FS8 Logo

FS8

FS8, Inc.
https://www.fs8.com
1-737-787-1955
3601 South Congress Avenue, Building E, Austin, TX 78704

Initial Investment Range

$343,700 to $781,600

Franchise Fee

$222,500 to $250,100

The franchise is for the establishment and operation of a FS8 Studio which provides group fitness and low impact exercise training, using a distinctive system of exercise training.

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FS8 March 31, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: July 16, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
3
3
4

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The financial statements for FS8, Inc. (FS8) show significant signs of financial weakness. As of year-end 2024, the company had a total stockholder's deficit of over $2.6 million and has recorded substantial net losses for the past three fiscal years, including a loss of over $567,000 in 2024. This condition, which the franchisor notes as a special risk, raises questions about its ability to fund ongoing support and growth without relying on new franchise sales.

Potential Mitigations

  • A franchise accountant should meticulously review the audited financial statements, including all notes, to assess the company's solvency and long-term viability.
  • It is advisable to discuss the company's financial state and its reliance on affiliate funding with a business advisor to understand the potential impact on support.
  • Your attorney should investigate if any financial assurances, such as bonds or escrow accounts, are required by state regulators due to this financial condition.
Citations: Item 21, Exhibit C

High Franchisee Turnover

Low Risk

Explanation

The franchise system is very new, with only six total outlets (five franchised, one company-owned) in operation at the end of 2024. As a result, the turnover data in Item 20 does not yet reflect any terminations, non-renewals, or other cessations. The primary risk here is the lack of a meaningful performance history for a sufficient number of franchisees over an extended period.

Potential Mitigations

  • Engaging a business advisor to help you contact a significant percentage of the current franchisees listed in Item 20 is crucial for due diligence.
  • It is important to ask your attorney to scrutinize the list of franchisees who have not yet opened to understand any potential delays or issues.
  • An accountant can help you analyze the growth projections in Item 20 against the company's limited operating history.
Citations: Item 20

Rapid System Growth

Low Risk

Explanation

This risk was not identified in the FDD package. Rapid system growth can strain a franchisor's ability to provide adequate support. It is important to evaluate whether a franchisor's support infrastructure, including staffing and systems, is keeping pace with its unit growth to ensure new and existing franchisees receive the assistance they need to succeed.

Potential Mitigations

  • With your business advisor, you should question the franchisor about their plans for scaling support infrastructure to match projected growth.
  • Your accountant can review the franchisor's financials in Item 21 to determine if they have allocated sufficient resources for support functions.
  • It is prudent to ask a broad range of existing franchisees about the current quality and responsiveness of franchisor support.
Citations: Items 11, 20, 21

New/Unproven Franchise System

High Risk

Explanation

FS8 explicitly discloses its short operating history as a special risk. The company was formed in late 2020 and began franchising in mid-2021. As shown in Item 20, the system is in its infancy with very few operating units. Investing in such a new system carries higher risk due to the business model being unproven in a franchise context, minimal brand recognition, and a lack of extensive franchisee performance history.

Potential Mitigations

  • Thorough due diligence on the management team's prior industry and franchising experience, with help from a business advisor, is critical.
  • Speaking with the earliest franchisees about their experiences with the system and its support is essential for understanding the real-world operation.
  • Your accountant should carefully assess the franchisor's capitalization and financial stability, given the higher risks of a new system.
Citations: Items 1, 2, 20, 21, Special Risks

Possible Fad Business

Medium Risk

Explanation

The business model, which combines pilates, yoga, and tone workouts, operates in the highly competitive and trend-driven boutique fitness industry. A prospective franchisee could find that while the concept is currently popular, there is a risk that consumer preferences may shift over the 10-year contract term. The long-term sustainability of this specific fitness combination versus broader fitness trends may warrant careful consideration.

