Gold's Gym
Initial Investment Range
$1,778,000 to $4,347,000
Franchise Fee
$40,000 to $40,500
The franchise offered is to operate a Gold’s Gym-branded health club (a “Gold’s Gym Facility”).
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Gold's Gym July 1, 2024 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.
Franchisor Stability Risks
Start HereDisclosure of Franchisor's Financial Instability
High Risk
Explanation
The franchisor explicitly flags its "Financial Condition" as a special risk. Audited financials in Exhibit H show significant inter-company loans with its parent, RSG Group, indicating a heavy financial dependence. The predecessor entity's 2020 bankruptcy, disclosed in Item 4, also presents a historical stability risk. This complex financial structure and history could impact the franchisor's ability to provide long-term support, making it a risk for you.
Potential Mitigations
- Your accountant should thoroughly analyze the audited financial statements, including all footnotes and the notes on related-party transactions, to assess the franchisor's true financial health.
- Discuss the implications of the predecessor's bankruptcy and the current parent company's financial influence with your franchise attorney.
- A business advisor can help you evaluate the potential impact of the franchisor's financial condition on its ability to support its franchisees long-term.
High Franchisee Turnover
Medium Risk
Explanation
Item 20 data reveals a notable number of outlets have left the system over the past three years through non-renewals and ceasing operations. In 2021, 18 units (excluding transfers) exited from a base of 180. In 2022, it was 14 from 166, and in 2023, 10 from 158. While the rate is improving, the consistent number of non-renewals and cessations suggests potential underlying issues with profitability or franchisee satisfaction that you should investigate.
Potential Mitigations
- Speaking with former franchisees listed in Exhibit G is critical; your attorney can help you formulate questions to understand why they left the system.
- Your accountant can help you analyze the turnover data in Item 20 to calculate the effective churn rate and compare it to industry benchmarks.
- Discuss the reasons for the non-renewals and ceased operations directly with the franchisor, with guidance from your business advisor.
Rapid System Growth
Low Risk
Explanation
The risk of a franchisor's support systems being strained by excessively rapid expansion was not identified. FDD Item 20 data indicates that the number of franchised outlets has been stable or slightly declining over the last three years. This suggests that the franchisor, Gold's Gym Franchise LLC (GGFLLC), is not currently undergoing a growth phase that might risk overwhelming its support infrastructure.
Potential Mitigations
- A business advisor can help you assess whether the franchisor's current support infrastructure is adequate for the existing system size.
- When speaking with current franchisees, it's still valuable to ask about the quality and timeliness of the support they receive from the franchisor.
- Your attorney can review the franchisor's contractual support obligations in Item 11 to ensure they are clearly defined.
New/Unproven Franchise System
Medium Risk
Explanation
The franchisor explicitly identifies its "Short Operating History" as a special risk. GGFLLC was formed in July 2020 and began franchising in March 2021 after acquiring assets from its predecessor, which filed for bankruptcy. While the Gold's Gym brand is long-established, you are contracting with a newer corporate entity. This newness could introduce uncertainty regarding its long-term operational policies, support structures, and strategic direction, presenting a risk to your investment.
Potential Mitigations
- Your attorney should carefully examine the implications of contracting with this newer entity, especially in light of the predecessor's history.
- Engage a business advisor to assess the current management team's experience and their strategy for managing the brand post-acquisition.
- It is vital to speak with franchisees who signed agreements with the new entity to gauge their experience with its support and systems.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. The Gold's Gym concept is a long-established business in the fitness industry and is not based on a new or fleeting trend. The risk of investing in a fad business is that consumer interest may decline, but your contractual obligations to pay fees would continue. This does not appear to be a significant concern here.
Potential Mitigations
- A business advisor can help you research the long-term stability and competitive landscape of the traditional health club industry.
- When creating a business plan, your financial advisor can help you model for shifts in consumer fitness preferences over the long term.
