2020 FDD (EXCLUDING EXHIBITS)

FRANCHISE DISCLOSURE DOCUMENT Basecamp Fitness, LLC a Delaware limited liability company 111 Weir Drive Woodbury, MN 55125 866-956-4612 franchise@basecampfitness.com www.basecampfitness.com Basecamp Fitness, LLC is offering franchises for the operation of boutique interval training studios, under the “BASECAMP” and “BASECAMP FITNESS” trademarks and related trademarks and service marks, that offer short, high-intensity guided workouts combining strength, cardio and core training in a fast-paced, high-energy environment (“Basecamp Studio”). The total investment necessary to begin operation of a Basecamp Fitness franchise ranges from $500,760 to $734,848. This includes $162,500 to $193,000 that must be paid to the franchisor or its affiliates. We may also offer you the right to develop multiple Basecamp Studios. You would then sign an Area Development Agreement and pay a Development Fee based upon the number of Basecamp Studios you agree to open, which replaces the Initial Franchise Fee you would have paid for those studios. This Disclosure Document summarizes certain provisions of your franchise agreement and other information in plain English. Read this Disclosure Document and all accompanying agreements carefully. You must receive this Disclosure Document at least 14 calendar-days before you sign a binding agreement with, or make any payment to, the franchisor or an affiliate in connection with the proposed franchise sale. Note, however, that no governmental agency has verified the information contained in this document. You may wish to receive your Disclosure Document in another format that is more convenient for you. To discuss the availability of disclosures in different formats, contact your sales representative at 111 Weir Drive, Woodbury, Minnesota 55125, telephone 866-956-4612. The terms of your contract will govern your franchise relationship. Don’t rely on the Disclosure Document alone to understand your contract. Read all of your contract carefully. Show your contract and this Disclosure Document to an advisor, like a lawyer or an accountant. Buying a franchise is a complex investment. The information in this Disclosure Document can help you make up your mind. More information on franchising, such as “A Consumer’s Guide to Buying a Franchise,” which can help you understand how to use this Disclosure Document, is available from the Federal Trade Commission. You can contact the FTC at 1-877-FTC-HELP or by writing to the FTC at 600 Pennsylvania Avenue, NW, Washington, D.C. 20580. You can also visit the FTC’s home page at www.ftc.gov for additional information. Call your state agency or visit your public library for other sources of information on franchising. There may also be laws on franchising in your state. Ask your state agencies about them. ISSUANCE DATE: March 27, 2020.

How to Use This Franchise Disclosure Document

Here are some questions you may be asking about buying a franchise and tips on how to find more information:

QUESTION

WHERE TO FIND INFORMATION

How much can I earn?

Item 19 may give you information about outlet sales, costs, profits or losses. You should also try to obtain this information from others, like current and former franchisees. You can find their names and contact information in Item 20 or Exhibit C.

How much will I need to invest?

Items 5 and 6 list fees you will be paying to the franchisor or at the franchisor’s direction. Item 7 lists the initial investment to open. Item 8 describes the suppliers you must use.

Does the franchisor have the financial ability to provide support to my business?

Item 21 or Exhibit D includes financial statements. Review these statements carefully.

Is the franchise system stable, growing, or shrinking?

Item 20 summarizes the recent history of the number of company-owned and franchised outlets.

Will my business be the only Basecamp Fitness business in my area?

Item 12 and the “territory” provisions in the franchise agreement describe whether the franchisor and other franchisees can compete with you.

Does the franchisor have a troubled legal history?

Items 3 and 4 tell you whether the franchisor or its management have been involved in material litigation or bankruptcy proceedings.

What’s it like to be a Basecamp Fitness franchisee?

Item 20 or Exhibit C lists current and former franchisees. You can contact them to ask about their experiences.

What else should I know?

These questions are only a few things you should look for. Review all 23 Items and all Exhibits in this disclosure document to better understand this franchise opportunity. See the table of contents.

What You Need To Know About Franchising Generally

Continuing responsibility to pay fees. You may have to pay royalties and other fees even if you are losing money.

Business model can change. The franchise agreement may allow the franchisor to change its manuals and business model without your consent. These changes may require you to make additional investments in your franchise business or may harm your franchise business.

Supplier restrictions. You may have to buy or lease items from the franchisor or a limited group of suppliers the franchisor designates. These items may be more expensive than similar items you could buy on your own.

