UFOC

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Sample UFOC

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ATHLETIC NATION

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FRANCHISE OFFERING CIRCULAR

Athletic Nation Franchise Corp.

a California corporation

6475 Camden Ave. Suite 100

San Jose, CA 95120

408-268-5310

We offer a franchise to operate a Athletic Nation Men's Fitness Gym business which provides personal and group fitness training to men.

Your initial franchise fee is $25,000. The total initial investment for your franchise will range from $42,815.00 to $59,980.00.

RISK FACTORS

THE FRANCHISE AGREEMENT REQUIRES THE FRANCHISEE TO ARBITRATE WITH, OR SUE, THE FRANCHISOR (AND/OR RELATED PERSONS/ENTITIES) ONLY IN CALIFORNIA. IF YOU ARE NOT FROM CALIFORNIA, THIS OUT OF STATE ARBITRATION AND/OR LITIGATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST MORE TO ARBITRATE WITH, OR SUE THE FRANCHISOR (AND/OR RELATED PERSONS-ENTITIES) IN CALIFORNIA THAN YOUR HOME STATE.

THE POSSIBLE SUCCESS OF YOUR FRANCHISE MAY BE DEPENDENT ON THE LOCATION OR AREA YOU CHOOSE, THE LOCAL MARKET FOR THE PRODUCTS AND SERVICES OFFERED, COMPETITION AND OTHER FACTORS. THESE FACTORS, ALONG WITH YOUR OWN ABILITY IN


OPERATING YOUR FRANCHISE SYSTEM, TOGETHER WITH YOUR FINANCIAL AND OTHER RESOURCES, ARE THE THINGS MOST LIKELY TO DETERMINE YOUR POSSIBLE SUCCESS. THERE ARE NO ASSURANCES THAT YOU WILL BE SUCCESSFUL AND THIS IS A SPECULATIVE INVESTMENT.

THE FRANCHISOR HAS BEEN IN EXISTENCE FOR A SHORT PERIOD OF TIME (SINCE August 2006). THEREFORE, THERE IS ONLY A BRIEF OPERATING HISTORY TO ASSIST YOU IN JUDGING WHETHER OR NOT TO MAKE THIS INVESTMENT.

THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.

Information comparing franchisees is available. Call the state administrators listed in Exhibit F or your public library for sources of information.

Registration of this franchise with the state does not mean that the state recommends or has verified the information in this offering circular. If you learn that anything in this offering is untrue, contact the Federal Trade Commission and the appropriate state authority listed in Exhibit F.

The descriptions in this Offering Circular of the various documents that you will be asked to sign are required to be brief and are for general informational purposes only. The actual provisions of these documents will control in any case and you should refer to the Franchise Agreement and other documents for more complete information. You are urged to carefully review all documents, including a comparison to any prior Agreement if a cancellation, renewal, or replacement of an existing Franchise Agreement is involved, as well as this Offering Circular, with independent advisors who can provide legal, business, and/or economic guidance, such as a lawyer and/or accountant.

You should understand that every detail of your Franchise will be important not only to you, but to us and all other Franchisees in order to: (a) develop and maintain high and uniform operating standards based; (b) increase the demand for services we offer to the public; and (c) establish and maintain a reputation for offering uniform and high quality services, ethical business practices and integrity. A fundamental requirement of your joining and remaining part our franchised system will be your commitment to the operation of your franchise in accordance with our standards

You also should understand the following business realties: A Athletic Nation Men's Fitness Gym franchise involves business risks. Any volume of business, profit, and/or possible success is primarily dependent on your ability and efforts as an independent business operator, as well as the degree to which you follow our system. Your success cannot be guaranteed.


TABLE OF CONTENTS

OF

FRANCHISE OFFERING CIRCULAR

Item 1             The Franchisor, its Predecessors and Affiliate........   4

Item 2             Business Experience..................   6

Item 3             Litigation......................   8

Item 4            Bankruptcy.....................   9

Item 5             Initial Franchise Fee..................   10

Item 6            Other Fees .....................    11

Item 7            Initial Investment...................    14

Item 8            Restrictions on Sources of Products and Services.......   17

Item 9             Franchisee's Obligations................   19

Item 10           Financing......................   21

Item 11           Franchisor's Obligations................   22

Item 12           Territory......................   24

Item 13           Trademarks.....................   25

Item 14           Patents, Copyrights and Proprietary Information.......   27

Item 15           Obligation to Participate in the Actual Operation of the Franchise   28

Item 16           Restrictions on What the Franchisee May Sell........  29

Item 17           Renewal, Termination, Transfer and Dispute Resolution ....   30

