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How much does Stretch Lab cost?
Initial Investment Range
$269,019 to $610,224
Franchise Fee
$157,150 to $210,350
The franchise is the right to develop, own and operate, as part of the Stretch Lab system, a fitness studio that provides specialized stretch and fitness services using designated equipment.
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Stretch Lab April 8, 2025 FDD Risk Analysis
Free FDD Library AI Analysis Date: August 19, 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's parent and guarantor, XPOF Assetco, LLC (Assetco), was recently formed and its financials show significant dependence on its parent, Xponential Fitness, Inc. (XFI). Auditors issued an "Emphasis of Matter" highlighting this reliance. It also shows a $155 million cash advance to XFI, potentially weakening the guarantor's ability to support you. The parent company is also involved in significant litigation, adding to the overall financial uncertainty and risk.
Potential Mitigations
- A franchise accountant should scrutinize the consolidated financial statements, including the auditor's notes and the large inter-company advance, to assess the true financial health of the guarantor.
- Discuss the implications of the complex corporate structure and the parent company's litigation with your franchise attorney.
- Developing a conservative financial plan with your advisor is essential, given the potential uncertainty in franchisor support.
High Franchisee Turnover
Medium Risk
Explanation
Item 20 data shows a low calculated turnover rate for operating studios over the last three years. However, Exhibit J, which lists franchisees who have left the system, contains 93 entries. A significant number of these are marked as terminated or having ceased operations before their franchise agreement was fulfilled, including many who never opened. This discrepancy between the low operating churn and the high number of exits before opening may indicate issues with the pre-opening process.
Potential Mitigations
- Your attorney should help you analyze the data in both Item 20 and Exhibit J to understand the rate of pre-opening attrition.
- Contacting franchisees from both the current list and the list of those who have left is crucial for a complete picture of the franchisee experience.
- Ask your business advisor to help you formulate questions for the franchisor about the number of agreements that do not result in an open and operating studio.
Rapid System Growth
Medium Risk
Explanation
Item 20 data shows very rapid growth, with the number of franchised outlets more than tripling from 148 at the start of 2022 to 485 at the end of 2024. While growth can be positive, such a rapid expansion rate can strain a franchisor's resources. This may potentially impact the quality and availability of training, site selection assistance, and ongoing operational support for all franchisees in the system.
Potential Mitigations
- It is important to ask current franchisees about their experience with the quality and timeliness of franchisor support.
- A business advisor can help you question the franchisor about how their support infrastructure has scaled to manage this rapid growth.
- Your accountant can review the franchisor's financials to assess if they appear to have the resources to adequately support a rapidly expanding system.
New/Unproven Franchise System
Medium Risk
Explanation
The franchisor entity, Stretch Lab Franchise SPV, LLC (Stretch Lab SPV), was formed in March 2023 and acquired the system from a predecessor. The FDD explicitly highlights the franchisor's "Short Operating History" as a special risk. Investing in a franchise that is operated by a recently formed legal entity, even if the brand is more established, carries risks related to the new entity's track record, operational processes, and financial standing.
Potential Mitigations
- A thorough review of the corporate reorganization described in Item 1 with your attorney is important to understand the new entity's history and obligations.
- Speaking with franchisees who have operated under both the predecessor and the current franchisor could provide valuable insight.
- Your business advisor can help you assess the potential risks associated with contracting with a recently formed franchisor entity.
Possible Fad Business
Low Risk
Explanation
This risk was not identified in the FDD package. A fad business is one that enjoys brief popularity but lacks long-term consumer demand. Investing in such a concept can be risky, as your long-term contract could outlast the trend, potentially leading to declining sales and business failure. Evaluating a concept's staying power and its ability to adapt to changing consumer tastes is a key part of due diligence.
Potential Mitigations
- A business advisor can help you conduct independent market research to assess the long-term consumer demand for specialized stretching services.
- Discuss the franchisor's strategy for innovation and evolving the service offerings to stay relevant with their management team.
