though you pay your own travel and living expenses. For existing franchisees implementing the Coaching Suite, virtual training is available for $250 per person. On-site relaunch or additional assistance training typically lasts 2-6 days at the franchisor's discretion.

Q: Can I run an Anytime Fitness franchise as an absentee owner?

A: The FDD addresses this in Item 15 but the detailed content is not provided in the excerpts. However, the document indicates you must designate a "Principal Operator" for your business and requires minimum staffing hours per week. The franchise model requires offering personal training, small and/or large group training, and coaching services, which necessitates qualified staff. While the 24-hour access model allows unstaffed hours, the requirement for staffed hours and active management suggests some level of owner involvement or strong on-site management is necessary.

Q: What are the main competitors to Anytime Fitness?

A: According to Item 1, Anytime Fitness competes in a "developed market" with "other national fitness chains, personal training studios and local fitness centers." The FDD specifically mentions that affiliate OrangeTheory Fitness (which became part of the same parent company in April 2024) operates 1,289 franchised studios in the U.S. Other affiliated brands under the same parent company include Basecamp Fitness (16 franchised studios), The Bar Method (73 franchised studios), and Waxing the City (150 franchised studios), though these focus on different fitness niches. Major competitors would include Planet Fitness, LA Fitness, 24 Hour Fitness, and various regional and boutique fitness chains.

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Key Considerations for Prospective Franchisees

Financial Requirements:

• Minimum liquid capital needs are not specified in the provided FDD sections
• Total investment: $397,516 - $973,121
• Ongoing fees: Minimum $2,198/month plus local marketing requirements
• 12-month timeline to open or begin paying Monthly Fee

Important Red Flags:

1. Special Risk Warning: The FDD includes a mandatory disclosure that "The Franchisor's guarantor's financial condition as reflected in its financial statements (see Item 21) calls into question the Franchisor's financial ability to provide services and support to you."
2. Fee Structure Changes: Franchisor reserves the right to replace fixed Monthly Fee with percentage-based royalty on 30 days' notice
3. Mandatory Spending: Significant required expenditures including $11,000-$23,000 grand opening, ongoing local marketing minimums, and equipment replacement cycles (cardio 5-7 years, strength ~10 years)
4. Out-of-State Dispute Resolution: Mediation, arbitration, and litigation must occur in Minnesota or at locations selected by the franchisor

Positive Factors:

• Established brand with extensive network
• 24-hour access model with member reciprocity across locations
• Multiple pricing tiers for veterans and multi-unit operators
• Comprehensive technology and support systems
• Flexible ownership options (single unit or multi-unit development)

Prospective franchisees should conduct thorough due diligence, including speaking with current and former franchisees, reviewing complete financial statements in Item 21, and consulting with franchise attorneys and accountants before making an investment decision.