Item 18           Public Figures....................   33

Item 19           Earnings Claims....................   34

Item 20           List of Outlets....................    35

Item 21           Financial Statements .................    36

Item 22           Contracts......................    37

Item 23           Receipt ......................    38

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TABLE OF CONTENTS

OF

FRANCHISE OFFERING CIRCULAR

[List of Exhibits]

ExhibitA       Franchise Agreement .................................................... 39

Exhibit B       Financial Statements....................................................... 65

Exhibit C       Receipt for Franchise Fee................................................71

Exhibit D       Statement of Prospective Franchisee....................................73

Exhibit E       California Addendum.....................................................77

Exhibit F        List of State Franchise Administrators.................................79

Exhibit G       Start-up Supply and Equipment Package...............................82

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Iteml The Franchisor, its Predecessors and Affiliates

Terminology: Within this document and the attachments, the words "we," "us," "Athletic Nation," or "our" means Athletic Nation Franchise Corp. The words "you" or "your" means the franchisee: the person or business entity that is looking into the possibility of buying our franchise. The license which we may provide to you to own and operate a business of the type described in this offering circular is called the "Franchise." The business which you would own under the Franchise which we may provide to you is called the "Franchised Business."

The Franchisor: The franchisor is Athletic Nation Franchise Corp., a California corporation. The corporation was fonned on November 1, 2006. Its offices are located at 6475 Camden Ave. Suite 100, San Jose, California 95120. Our telephone number is (408) 268-5307. We do business under the name of Athletic Nation and Athletic Nation Men's Fitness Gym and we have applied for a trademark on the name Athletic Nation. We have no subsidiaries. We have no predecessors or affiliates. However, Dennis Mulgannon is majority owner of Athletic Nation Gym 001, LLC, a fitness gym located in San Jose, California. This business does not offer franchises for sale.

The Franchisor's Business: Athletic Nation offers franchisees the right to operate an Athletic Nation Men's Fitness Gym business. Athletic Nation Men's Fitness Gym facilities specialize in providing group and personal fitness programs and training specifically for men based on the principles of a book and video created by our Founder Dennis Mulgannon. Since we are a new company, we have no prior business history.

Agent for Service of Process: Depending on where you live, you may serve us by delivering documents to a state agency. A list of state agencies is attached to this offering circular as Exhibit F.

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Market and Competition: Your customers will be men of all ages, but your target group will be men between the ages of 25-65. You will compete with national and local gyms and personal training facilities in your market area. We believe you will have a competitive advantage in your market based on our proprietary program and motivational techniques. Examples of companies you will compete with are 24Hour Fitness, Club One Fitness.

Regulation of Business: California has industry-specific statutes that may apply to your business if it is located in California. See California Civil Code §§1812.80 etseq. These statutes apply to health studios and require you to provide certain disclosures in contracts with your customers. These disclosures apply to such things as how much advance payment you may accept, acceptable refund policies, and other customer related issues. The statutes and their interpretations may change from time to time. You should consult a lawyer concerning these requirements. Franchisees located in other jurisdictions also may be regulated by similar laws.

Selectivity in Granting Franchises: We reserve the right to be selective in granting franchises. If we present this document to you for your review, this does not in and of itself mean that we are offering you a franchise at that time or at any time in the future. When you sign the Franchise Agreement, it will not be approved or accepted by us until we actually sign it and provide you with a copy signed by us. If we do not sign the Franchise Agreement, this will mean that we have not approved it and your check which you gave us for the franchise fee shall be returned within ten business days from the date that we received it from you along with the original Franchise Agreement which you signed.

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Item 2 Business Experience

Dennis Mulgannon. President:

Dennis Mulgannon is the founder and president of Athletic Nation. He has over 20 years experience developing and growing franchise concepts. Working in various capacities, his primary success has been in launching new franchises and repositioning mature brands for new growth. Companies which Mr. Mulgannon has worked with as Director of Franchising include: Erik's Delicafe's, Home Care Assistance, and Poo! Franchise Services. Dennis has owned and operated an Athletic Nation Men's Fitness Gym facility in San Jose, California, since August 2006. Mr. Mulgannon is an accomplished fitness industry author and producer with his book and video "Reality Fitness in 90 Days... .FOR MEN".

Grant Gould, Vice President of Sales and Marketing:

Grant has more than 20 years of direct sales and marketing experience. He founded HOMES.com, originally known as , and built it into the largest real estate website development company in North America. He started his sales career with Glenn Ivy Resorts as Director of Marketing, where he managed a team of 150 inside salespeople. Mr. Gould's most recent position has been Executive Vice President with Aviatech, the franchise industries top franchise recruitment marketing firm.