Operating restrictions. The franchise agreement may prohibit you from operating a similar business during the term of the franchise. There are usually other restrictions. Some examples may include controlling your location, your access to customers, what you sell, how you market, and your hours of operation.

Competition from franchisor. Even if the franchise agreement grants you a territory, the franchisor may have the right to compete with you in your territory.

Renewal. Your franchise agreement may not permit you to renew. Even if it does, you may have to sign a new agreement with different terms and conditions in order to continue to operate your franchise business.

When your franchise ends. The franchise agreement may prohibit you from operating a similar business after your franchise ends even if you still have obligations to your landlord or other creditors.

Some States Require Registration

Your state may have a franchise law, or other law, that requires franchisors to register before offering or selling franchises in the state. Registration does not mean that the state recommends the franchise or has verified the information in this document. To find out if your state has a registration requirement, or to contact your state, use the agency information in Exhibit A.

Your state also may have laws that require special disclosures or amendments be made to your franchise agreement. If so, you should check the State Specific Addenda. See the Table of Contents for the location of the State Specific Addenda.

Special Risk(s) to Consider About This Franchise

Certain states require that the following risk(s) be highlighted:

Out-of-State Dispute Resolution. The Franchise Agreement and Area Development Agreement require you to resolve disputes with the franchisor by mediation at a place selected by the mediator more than 100 miles from your principal office, by arbitration in Minnesota (or if franchisor’s principal office is not in Minnesota, at the office of the American Arbitration Association located closest to its principal office) and/or by litigation only in Minnesota. Out-of-state mediation, arbitration, or litigation may force you to accept a less favorable settlement for disputes. It may also cost more to mediate, arbitrate, or litigate with the franchisor in Minnesota than in your own state.

Certain states may require other risks to be highlighted. Check the “State Specific Addenda” to see whether your state requires other risks to be highlighted.

NOTICE MANDATED BY SECTION 8 OF MICHIGAN’S FRANCHISE INVESTMENT ACT

The following is applicable to you if you are a Michigan resident or your franchise will be located in Michigan.

The state of Michigan prohibits certain unfair provisions that are sometimes in franchise documents. If any of the following provisions are in these franchise documents, the provisions are void and cannot be enforced against you.

(a)  A prohibition on the right of a franchisee to join an association of franchisees.

(b)  A requirement that a franchisee assent to a release, assignment, novation, waiver, or estoppel which deprives a franchisee of rights and protections provided in this act. This shall not preclude a franchisee, after entering into a franchise agreement, from settling any and all claims.

(c)  A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause. Good cause shall include the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.

(d)  A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee’s inventory, supplies, equipment, fixtures, and furnishings. Personalized materials which have no value to the franchisor and inventory, supplies, equipment, fixtures, and furnishings not reasonably required in the conduct of the franchise business are not subject to compensation. This subsection applies only if: (i) The term of the franchise is less than 5 years and (ii) the franchisee is prohibited by the franchise or other agreement from continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the franchise or the franchisee does not receive at least 6 months advance notice of franchisor’s intent not to renew the franchise.

(e)  A provision that permits the franchisor to refuse to renew a franchise on terms generally available to other franchisees of the same class or type under similar circumstances. This section does not require a renewal provision.

(f)  A provision requiring that arbitration or litigation be conducted outside this state. This shall not preclude the franchisee from entering into an agreement, at the time of arbitration, to conduct arbitration at a location outside this state.

(g)  A provision which permits a franchisor to refuse to permit a transfer of ownership of a franchise, except for good cause. This subdivision does not prevent a franchisor from exercising a right of first refusal to purchase the franchise. Good cause shall include, but is not limited to:

          (i)  The failure of the proposed transferee to meet the franchisor’s then current reasonable qualifications or standards.

          (ii)  The fact that the proposed transferee is a competitor of the franchisor or subfranchisor. i

          (iii)  The unwillingness of the proposed transferee to agree in writing to comply with all lawful obligations.

          (iv)  The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.

(h)  A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor. This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to purchase the assets of a franchise on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right to acquire the assets of a franchise for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c).

(i)  A provision which permits the franchisor to directly or indirectly convey, assign, or otherwise transfer its obligations to fulfill contractual obligations to the franchisee unless provision has been made for providing the required contractual services.

The fact that there is a notice of this offering on file with the attorney general does not constitute approval, recommendation, or endorsement by the attorney general.