- Your attorney can review the contract for any flexibility in adapting the business model to future market changes.
Inexperienced Management
Low Risk
Explanation
This risk was not identified in the FDD package. FDD Item 2 details the business experience of the franchisor's key management personnel. The individuals listed appear to have extensive backgrounds in the fitness industry, including prior experience with the Gold's Gym brand or its parent company. A lack of relevant management experience can pose a significant risk to a franchise system's stability and support quality.
Potential Mitigations
- Your business advisor can help you research the public track record and reputation of the key executives listed in Item 2.
- When speaking with current franchisees, asking about their perception of the management team's competence and vision is a valuable due diligence step.
- Reviewing the management team's experience with your attorney can provide context for the franchisor's overall capabilities.
Private Equity Ownership
High Risk
Explanation
The franchisor's parent, RSG Group GmbH, acquired the Gold's Gym brand out of the predecessor's bankruptcy in 2020. This ownership structure, akin to private equity, introduces risks related to prioritizing investor returns over franchisee health. The financial statements show significant inter-company loans and dependencies, suggesting the franchisor's decisions could be heavily influenced by the parent's financial objectives and potential exit strategy, which may not align with your long-term interests as a franchisee.
Potential Mitigations
- A business advisor can help you research RSG Group's history and its management approach with other brands it has acquired.
- Your accountant should analyze the related-party transactions in Item 21 to understand the financial relationship between the franchisor and its parent.
- It is crucial to ask franchisees who have operated under both the old and new ownership about changes in support and system direction.
Non-Disclosure of Parent Company
Medium Risk
Explanation
The franchisor discloses its parent and ultimate parent entities in Item 1, but does not include their financial statements in Item 21. Given the significant inter-company loans and financial dependence highlighted in the franchisor's own financials, the absence of the parent's financial statements creates a risk. You cannot fully assess the overall stability and resources of the entire corporate structure that supports your franchise, which is a significant information gap.
Potential Mitigations
- Your accountant should assess the risk posed by the high value of related-party transactions in the absence of parent financials.
- Discuss with your attorney whether the parent's financials might be required under state or federal rules given the circumstances.
- A business advisor can help you understand the potential implications of being financially dependent on a parent company whose health is not fully disclosed.
Predecessor History Issues
High Risk
Explanation
FDD Item 4 discloses that the franchisor's predecessor, Gold's Gym Franchising LLC, filed for Chapter 11 bankruptcy in May 2020. The current franchisor acquired the assets from this bankrupt entity. This history is a significant risk factor, indicating past systemic financial and operational problems with the brand. You should carefully consider the possibility that some of these historical issues could persist or re-emerge under the new ownership structure.
Potential Mitigations
- Your attorney must review the details of the bankruptcy disclosure in Item 4 and explain its potential implications for you.
- Engage your business advisor to research the reasons for the predecessor's bankruptcy and assess the changes made by the new ownership.
- It is imperative to speak with long-term franchisees who operated through the bankruptcy about their experiences.
Pattern of Litigation
Low Risk
Explanation
This specific risk was not identified in the FDD package. FDD Item 3 states, "No litigation is required to be disclosed in this Item." The absence of a pattern of franchisee-initiated lawsuits for fraud or franchisor-initiated suits for collection can be a positive indicator. However, it does not guarantee a dispute-free relationship. A history of significant litigation can often signal underlying problems in a franchise system.
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.
- When speaking with current and former franchisees, it is useful to ask about any formal or informal disputes they may have had with the franchisor.
- A business advisor can help you assess the franchisor's overall reputation within the industry.
Disclosure & Representation Risks
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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Financial & Fee Risks
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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Legal & Contract Risks
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
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Territory & Competition Risks
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
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Regulatory & Compliance Risks
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
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Franchisor Support Risks
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
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Operational Control Risks
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.
Term & Exit Risks
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.
Miscellaneous Risks
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.
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