Explanation

The risk of the franchisor expanding too quickly, potentially straining its support systems, was not explicitly identified. Rapid growth can sometimes lead to diluted support for individual franchisees. You should remain aware that a franchisor's ability to provide high-quality training, site selection assistance, and ongoing operational guidance can be challenged if its growth outpaces its internal resources.

Potential Mitigations

• Your business advisor can help you analyze the growth trajectory shown in Item 20 against the resources described in the financial statements in Item 21.
• Speaking with franchisees who have opened at different times can provide insight into whether support levels have changed over time.
• It's wise to have your attorney clarify the specific support commitments the franchisor is obligated to provide.

Explanation

This risk was not identified. The Gold's Gym brand has a long-operating history in the fitness industry, suggesting it is not a fad. However, any business in a trend-sensitive industry like fitness faces risks from changing consumer preferences. A business model that appears strong today could face challenges if it fails to adapt to new fitness trends or economic conditions. Your investment's long-term success depends on the brand's ability to evolve.

Potential Mitigations

• Engaging a business advisor to research the long-term trends in the health and fitness club industry can provide valuable context.
• Question the franchisor on their research and development process for new programs and services to stay competitive.
• Discuss with your financial advisor how to build a business plan that can adapt to shifts in local market demand.

Explanation

This risk was not identified in the FDD. The executive team described in Item 2 appears to have prior experience within the Gold's Gym system or with its parent companies. However, it is always important for you to assess whether the management team possesses the necessary skills to support franchisees effectively. Inexperienced leadership could lead to poor strategic decisions or inadequate support, affecting your business's performance.

Potential Mitigations

• A business advisor can help you research the professional backgrounds of the key executives listed in Item 2.
• When speaking with current franchisees, you should specifically ask about their direct experiences with the management team's competence and responsiveness.
• Your attorney should verify if there have been any recent, un-disclosed changes in key management personnel.

Explanation

The FDD in Item 1 identifies the ultimate parent company as RSG Group GmbH, a large, international operator of fitness brands. This is not a typical private equity firm focused on short-term exits. However, as a franchisee, your success is tied to the strategic decisions made by this parent company, which may have priorities that extend beyond the Gold's Gym brand in the U.S., potentially affecting resource allocation or long-term strategy for the system.

Potential Mitigations

• A business advisor can help you research the parent company, RSG Group GmbH, and its overall strategy and performance with its other fitness brands.
• When speaking with franchisees, ask if they have observed any changes in focus or support since the acquisition by the new parent.
• Your attorney should review any clauses in the agreement that relate to the franchisor's sale or assignment to understand the implications of a future ownership change.

Explanation

This risk was not identified in the FDD. Item 3 states that no litigation is required to be disclosed. Generally, a clean litigation history is a positive sign. However, it's important to remember that this only reflects litigation that meets the specific disclosure requirements. It does not guarantee the absence of all disputes, and future litigation could arise.

Potential Mitigations

• Your attorney can conduct independent searches for litigation involving the franchisor or its affiliates that may not have met the threshold for disclosure.
• It is wise to ask current and former franchisees about any disputes they may be aware of, even if not formally litigated.
• You should confirm with a business advisor that the lack of litigation is typical for a system of this size and age.