Tim Borland. Director of Training:

Mr. Borland graduated from California Polytechnic State University with a degree in

Kinesiology (the scientific study of human movement). He has worked in the corporate

wellness industry with clients such as Club One Fitness, Inc. Tim is an accomplished

triathlete and marathon runner including competing in the Boston and Chicago

Marathons.

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Ryan Cunningham: Director of Real Estate

Mr. Cunningham acts as Athletic Nation's Director of Real Estate since August 1, 2005. Mr. Cunningham is also President of Javelin Solutions, located in Denver, Colorado since its inception in May 2005. Before that, Mr. Cunningham was an Executive Vice President for Jones Lang LaSalle from July 1985 until April 2005.

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Item 3 Litigation

No litigation is required to be disclosed in this offering circular.


Item 4 Bankruptcy

Our founder, Dennis Mulgannon, filed for protection under Chapter 7 of the Bankruptcy Code on January 12,1999. Mr. Mulgannon was the president and personal guarantor of certain debts incurred by Ourpool.com, Inc., an Internet company that lost its corporate funding as part of the dot-com stock market crash of 1999. (The action was filed in the U.S. Bankruptcy Court, Northern District of California, case number 01-50119 gsj.) A complete discharge was granted by the Court on March 6,2000.

Other than this action, no person previously identified in Items 1 or 2 of this offering circular has been involved as a debtor in proceedings under the U.S. Bankruptcy Code required to be disclosed in this item.

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Item 5 Initial Franchise Fee

Our franchisees pay an initial franchise fee to us of $25,000.00. Once we accept you as a franchisee, your franchise fee will not be refunded under any circumstance. If we award one or more additional franchises to you, the franchise fee for all subsequent franchises will be $15,000.00.

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Item 6 Other Fees

The following is a table of other recurring or one-time fees that you must pay us or our affiliates over the course of the franchise relationship.

Name of Feed)

Amount

Due Date

Remarks

Royalty Fees (See notes 1,2 & 3)

10.0% of your total gross revenue from all sales of Athletic Nation Men's Fitness Gym products and services.

Deducted via EFT weekly on the Monday following the previous weeks sales ending Sunday

(EFT) means Electronic Funds Transfer from your bank to our bank

Weekly Cooperative Advertising Fee (See Notes 1,2 &3)

5.0% (3.0% local market or $500.00 whichever is greater and 2.0% national market) of your total gross revenue from all sales of Athletic Nation Men's Fitness Gym products and services.

Deducted via EFT weekly on the Monday following the previous weeks sales ending Sunday

(EFT) means Electronic Funds Transfer from your bank to our bank

Initial Franchisee Training Fee

(See Note 4)

(See Note 4)

(See Note 4)

Intranet fee (see note 5)

$39.00 per month

Deducted via EFT weekly on the Monday following the previous weeks sales ending Sunday

(EFT) means Electronic Funds Transfer from your bank to our bank

Late Fees; Dishonored Checks; Interest

$50 charged for dishonored check, plus 1.5% per month interest on all late payments

Payable on demand

Transfer of Business or Rights

$2,500.00 for administrative expenses

Prior to close of transfer. You may negotiate with transferee to pay this fee.

Payable when the Franchise Agreement or any interest in your business is transferred.

Renewal of Franchise

$10,000.00

At time of renewal

Audit Expenses

Costs of Audit

On Demand

Payable upon determination by audit of at least 3% discrepancy or more

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Indemnification

Will vary under circumstances

As incurred

You must reimburse us if we are sued and/or held liable for certain claims

(1)  All fees are non-refundable unless otherwise noted.

(2)  Royalty fees are 10.0% on all gross revenue. Weekly Cooperative Advertising Fees are 5.0% (3.0% local market and 2.0% national market) or $500.00 whichever is greater on all gross revenue. There is no graduated or "sliding" scale.

(3)  Gross Revenue includes all revenues, less sales tax, which (a) are or could be received or earned by or with respect to your franchised business, (b) are or could be received or earned by you or on your behalf or for your benefit and which relate to the type of products, services, materials, inventory, items, supplies, promotional items, equipment or any other items which are or could be provided, through or in association with the franchised business and/or (3) are or could be received or earned by you or on your behalf or for your benefit and which are or could be provided, in association with any use of our trademarks, techniques, systems, procedures, know-how, or any other aspect of our franchised system. Billings are included in gross revenue for the month in which you send your billing to the customer. If the account proves to be uncollectible by you after (a) a minimum of 120 days and (b) your best efforts to collect the account, any royalty payment you have made to us with respect to such billing may be deducted from future royalties due us. To qualify as "best efforts", you must engage in personal action by you (including written demand letters) to collect the account followed by either (i) referring the account to a collection agency or (ii) pursuing the matter in court. On our request, you must supply the documentation of such efforts. If the account is thereafter collected by you, you must immediately pay the royalty to us.