If the franchisee has any questions regarding this notice, those questions should be directed to the Michigan Department of Attorney General, Consumer Protection Division, Attn.: Franchise, 525 West Ottawa Street, Lansing, Michigan 48909, telephone: (517) 373-7117.

ITEM 1
THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES

To simplify the language in this Franchise Disclosure Document the “Company”, “Basecamp Fitness” or “we,” “us,” or “our” means Basecamp Fitness, LLC, the “Franchisor.” “You” or ”your” means the person, corporation, limited liability company, partnership or other business entity that buys the franchise, the “Franchisee.” If you are a corporation, limited liability company, partnership or other entity, “you” includes the franchisee’s owners.

The Franchisor

We are a Delaware limited liability company formed on August 22, 2018. Our principal business address is 111 Weir Drive, Woodbury, Minnesota 55125. We do business under our corporate name and as “Basecamp” and “Basecamp Fitness”. We do not conduct business in any other line of business nor do we offer franchises in any other line of business. Our agents for service of process are disclosed on Exhibit A.

The Business

The Basecamp Fitness concept and brand was founded in March 2013, with the opening of the first Basecamp Fitness studio in Burlingame, California. The Basecamp Fitness brand’s presence expanded with the opening of 4 more locations in California over a 2-year period; Santa Monica in January 2015, San Francisco in April 2015, West Hollywood in October 2015 and Pasadena in January 2017. On October 23, 2018 we purchased the assets of the Basecamp Fitness brand, including the assets of these 5 locations, pursuant to an Asset Purchase Agreement between Nick Swinmurn, us, Dethrone Basecamp, LLC, Dethrone LLC, Dethrone Corporate, LLC, Dethrone Pasadena, LLC, Dethrone San Francisco, LLC, Dethrone Santa Monica, LLC, Dethrone West Hollywood, LLC, and Dethrone Burlingame, LLC. All of these Dethrone entities would be considered predecessors of ours and have a principal business address of 405 Primrose Road, No. 200, Burlingame, California 94010. To our knowledge, none of these entities has offered franchises in any lines of business.

After our purchase of the Basecamp Fitness assets we opened a Basecamp Fitness studio in Minneapolis, Minnesota in May 2019. We sold one Basecamp Fitness area development agreement in Wisconsin in the summer of 2019. We began offering unit Basecamp Studio franchises in the spring of 2020.

The franchise we offer is for the establishment, development and operation of a boutique interval training studio that offers short, high intensity guided workouts that combine strength, cardio and core training in a fast-paced, high-energy environment, under the “BASECAMP” and “BASECAMP FITNESS” trademarks, and other trademarks, trade names, service marks, and commercial symbols we may authorize (“Marks”). These businesses are referred to in this Disclosure Document as a “Basecamp Studio”. You will operate your Basecamp Studio using a unique system with high standards of service, including valuable know-how, information, trade secrets, confidential information, training and exercise methods, standards, designs, methods of trademark usage, copyrights, sources and specifications, confidential electronic and other communications, methods of Internet usage, the sale of proprietary products, and research and development connected with the operation and promotion of Basecamp Studios (“System”). We can change or otherwise modify the System at any time as we see fit.

You must construct and operate your Basecamp Studio in accordance with our standards and sign our standard franchise agreement (“Franchise Agreement”). Your Basecamp Studio may only offer the services and products we authorize. Specifically, your Basecamp Studio must provide certain class-based workouts that meet our standards, offer the various types of memberships we specify and sell the merchandise, including apparel, and food and beverage products we require. We may add, modify, or delete

any services or products that you must offer or sell at your Basecamp Studio at any time, and change and modify our standards as we see fit.

You will have the right to operate a single Basecamp Studio at a location we specify in your Franchise Agreement. We also offer qualified people the right to develop multiple Basecamp Studios within a specific territory under the terms of an Area Development Agreement (“Area Development Agreement”). If you sign an Area Development Agreement, you will sign a separate Franchise Agreement for each Basecamp Studio you develop under your Area Development Agreement. You will sign the Franchise Agreement when you sign the Area Development Agreement. The form of that agreement will be the form attached to this Disclosure Document. Later Franchise Agreements you sign will be in the form of agreement we use at the time you sign the agreement. The terms of those agreements may differ from the form attached to this Disclosure Document.

