Explanation

Item 20 data shows a system that is shrinking, not growing rapidly. The number of franchised outlets has declined each year for the last three years, from 139 at the start of 2022 to 90 at the end of 2024. Therefore, the risks associated with a franchisor's support systems being strained by excessively rapid growth were not identified.

Potential Mitigations

• A business advisor can help you analyze system growth trends presented in Item 20 to evaluate the franchise's trajectory.
• When speaking with existing franchisees, it's wise to inquire about the quality and consistency of franchisor support.
• An accountant's review of the franchisor's financial statements can offer insights into its capacity to support its current and future franchisees.

Explanation

This risk was not identified. TBCI began offering franchises in January 2010 and has over a decade of experience. However, the current parent company, BoxUnion Holdings, LLC, acquired the company at the end of 2020, and key management's tenure with TBCI began in 2021. This means the leadership team is relatively new to managing this specific franchise system, which can present its own set of challenges.

Potential Mitigations

• Your business advisor should help you evaluate the management team's experience in both the fitness industry and in franchising.
• Inquiring with franchisees who have been in the system before and after the 2020 acquisition could provide valuable perspective on changes in management and support.
• A review of the parent company's history and performance with other brands, if any, can be discussed with your attorney.

Explanation

This risk was not identified. Boutique fitness, specifically boxing-themed workouts, has been a part of the fitness landscape for many years, suggesting a degree of sustained consumer demand. The risk of the entire concept being a short-lived fad appears low, although local market trends and competition are still important factors for you to consider for your specific location.

Potential Mitigations

• Engaging a business advisor to research your local market is crucial to determine the long-term demand for this specific type of fitness studio.
• It is important to evaluate the franchisor's plans for innovation and brand evolution to stay competitive.
• Your own assessment of whether the concept has lasting appeal versus being a temporary trend should be a key part of your due diligence.

Explanation

This risk was not identified. The executives listed in Item 2 appear to have prior experience in business, finance, and, in some cases, the fitness industry through the parent company, BoxUnion Holdings. The risk is not a lack of general business experience but rather that the current management team is relatively new to this specific franchise system since its acquisition in late 2020.

Potential Mitigations

• A thorough review of the backgrounds of the key executives in Item 2 with your business advisor is recommended.
• Asking current franchisees about their direct experiences with the management team's support and strategic direction can provide valuable insight.
• Your attorney can help you understand the implications of the recent change in ownership and leadership.

Explanation

This risk was not identified. The FDD clearly discloses in Item 1 that TBCI is a wholly owned subsidiary of BoxUnion Holdings, LLC. However, the financial statements provided are for TBCI only, not the parent company. Given TBCI's history of net losses, the financial strength of the parent company is a material fact for assessing overall system stability, but its financials are not included.

Potential Mitigations

• Your accountant should evaluate the provided TBCI financials, noting the absence of parent company data.
• It would be prudent to ask the franchisor about the financial health of the parent company and its commitment to supporting TBCI.
• Your attorney can advise on whether the parent company has guaranteed any of TBCI's obligations under the franchise agreement.

Explanation

This risk was not identified in the FDD package. Item 1 does not list any predecessors for TBCI. The company was formed in 2009 and appears to have operated the system continuously, although it was acquired by a new parent company at the end of 2020. Therefore, risks associated with an undisclosed or problematic predecessor history are not applicable here.

Potential Mitigations

• It's still good practice for your attorney to verify the corporate history disclosed in Item 1.
• Asking long-term franchisees about the history of the company can confirm the information presented in the FDD.
• A business advisor can help you understand the implications of the recent change in parent ownership, which is a separate consideration.

Explanation

This risk was not identified. Item 3 of the FDD states, "No litigation is required to be disclosed in this Item." This suggests there is no current, material litigation involving the franchisor, its predecessors, or key personnel that alleges fraud, misrepresentation, or violations of franchise law. The absence of such disclosures is a positive factor, though it does not preclude past, settled, or non-material lawsuits.

Potential Mitigations

• Your attorney should confirm that the statement in Item 3 meets all federal and state disclosure requirements.
• In your discussions with current and former franchisees, it is still wise to inquire about any past or present disputes within the system.
• An online search for news articles or legal filings related to the franchisor can sometimes provide additional context, which your business advisor can assist with.