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(4)  There is no additional fee to you for the Initial Franchisee Training program if you purchase a franchise from us. There is a $1,000 charge to you for the initial Franchisee training program if you purchase an existing franchise from another of our Franchisees. In either case, you are required to attend a mandatory 1 -week training class at a time and place we designate. Your expenses and your personnel's expenses incident to attendance at the training class, including travel, lodging, meals, transportation, and other incidental expenses, shall be borne by you.

(5)  This fee is our actual cost to provide contracted services for Intranet services through a contracted relationship with FranConnect, Inc.

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Item 7 Initial Investment

The following is a table of expenditures that you will incur at the beginning of the franchise.

Expenditures

Estimated amount or Estimated Low-High Range

When Payable

Method of Payment

Whether Refundable

To Whom Paid

Initial Franchise Fee

$25,000.00 For your first

franchise

$15,000.00 for

each

subsequent

franchise

at signing of

Franchise

Agreement

Lump Sum

Non Refundable

Athletic Nation

Gym Supplies and Equipment

(i) .

$10,000-$12,500

Upon receipt of supplies and equipment

Lump Sum

Non Refundable

National Suppliers and Athletic Nation

Business Licenses

25- $200.

Before engaging in business

As set by the Local agency

Non Refundable

Local agency

Tenant

Improvements and Lease Deposit (2)

$1,000-$5,000

Prior to opening for business

As agreed by you with suppliers

As agreed by you with suppliers

Landlord, contractors, and others

Real Estate Site Selection and Lease Negotiation

$2,500.00

at signing of

Franchise

Agreement

Lump Sum

Non Refundable

Javelin Solutions

Business Liability Insurance

$165.00-$330.00

Prior to opening for business

As agreed by you with suppliers

Non Refundable

Insurance Carrier

Computer system, software and internet connection

$250-$1,400

Prior to opening for business

As agreed by you with suppliers

As agreed by you with suppliers

Local suppliers

Grand Opening Advertising (3)

$2,000-$5,000 (there is a monthly advertising cost after opening)

Prior to opening for business

As agreed by you with suppliers

As agreed by you with suppliers

Local suppliers

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Gym Interior Decor Package

$375 - $550

Prior to opening for business

As agreed by you with suppliers

As agreed by you with suppliers

Athletic Nation

Additional Funds as Working Capital (4)

$1,500-$7,500

After opening for business

As agreed by you with suppliers

As agreed by you with suppliers

Local suppliers

Totals

(5)

$42,815 to $59,980

(1)  See the Franchise Agreement for a complete list of your initial supplies and equipment.

The costs of your gym supplies and equipment can be financed by a third party which could reduce your initial cash requirement to open your gym to $32,815 to $44,980

(2)  Your costs for tenant improvements may be higher if you make more extensive modifications and/or use more expensive material.

(3)   Following the Grand Opening, you will be required to spend at least five percent (5.0%) or $500.00 per month (which ever is higher) on advertising for your gym.

(4)   You will need working capital after you start the business. Your expenses will include rent, insurance, advertising, your salary, employees' pay, taxes, and other payments for the normal goods and services typically required to operate a business. You cannot expect initial revenues to cover all of your expenses as you start operations. You should have adequate funds available to cover living expenses in addition to adequate operating capital. The amount necessary will vary according to your personal needs and lifestyle. The figures set forth in the table are estimates and we cannot guarantee that you will not have additional expenses in starting the business. Your costs will depend on factors such as how closely you follow our methods and procedures; your management skill; experience and business acumen; local economic conditions; the local market for our product or service; the prevailing wage rate; competition; and the level of sales reached during the start-up phase of the business.

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(6) Your costs to commence business are difficult to predict due to the numerous factors involved. We stronglv suggest that vou carefully prepare a business plan and review it with an accountant, lawyer, and/or other business advisor.

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Item 8 Restrictions on Sources of Products and Services

You must purchase certain goods and services from suppliers that we designate. The items are set forth below. Costs for each item are found in item 7 of this offering circular.

