UFOC
The original documents were scanned as an image. The original file can be downloaded at the link above.
Sample UFOC
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ATHLETIC NATION
TM
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.