We retain the right, in our sole discretion, to choose to award or not to award a franchise to any prospective franchisee, and to cease discussions regarding the awarding of a franchise at any time, regardless of the stage of the franchise award process or the time and money spent by you or any other prospective franchisee.

We will not require the owner of a Basecamp Studio to participate personally in the direct operation of the studio. However, each Basecamp Studio must employ a studio manager, a fitness manager, plus fitness instructors. The individual you designate as the “Principal Operator”, your studio manager and fitness manager must complete our Initial Training Program.

Our Parents and Affiliates

Our direct parent is Self Esteem Brands, LLC (“SEB”). SEB is owned by Anytime Worldwide, LLC (“Anytime Worldwide”). The majority of Anytime Worldwide is owned by Anytime Holdings, Inc. The principal business address of each of these parent companies is 111 Weir Drive, Woodbury, Minnesota 55125. We do not have any other parent companies.

We have 3 affiliates that offer franchises in other lines of business as discussed below. None of these affiliates have conducted the type of business that a Basecamp Fitness franchisee will operate nor have they offered franchises for the type of business a Basecamp Fitness franchisee will operate. All of these affiliates have the same principal business address as we do.

Our affiliate, Anytime Fitness, LLC (“Anytime Fitness”), began offering franchises for the operation of fitness centers designed to operate with minimal overhead and labor costs under the trademark, “Anytime Fitness®” in October 2002, and “Anytime Fitness Express®” in October 2006. Anytime Fitness began operating its own Anytime Fitness centers in January 2005, and its own Anytime Fitness Express center in October 2006. (It no longer operates any Anytime Fitness Express centers.) As of December 31, 2019, Anytime Fitness had 2,455 franchised centers in operation in the United States and 14 company-owned centers.

Our affiliate, The Bar Method Franchising, LLC (“The Bar Method Franchising”), offers franchises for the operation of boutique fitness studios that offer barre-based exercise classes using proprietary and non- proprietary instructional techniques, formats and methods designed to provide fitness training in an attractive atmosphere. As of December 31, 2019, The Bar Method Franchising had 117 franchised studios in operation in the United States. In addition, as of December 31, 2019, The Bar Method, LLC. (“TBM”), had 1 company-owned studio in California. TBM offered rights for Bar Method studios from June 2003 until October 2007 and assigned those agreements to The Bar Method Franchising in January 2008 at which time The Bar Method Franchising began offering Bar Method franchises.

Our affiliate, Waxing the City Worldwide, LLC (“Waxing the City Worldwide”), offers franchises for sale in the boutique body waxing services industry. Waxing the City Worldwide began offering franchises for that business in April 2013 and as of December 31, 2019 had 107 franchised locations operating in the United States and 9 company-owned locations.

We have one affiliate that will sell goods and services to our franchisees. ProVision Security Solutions, LLC (“ProVision”), will sell exercise equipment, information technology services, technology, and security systems, including computers, sound systems, software and other related components to our franchisees and can provide technology support, monitoring, and installation services for your Basecamp Studio. ProVision has the same principal business address as we do.

Market Competition

You will sell your services to the general public. The market for class-based fitness services, including group workout classes, is developed and highly competitive. Your competitors include other national fitness chains, personal training studios and local fitness centers. You will also face normal business risks that could have an adverse effect on your Basecamp Studio. These include industry developments, such as pricing policies of competitors, and supply and demand. Your financial success may also be sensitive to changes in general economic conditions, both globally and nationally.

Regulations

Your Basecamp Studio will be subject to national, state and local regulations that apply to all businesses, such as the Americans With Disabilities Act, wage and hour laws, employment laws, zoning laws, and business licensing requirements. Because you will accept credit cards, you will also have to comply with any general laws and regulations relating to the acceptance of credit cards, including the Payment Card Industry (“PCI”) Data Security Standard (“DSS”). Compliance with the PCI DSS is your responsibility. You must also comply with personal information, data protection and data privacy laws that affect the safekeeping of member information, and regulations that apply to electronic marketing, like faxes, emails, text messaging and telemarketing.

