FARRELL'S EXTREME BODYSHAPING

Item 7 outlines the initial investment from $151,028 to $349,478, covering build-out for 2,000-3,000 sq ft studios, equipment, and opening marketing—real estate and leasehold improvements drive the high end. The $40,000 franchise fee secures proprietary programs like 10-week challenges with prizes. Ongoing fees hit hard: 7.5% royalty on gross sales plus 1.5% ad fund and a fixed $1,674 monthly for tech, bookkeeping, and ENE services. Without Item 19, franchisees lack validated revenue or profit figures, forcing reliance on anecdotal seller claims in a competitive fitness market against bigger gyms.

System health raises flags—44 units in 2024 down from 46 in 2023 (-4% growth), with just 1 projected new unit, 3 terminations, and 6 transfers signaling churn. Yet 28 SBA loans averaging $199,582 and a low 7.1% default rate (FDD Item 20) suggest many owners secure financing and mostly repay, bolstering credibility since franchising began in 2007. This mix of modest scale, fee burden, and contraction advises caution for expansion bets, especially sans earnings transparency—strong for niche operators but risky for scaling ambitions.