Vertica Fitness Logo

Vertica Fitness

Vertica Fitness Franchising, Inc.
https://www.verticafitness.com
1-520-216-7651
11834 N. Silver Village Place, Oro Valley, AZ 85737

Initial Investment Range

$194,400 to $324,275

Franchise Fee

$59,950

offers franchises for the right to establish and operate a fitness studio that provides Pole Fitness and other exercise.

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Vertica Fitness April 29, 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
2
3
5

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The franchisor explicitly discloses that its financial condition is a special risk. The audited 2023 financial statements show a stockholder's deficit (negative net worth). While 2024 shows positive equity, it remains very low. Multiple states require the franchisor to post a surety bond due to its financial condition. This could impact its ability to provide support or grow the brand, increasing your risk.

Potential Mitigations

  • Your accountant must conduct a thorough analysis of the franchisor's financial statements, including the low stockholders' equity and historical losses.
  • It is important to discuss the implications of the required surety bonds with your franchise attorney to understand the protections they offer.
  • A business advisor can help you assess if the franchisor's financial health can sustain its support obligations as the system grows.
Citations: Item 21, Exhibit G, Special Risks to Consider About This Franchise, Exhibit A (State Addenda for CA, IL, MD, VA, WA)

High Franchisee Turnover

Low Risk

Explanation

This specific risk was not identified in the FDD package, as Item 20 tables show no franchise terminations, non-renewals, or other cessations of business. However, since the franchisor only began franchising in 2023, this data reflects a very new system and may not be indicative of long-term franchisee success or satisfaction. High turnover in mature systems can signal significant problems with profitability or support.

Potential Mitigations

  • It is advisable to ask current franchisees about their satisfaction and outlook, even though the system is new.
  • Engaging a business advisor can help you monitor franchisee success rates as the system matures.
  • Your accountant should help you develop conservative financial projections, as long-term franchisee profitability is not yet established.
Citations: Item 20

Rapid System Growth

Medium Risk

Explanation

Item 20 data shows the system is in a very early growth phase, having started with zero franchised outlets at the beginning of 2023 and growing to five by the end of 2024. While growth can be positive, rapid expansion in a new system can strain the franchisor's resources, potentially leading to inadequate franchisee support and training.

Potential Mitigations

  • Discuss the franchisor's plans for scaling its support infrastructure to match unit growth with your business advisor.
  • Interviewing the initial franchisees listed in Exhibit E about the quality and responsiveness of franchisor support is a crucial step.
  • Your accountant can help assess if the franchisor's financial resources, as shown in Item 21, are sufficient to support this growth.
Citations: Item 20

New/Unproven Franchise System

High Risk

Explanation

The franchisor explicitly discloses that it has a "Short Operating History," having been formed in 2022 and beginning to offer franchises the same year. While its affiliate has operated similar studios, the franchisor itself is new and unproven. This presents a higher risk regarding the viability of its franchise model, brand recognition, and ability to provide consistent, long-term support to you.

Potential Mitigations

  • Conducting extensive due diligence on the affiliate's operating history and the management team's experience is critical; a business advisor can assist.
  • It is important to speak with the very first franchisees about their experience with the new system.
  • A franchise attorney may be able to negotiate more favorable terms in the agreement to compensate for the higher risk of an unproven system.
Citations: Item 1, Special Risks to Consider About This Franchise

Possible Fad Business

Medium Risk

Explanation

The business is a pole fitness and exercise studio. While fitness is a large market, the specific niche of pole fitness could be subject to changing trends and consumer tastes. A prospective franchisee should consider whether the demand for this specific type of fitness is sustainable in their local market for the full 10-year term of the agreement and beyond, as you are contractually obligated regardless of market trends.