Many states, and some municipalities, have laws and regulations that apply specifically to health clubs and fitness clubs, membership contracts, operations and licenses. Many states limit the length of your customer contracts, provide for specific provisions to be included in those contracts, prescribe the format or type size for the contract, and/or provide customers the right to terminate their contracts. State regulations may also require you to obtain a bond to protect pre-paid membership fees you collect. Some states and municipalities may also have enacted laws requiring a staff person be certified in basic cardiopulmonary resuscitation, or have other specialized training. In addition, some states have laws requiring a fitness studio to have an automated external defibrillator and other first aid equipment on the premises, and some may require you to take other safety measures. Some states impose sales taxes on studio memberships. There may also be special permits required for you to operate some or all of your business. If these or similar laws have been enacted in the state or municipality in which you intend to operate your Basecamp Studio, you will need to comply with these laws, and we urge you to become familiar with them.

There are also state and federal laws and regulations that apply to credit transactions, such as the Federal Truth In Lending Act and Regulation Z, and various other credit related statutes like the Equal Credit Act and Fair Debt Collection Practices Act. These laws and regulations vary from state to state and may affect your operations.

Your business is subject to state and federal regulations that allow the government to restrict travel and/or require businesses to close during state or national emergencies. Because your business is operated from a

destination to which your customers must travel, your business can be affected by such orders more than others. As of the date of this Disclosure Document, travel restrictions have been implemented by the federal government and most state governments in response to the novel strain of the coronavirus (COVID-19) a global pandemic, and several state governments have ordered business closures.

ITEM 2
BUSINESS EXPERIENCE

President and Governor – Charles Runyon

Chuck Runyon has been the President and a Governor of our company since our formation in August 2018. He is also one of the founders of Anytime Fitness, and has served as a Director of Anytime Fitness since February 2002, until he was appointed as a Governor, President and Chief Manager in December 2009. In January 2013, he transitioned from the role of President to Chief Executive Officer of Anytime Fitness. He has been the Chief Executive Officer and a Governor of Waxing the City Worldwide since September 2012, and the President of The Bar Method Franchising since September 2019.

Vice President and Governor – Dave Mortensen

Dave Mortensen has been the Vice President and a Governor of our company, since our formation in August 2018. He is also one of the founders of Anytime Fitness, and has served as the Secretary and a Governor of Anytime Fitness since December 2009 and as its President since January 2013. In August 2007, he was elected a Director of our affiliate, ProVision, and he was appointed as President, Chief Financial Officer/Treasurer and Secretary of ProVision in October 2009. In December 2009, he was appointed as Secretary and a Governor of ProVision. He has been the President and Secretary of Waxing the City Worldwide, as well as a Governor, since September 2012, and the Vice President of The Bar Method Franchising since September 2019.

Chief Development Officer – Jedidiah Schmidt

Jedidiah (Jed) Schmidt has been our Chief Development Officer since January 2020. Mr. Schmidt joined SEB in June 2016 and served in various roles: from June 2016 to October 2018 he was President of ProVision Security, LLC and from October 2018 to January 2020 he was Brand President of Basecamp Fitness. Before joining us, Mr. Schmidt was Global Vice President of Sales and Marketing for Playerlync, LLC in Denver, Colorado from August 2013 to June 2016.

Chief Financial Officer/Treasurer – R. John Pindred

Mr. Pindred has been the Chief Financial Officer/Treasurer of our company since our formation in August 2018. From August 2004 until September 2014, he was Chief Financial Officer for Family Christian, LLC (f/k/a Family Christian Stores, Inc.), in Grand Rapids, Michigan. From August 2006 until September 2014, he was also the Chief Administrative Officer of that company. Mr. Pindred has been the Chief Financial Officer/Treasurer of Anytime Fitness since November 2014 and of Waxing the City Worldwide since November 2014, and the Chief Financial Officer of The Bar Method Franchising since September 2019.

General Counsel – James Goniea

Mr. Goniea has been the General Counsel and the Secretary of our company since our formation in August 2018. He has also served as the General Counsel for Anytime Fitness and Waxing the City Worldwide since October 2017 and as the General Counsel and Secretary of The Bar Method Franchising since

September 2019. From January 2016 to September 2017, he was a partner at Einbinder Dunn & Goniea LLP (now Einbinder & Dunn LLP) a law firm in New York, New York. Between September 2012 and December 2015, he was a partner at Wiggin and Dana LLP, a law firm in Philadelphia, Pennsylvania.

Basecamp Fitness Brand President – Benjamin Camper

Benjamin Camper has been our Brand President since March 2020. From July 2017 to February 2020 he was the Senior Director of Strategic Operations for 24 Hour Fitness in San Ramon, California. From November 2015 through June 2017 he was a District Manager for Extra Space Storage, a real estate investment trust located in Salt Lake City, Utah.