- It may be prudent to review industry reports with your financial advisor to understand the growth projections and competitive landscape for this fitness niche.
Inexperienced Management
Low Risk
Explanation
The management team listed in Item 2 appears to have extensive experience across the Xponential portfolio of brands. However, the Chief Operating Officer, Timothy Weiderhoft, filed for personal Chapter 7 bankruptcy in 2023 due to a failed unrelated venture. While this does not relate to the franchisor's finances, it is a required disclosure regarding a key executive's financial history that you should be aware of when evaluating the management team.
Potential Mitigations
- Your attorney can discuss the relevance of any executive bankruptcy disclosures with you.
- A business advisor can help you evaluate the overall strength and experience of the entire management team.
- Speaking with current franchisees can provide insight into their confidence in and interactions with the franchisor's leadership.
Private Equity Ownership
Medium Risk
Explanation
The franchisor is part of a large portfolio of brands controlled by a publicly-traded parent company, Xponential Fitness, Inc. (XFI), which has characteristics similar to a private equity-backed entity. This structure may create pressure to prioritize shareholder returns, which could potentially lead to decisions about fees, support levels, or system changes that may not align with the long-term interests of individual franchisees. The Franchise Agreement also permits the sale of the system.
Potential Mitigations
- A business advisor can help you research the parent company's reputation and its track record with its other franchise brands.
- It is important to talk with franchisees from various Xponential brands, if possible, to understand their perspective on the parent company's management.
- Your attorney should review the assignment clauses in the Franchise Agreement to clarify your rights if the system is sold.
Non-Disclosure of Parent Company
Low Risk
Explanation
The FDD discloses the parent company structure, with XPOF Assetco, LLC acting as the guarantor for the franchisor, Stretch Lab Franchise SPV, LLC. The financial statements for the guarantor are provided, and a formal Guaranty of Performance is included as Exhibit D. This structure appears to meet standard disclosure requirements, so the specific risk of non-disclosure of a parent company was not identified.
Potential Mitigations
- Your accountant should review the financial statements of the parent company (XPOF Assetco, LLC) to assess its ability to back the franchisor's obligations.
- It is advisable for your attorney to examine the specific terms of the Guaranty of Performance (Exhibit D) to understand the scope of the protection it offers.
- Understanding the relationship and financial reliance between a franchisor and its parent is a key due diligence step for your business advisor.
Predecessor History Issues
Low Risk
Explanation
This FDD clearly identifies Stretch Lab Franchise, LLC as the Predecessor entity from which the current franchisor, Stretch Lab Franchise SPV, LLC, acquired the system's assets as part of a 2023 internal reorganization. Therefore, this specific risk of non-disclosure was not identified. However, it is always important to review the full history of a franchise system, including the performance and litigation history of any predecessors.
Potential Mitigations
- Have your attorney review the FDD's disclosures about the predecessor in Items 1, 3, 4, and 20.
- It's wise to ask long-term franchisees about their experiences under the predecessor's management to identify any recurring issues.
- A business advisor can help you research the predecessor's history for any publicly available information that might be relevant.
Pattern of Litigation
High Risk
Explanation
Item 3 discloses a significant number of pending lawsuits filed by franchisees of affiliated Xponential brands (like AKT and Yoga Six) against the parent company and its management. Allegations include violations of franchise laws, fraud, and breach of contract. While not directly against Stretch Lab SPV, these lawsuits indicate a pattern of alleged issues and franchisee dissatisfaction across the parent organization that oversees your potential franchisor. This suggests a potential for systemic problems.
Potential Mitigations
- A thorough analysis of the litigation summary in Item 3 with your franchise attorney is essential to understand the nature and potential gravity of the claims.
- Your attorney can help you understand the risks associated with a franchisor group facing numerous franchisee lawsuits.
- Conducting extensive due diligence by speaking with a wide range of current franchisees is critical to gauge satisfaction levels.
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
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Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Purchase the complete risk review to see all 102 risks across all 10 categories.
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
Purchase the complete risk review to see all 102 risks across all 10 categories.
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.