Potential Mitigations

  • A business advisor can help you conduct independent market research to assess the long-term consumer demand for this specific fitness modality versus broader wellness trends.
  • You should evaluate the franchisor's plans for innovation, program development, and adaptation to evolving fitness markets.
  • Discussing the business's resilience to market shifts and economic downturns with current franchisees provides valuable insight.
Citations: Item 1

Inexperienced Management

Medium Risk

Explanation

While some executives have experience with the affiliate F45 brand, the FDD does not indicate that the management team has extensive prior history managing this specific FS8 concept or a similar pilates/yoga/tone franchise system. For a new franchise system, a management team without a long, direct track record in the specific business model may present risks related to the refinement of operational systems, training, and franchisee support.

Potential Mitigations

  • In discussions with the franchisor, it's wise to inquire about the management team's direct experience with this specific type of fitness concept.
  • Your business advisor can help you assess whether the team's skills from other fitness brands are directly transferable and sufficient.
  • Engaging with current franchisees to gauge their confidence in the management team's leadership and strategic direction is crucial.
Citations: Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD package. Private equity ownership can be a concern if the firm prioritizes short-term returns over the long-term health of the franchise system. This can sometimes lead to reduced support, increased fees, or a quick sale of the company. Understanding the private equity firm's reputation and history with other franchise brands is an important due diligence step for a prospective franchisee.

Potential Mitigations

  • If a franchisor is PE-owned, a business advisor can help you research the firm’s track record with other franchise systems.
  • It is advisable to ask current franchisees about any changes in support or culture since the PE acquisition.
  • Your attorney should review any terms in the franchise agreement that permit the franchisor to sell the system without franchisee consent.
Citations: Item 1

Non-Disclosure of Parent Company

Medium Risk

Explanation

Item 1 identifies FS8 Holdings Inc. as the immediate parent and F45 Training Holdings Inc. as the ultimate parent. The financial statements in Item 21 are for FS8, Inc. only, and do not include those of the parent companies. Given FS8's stockholder deficit and reliance on affiliate funding, the financial health of the parent entities is material to your risk assessment, but their full financials are not provided for review.

Potential Mitigations

  • Your accountant should carefully analyze the related party transactions detailed in the notes to the FS8 financial statements to understand the level of dependency.
  • It is important to ask the franchisor about the financial health and commitment of the parent companies to the FS8 brand.
  • A business advisor can help you research public information on F45 Training Holdings Inc. to gain more context on the ultimate parent's stability.
Citations: Items 1, 21

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD package. Franchisors are required to disclose information about their predecessors. A predecessor is a company from which the franchisor acquired the main assets of the business. A lack of clear information about a predecessor's history, including any past litigation or bankruptcy, can hide systemic issues that may have been inherited by the current franchisor, affecting your investment.

Potential Mitigations

  • Your attorney should carefully review Item 1 of the FDD to identify any predecessors and check for related disclosures in Items 3 and 4.
  • A business advisor can assist in researching a predecessor's history if one is disclosed.
  • It is beneficial to ask long-term franchisees about their experiences under any previous ownership.
Citations: Items 1, 3, 4

Pattern of Litigation

High Risk

Explanation

Item 3 discloses a significant pattern of litigation and regulatory enforcement actions against the franchisor's affiliate, F45 Training Inc., which shares officers and a parent company. These actions include franchisee lawsuits alleging fraud and multiple state consent orders and settlements related to illegal financial performance representations and other franchise law violations. This history suggests potential systemic issues with sales practices and compliance within the parent organization, which may pose a risk to FS8 franchisees.

Potential Mitigations

  • A thorough review of the details of every litigation and regulatory action in Item 3 with your franchise attorney is essential.
  • It is crucial to ask the franchisor what steps have been taken within the overall organization to prevent similar issues from occurring with the FS8 brand.
  • Your business advisor can help you contact current franchisees to inquire about their sales and disclosure experience.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
2
2
11

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

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3

Financial & Fee Risks

Total: 10
4
5
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

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4

Legal & Contract Risks

Total: 16
6
4
6

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

5

Territory & Competition Risks

Total: 5
3
2
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

6

Regulatory & Compliance Risks

Total: 10
5
3
2

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

7

Franchisor Support Risks

Total: 4
2
1
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

8

Operational Control Risks

Total: 12
4
6
2

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

9

Term & Exit Risks

Total: 18
7
8
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

10

Miscellaneous Risks

Total: 2
2
0
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.