Studio Division President – Angela Jaskolski

Angela Jaskolski joined SEB in April 2016 as the Senior Vice President of Strategic Operations. In August 2016, she became the Brand President of Waxing the City. In September 2019 she became our Studio Division President. From April 2013 to April 2016 Ms. Jaskolski was the Vice President of Corporate Operations for Regis Corporation, based in Minneapolis, MN.

Vice President of Franchise Administration – Jennifer Yiangou

Jennifer Yiangou has been our Vice President of Franchise Administration since August of 2018. She has served in this same role with The Bar Method since September 2019, with Waxing the City since October 2012 and with Anytime Fitness since January 2008.

Chief Marketing Officer – Amy Halford

Amy Halford has been our Chief Marketing Officer since June 2019. She has held this same position with Waxing the City Worldwide and Anytime Fitness since June 2019. From March 2018 to June 2019 she was the Senior Director of Brand Strategy and Development for us and Anytime Fitness, located in Woodbury, Minnesota. From March 2017 to March 2018, Ms. Halford was the Vice President of Digital for Gomn.com and prior to that, from May 2014 to March 2017, she was the Director of Owned Media and Publishing for General Mills, located in Golden Valley, Minnesota.

Chief Information Officer: Tammylynne Jonas

Tammylynne Jonas has been our Chief Information Officer since June 2019 and serves in the same role for Waxing the City Worldwide, Anytime Fitness and The Bar Method. From 2017 to 2019 she was the Chief Information Officer for Holiday Companies, and while in that role, from 2018 to 2019, she simultaneously served as Senior Director of the Global Technology Team for Couche-Tard, located in Laval, Canada. From 2012 to 2017, Ms. Jonas was Vice President for Technology: Vendor Management, Sourcing, Enterprise Services, and Application Development for Kohl’s, located in Menomonee Falls, Wisconsin.

Chief Self Esteem Officer – Carol Grannis

Carol Grannis has been our Chief Self Esteem Officer since August of 2018. She has served in this same capacity with Waxing the City and Anytime Fitness since August 2017. She founded Leading Edge Talent Solutions (“Leading Edge”) in January 2003 based in Woodbury, Minnesota, and operated Leading Edge through July 2017. Through Leading Edge, she was a consultant for us from March 2010 to July 2017.

Vice President of Real Estate – Mark Norman

Mr. Norman joined us in September 2019 as Vice President of Real Estate. He serves in the same capacity for Anytime Fitness, Basecamp Fitness and The Bar Method. From April 2017 to September 2019 Mr. Norman served as Vice President of Real Estate for Regis Corporation in Minneapolis, Minnesota. From September 2016 to April 2017 he was Associate Vice President of Real Estate at Regis Corporation in Minneapolis, Minnesota and was a Real Estate Director with Regis from November 2010 to September 2016.

Director of Financing – Timothy Smith

Timothy Smith has been our Director of Financing since October 2018. He has served in this same capacity with Waxing the City since October 2012. He has also served as the Director of Financing of Anytime Fitness since December 2009. From February 2013 to present has been President of our affiliate Franchise Financial, LLC.

ITEM 3
LITIGATION

Remarck Partners, LLC vs. Gibson Center, L.P., et al. Superior Court for the State of California, Yolo County, Case No. CV-17-1747, filed October 24, 2017. Plaintiff Remarck Partners, bought a shopping center in which an Anytime Fitness franchisee had planned to lease space to develop an Anytime Fitness center. Plaintiff is suing the seller, Gibson Center, L.P., along with Anytime Fitness and Franchise Real Estate LLC (“FRE”) for allegedly fraudulently failing to disclose that the franchisee was trying to get out of the lease and could not move forward with opening a club due to significantly changed financial circumstances. Plaintiff subsequently filed an Amended Complaint on or about January 11, 2018 adding claims against the franchisee. Anytime Fitness and FRE filed a motion to dismiss all claims brought against Anytime Fitness and FRE, but that motion was denied. In November 2019, Anytime Fitness entered into a settlement agreement with the plaintiff. The settlement agreement resolved all claims against Anytime Fitness and FRE, except for certain cross-claims by Gibson Center, a former owner of the shopping center at issue. Those cross claims are still pending. The final settlement agreement provides that neither Anytime Fitness nor FRE will pay any amount, but they will dismiss their claims against Remarck in exchange for Remarck’s dismissal of its claims against Anytime Fitness and FRE. We are not a party to this litigation.