(a)  Equipment and Supplies: You must purchase your initial gym package of supplies and equipment from a designated vendor that we approve. The price is estimated at $10,000.00 to $12,500.0 and a list of the equipment and supplies is attached to the Franchise Agreement. When your supplies and equipment need replacing, you will be required to purchase these items from vendors designated by us.

(b)  Training: Your initial training is provided by us. You must have at least two trained persons available for your facility at all times. You are required to attend and receive certification in instruction in first aid and CPR (adult and pediatric) provided by the Red Cross. The Red Cross generally provides this service at no charge or a minimal fee. You must purchase certain other goods and services which adhere to our standards and requirements. All items that you will be required to purchase may be purchased from any supplier provided that each supplier provides goods in compliance with our standards and is approved by us. We will not unreasonably withhold our approval. All items purchased from third party sources will be subject to review by us. This review may entail examination or testing of items purchased (based on samples which you provide to us to examine); information provided by you regarding the supplier's history, business reputation, delivery performance and other information. Our review is typically completed in 30 days. We may revoke your right to use a given supplier by notifying you in writing at which time you must cease to do business with that supplier within 30 days.

The items which must be purchased in accordance with our specifications are set forth below. Costs which correspond to each item which you are required to purchase may be found in item 7 of this offering circular.

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(a)  Computer Hardware/Software and Updates: You will be required to use a computer system compatible with our specifications. This computer will be included in your startup package of supplies and equipment. You will be responsible for providing a dedicated telephone connection to the computer and for providing Internet access. It may also be necessary for you to load software updates into the computer when we direct you to do so. You may be required to modify your computer system from time to time and you will be expected to comply with such modifications within a reasonable period of time. You will be required to maintain a modem on your computer in good working condition.

(b)  Repairs and Remodeling: You may be required repair, refinish, repaint, replace, and/or remodel your business premises to comply with our specifications. You must use qualified, licensed contractors.

(c)  Insurance: You must maintain liability and property damage insurance for your franchised business covering its operation and the location where the business is conducted. Coverage will be in a minimum amount of three million dollars ($3,000,000). Coverage will include fire, products liability, and property damage. You also must carry such insurance as may be required by the lease of your location and/or by any lender or equipment lessor/sublessor. You must obtain workers compensation insurance as required by law.

(d)  You are required to use FranConnect for your Intranet service provider as part of your Athletic Nation franchise. You are also required to use Javelin Solutions for your real estate site selection.

The purchase of items from us or from affiliated suppliers we designate will represent between 80% and 100% percent of your purchases in opening the franchised business and approximately 10% of your purchases in operating the franchised business on an ongoing basis.

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Item 9

Franchisee's Obligations

THIS TABLE LISTS YOUR PRINCIPAL OBLIGATIONS UNDER THE FRANCHISE AND OTHER AGREEMENTS. IT WILL HELP YOU FIND MORE DETAILED INFORMATION ABOUT YOUR OBLIGATIONS IN THESE AGREEMENTS AND IN OTHER ITEMS OF THIS OFFERING CIRCULAR

Obligation Circular

a. Site selection and acquisition

b. Pre-opening purchases/leases

c. Site development and other 12

pre-opening requirements

d. Training

e. Opening

f.  Fees

g. Compliance with standards and policies/Operating

Manual

h. Trademarks and proprietary information

i. Restrictions on products/services offered

j. Customer service requirements

k. Territorial development

I. Ongoing product/ service purchases

m. Maintenance, appearance and remodeling requirement

n. Insurance

o. Advertising

p. Indemnification

Section in Agreement

Sections 1 and 9 of Agreement Sections 1, 8,9 and 11 of Agreement

Sections 7, 8,9 and 11 of Agreement

Section 10 of Agreement

Sections 1,11, and 12 of Agreement

Sections 4-8 of Agreement

Sections 2, 3,5, and 8-19 of Agreement

Section 13 of Agreement

Sections 7-12 of Agreement

Sections 8-11 of Agreement

Sections 1 and U of Agreement Sections 7 and 8 of Agreement

Sections 9 and 11 of Agreement

Section 16 of Agreement Section 12 of Agreement Section 22 of Agreement

Item in Offering

Items 11 and 12 Items 6, 7 and 8

Items 6, 7,11 and

Item 11

Items 6-8 and 11

Items 5,6 and 7

Item 11

Items 13 and 14

Item 16

Item 11

Items 12 and 16 Item 8

Items 8 and 11

Items 7 and 8 Items 7 and 11 Item 6

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The original documents were scanned as an image. The original file can be downloaded at the link above.