Potential Mitigations

  • A business advisor can help you conduct local market research to gauge long-term consumer demand for this specific fitness niche.
  • Question the franchisor on their plans for innovation and adapting the business model to evolving fitness trends.
  • Evaluating the business's resilience to economic shifts and its appeal beyond current trends is a wise step to take with a financial advisor.
Citations: Item 1

Inexperienced Management

Medium Risk

Explanation

The franchisor itself does not operate a business of the type being franchised; it relies on an affiliate for operational experience. Furthermore, the key franchising and development executives hold concurrent high-level roles (CEO, COO) at another franchise system, which may divide their attention. While the CEO has direct industry experience, this management structure could pose a risk to the level of dedicated support and strategic focus you receive.

Potential Mitigations

  • A thorough vetting of the management team's concurrent obligations should be discussed with your business advisor.
  • It is important to ask current franchisees about the responsiveness and expertise of the management and support teams.
  • Your attorney can help you question the franchisor about how they manage potential conflicts of interest and ensure adequate support.
Citations: Item 1, Item 2

Private Equity Ownership

Low Risk

Explanation

This risk was not identified in the FDD package. Item 1 does not indicate that the franchisor is owned or controlled by a private equity firm. This type of ownership can sometimes lead to decisions that prioritize short-term returns over the long-term health of the franchise system, potentially affecting franchisee support, fees, and overall brand strategy. Its absence here may be a positive factor.

Potential Mitigations

  • Your attorney can help you verify the franchisor's ownership structure through public records to confirm the absence of private equity control.
  • Engaging a business advisor to understand the typical impacts of different ownership structures on franchise systems can be beneficial.
  • In any franchise, it is prudent to have your attorney review clauses related to the franchisor's right to sell or assign the system.
Citations: Not applicable

Non-Disclosure of Parent Company

Low Risk

Explanation

This risk was not identified in the FDD package. Item 1 discloses that the franchisor does not have any parent companies. In situations where a franchisor is a subsidiary, the financial health and influence of the parent company can be a significant factor. The absence of a parent company simplifies the corporate structure, making the franchisor's own financial statements the primary indicator of stability.

Potential Mitigations

  • Your accountant should focus their analysis on the franchisor's own financial statements as provided in Item 21.
  • Verifying corporate structure through public records is a step your attorney can take to confirm no undisclosed controlling entities exist.
  • It is always a good idea to discuss the franchisor's capitalization and financial stability with a business advisor.
Citations: Item 1

Predecessor History Issues

Low Risk

Explanation

This risk was not identified in the FDD package. Item 1 indicates the franchisor does not have any predecessors. When a franchisor acquires a business from a predecessor, it's important to investigate the predecessor's history for issues like litigation or high franchisee turnover. Since this franchise system is new and was not acquired from another entity, this specific risk is not applicable.

Potential Mitigations

  • A business advisor can help you focus your due diligence on the history of the current franchisor and its affiliate.
  • Your attorney should confirm that the information in Item 1 is complete regarding the franchisor's history.
  • Speaking with the earliest franchisees about the system's development from its inception is a valuable exercise.
Citations: Item 1

Pattern of Litigation

Low Risk

Explanation

This risk was not identified in the FDD package. Item 3 states that no litigation is required to be disclosed. A pattern of lawsuits, particularly those initiated by franchisees alleging fraud or misrepresentation, can be a major red flag indicating systemic problems. The absence of such litigation is a positive sign, although it is also expected for a very new franchise system.

Potential Mitigations

  • Your attorney can conduct an independent search for any litigation that may not have met the criteria for disclosure in Item 3.
  • Discussing any disputes or disagreements with current franchisees can provide insight beyond formal litigation records.
  • A business advisor can help you establish a framework for ongoing monitoring of the franchisor's legal health.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 15
2
4
9

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
4
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.

4

Legal & Contract Risks

Total: 16
6
5
5

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
1
3
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.

6

Regulatory & Compliance Risks

Total: 10
4
3
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.

7

Franchisor Support Risks

Total: 4
3
1
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.

8

Operational Control Risks

Total: 12
6
4
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
8
6
4

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.