The following disclosures relate to our affiliates, TBM and The Bar Method Franchising, in connection with the offering of boutique fitness studios that offer barre-based exercise classes under the name The Bar Method®:

Illinois v. The Bar Method Franchising Inc. and The Bar Method Inc. (Case No. 2009CH 0125, Seventh Judicial Circuit of Illinois, filed February 9, 2009). The Illinois Attorney General brought this action against The Bar Method Franchising and TBMI alleging the agreement between TBMI and an Illinois resident that TBMI assigned to The Bar Method Franchising in January 2008 constituted a franchise that was not registered under the Illinois Franchise Disclosure Act, and that TBMI did not provide a franchise disclosure document to the operator as that statute requires. On February 9, 2009, The Bar Method Franchising and TBMI agreed to the entry of a Final Judgment and Consent Decree in which, while not admitting any liability for any violations, The Bar Method Franchising and TBMI agreed to the entry of a permanent injunction prohibiting The Bar Method Franchising and TBMI from offering or selling franchises in Illinois without being registered as a franchisor or failing to provide the franchise disclosure document to residents of Illinois as the Illinois Franchise Disclosure Act requires. The Bar Method Franchising also agreed to offer rescission of the agreement to the Illinois operator and to the payment of penalties and costs to the

State of Illinois in the amount of $5,000. The Illinois operator did not accept the offer of rescission and its agreement continues in effect.

In the Matter of the Investigation by Andrew Cuomo, Attorney General of the State of New York, of The Bar Method Inc. and Carl Diehl (Assurance No. 08-108). On April 2, 2009, TBMI and Mr. Diehl, as its Vice President, entered into an Assurance of Discontinuance (“AOD”) under which, without admitting any violation of the law, they agreed to offer rescission of an agreement that TBMI signed in New York without being registered to sell franchises in that state. As part of the AOD, TBMI and Mr. Diehl agreed to comply with the provisions of the New York Franchises Act and not to sell franchises in New York without a current registration. TBMI also paid to the State of New York the sum of $2,500. The New York operator did not accept the offer of rescission and she continues to operate her studio under the agreement.

Other than these actions, no litigation is required to be disclosed in this Item.

ITEM 4
BANKRUPTCY

Except as set forth below, no bankruptcy information is required to be disclosed in this Item.

Our Chief Financial Officer, R. John Pindred, was an officer of Family Christian, LLC, 5300 Patterson Avenue Southeast, Grand Rapids, Michigan 49530, from August 2004 until September 2014. On February 11, 2015, about 5 months after Mr. Pindred left that company, Family Christian, LLC, filed for protection under Chapter 11 of the United States Bankruptcy Code, Case No. 15-00643, United States Bankruptcy Court, Western District of Michigan. The deadline for filing claims passed on June 9, 2015. On August 11, 2015, Family Christian, LLC’s Chapter 11 Plan of Liquidation, involving a sale of assets and continuity of operations, was confirmed. On August 1, 2016, the court issued a final decree closing the case.

ITEM 5
INITIAL FEES

Standard Franchises

Our initial franchise fee (“Initial Franchise Fee”) for a single Basecamp Studio is $50,000. However, we offer other pricing options for veterans, existing franchisees who are not in default under their existing Franchise Agreement(s) with us, and for people signing an Area Development Agreement to open and operate multiple Basecamp Studios. A schedule of the various pricing options and fees follows:

Franchise Agreement Pricing

New Franchisee

New Franchisee Who Meets Veteran Requirements (Note 1)

Existing Franchisee (Outside of Preference Period) (Note 2)

Existing Franchisee Who Meets Veteran Requirements

Basecamp Studio Franchise

$50,000

$47,500

$45,000

$42,500

1. To qualify for a veteran fee, you must be a current member of the United States or Canadian military, or a veteran who received an honorable discharge from a branch of the United States or Canadian military.

2. We offer a pricing option for existing franchisees of ours, or of our affiliates, Anytime Fitness, The Bar Method and Waxing the City, that are open and operating, and are in good standing, i.e. not subject to any uncured default notice.

Limited-time “Friends and Family” Initial Franchise Fee Pricing (Single Unit)

For a minimum period of 120 days beginning March 31, 2020, we are offering a one-time “Friends and Family” pricing and preference option to financially qualified, existing franchisees of ours, or of our affiliates, Anytime Fitness, The Bar Method, and Waxing the City, that are open and operating, and are in good standing, including not subject to any uncured default notice (“Preference Period”). During this Preference Period, these existing franchisees will have preference over members of the general public in purchasing during the Preference Period a Basecamp Fitness franchise. For example, this means that if a member of the public and a qualified, existing franchisee each want to purchase a Basecamp Franchise in the same DMA, and there is only one franchise agreement available in that DMA, we will award the franchise agreement to the qualified, existing franchisee. During the Preference Period, existing franchisees may purchase a Basecamp Fitness franchise for an initial franchise fee of $39,000. No discounts apply to this limited-time offer. In each case, the different Initial Franchise Fees only apply to Franchise Agreements or ADAs you enter into with us during the time this option is offered. We can modify or terminate any of these programs at any time. See below for Area Development pricing. In all cases, the Initial Franchise Fee is due in full when you sign the Franchise Agreement, deemed fully earned by us once paid and is non- refundable.

You will have 12 months from the date you sign the Franchise Agreement to open and begin operating your Basecamp Studio. If you want to extend that time for an additional 3 months, and we agree to allow you to do so, you must pay a $500 extension fee to us as a condition to our granting the extension. (However, we will waive this extension fee if you are actively working with us in locating a site.) The extension fee also applies if we agree to allow you to extend the date for opening of any Basecamp Studio that you must open under your Area Development Agreement. We are not, however, obligated to grant these extensions, and we can condition our consent on other requirements. Extension fees are not refundable and are not credited against any other obligation you may have to us. .

Area Development
We also offer Area Development Agreements (an “ADA”) to develop multiple Basecamp Studios.

Initial Franchise Fee

You must pay an Initial Franchise Fee in connection with each Franchise Agreement you sign under the ADA. Pricing for ADAs purchased outside of the Friends and Family Program is discussed below:

Initial Franchise Fee Pricing under Area Development Agreements

(Standard Basecamp Fitness Franchise)

New Franchisee

New Franchisee Who Meets Veteran Requirements

Existing Franchisee

Existing Franchisee Who Meets Veteran Requirements

2 locations

$92,500.00

$ 87,500.00

$90,000.00

$ 85,000.00

3 locations

$130,000.00

$ 125,000.00

$130,000.00

$ 125,000.00

4 locations

$ 172,500.00

$ 162,500.00

$172,500.00

$ 165,000.00

5 locations

$200,000.00

$ 187,500.00

$200,000.00

$ 192,500.00

6 locations

$242,500.00

$ 230,000.00

$242,500.00

$ 232,500.00

7 locations

$285,000.00

$ 272,500.00

$285,000.00

$ 272,500.00

8 locations

$327,500.00

$ 315,000.00

$327,500.00

$ 312,500.00

9 locations

$370,000.00

$ 357,500.00

$370,000.00

$ 352,500.00

10 locations

$395,000.00

$ 377,500.00

$395,000.00

$ 377,500.00

Additional locations

+$42,500 each

+$40,000 each

+$42,500 each

+$40,000 each

Limited-time “Friends and Family” ADA Initial Franchise Fee Pricing

As discussed above, we have instituted a “Friends and Family Program”. Existing franchisees of ours, or of our affiliates, Anytime Fitness, The Bar Method and Waxing the City, that are open and operating, and are in good standing, i.e. not subject to any uncured default notice will have preference over members of the general public in purchasing a Basecamp Fitness ADA during the Preference Period. For example, this means that if a member of the public and a qualified, existing franchisee each want to purchase a Basecamp ADA in the same DMA, and that DMA does not have the capacity to support both ADAs, we will award the ADA to the qualified, existing franchisee. No other discounts apply to this limited-time offer. Pricing for ADAs purchased through the Friends and Family Program is discussed below:

Initial Franchise Fee Pricing under Area Development Agreements
(Standard Basecamp Fitness Franchise)

Existing Franchisee

2 locations

$79,000

3 locations

$116,500

4 locations

$156,500

5 locations

$189,000

6 locations

$229,000

7 locations

$269,000

8 locations

$309,000

9 locations

$349,000

10 locations

$376,500

Additional locations

+$42,500 each

If you sign an ADA, the initial franchise fee is referred to as a Development Fee, and you pay it in full, for all the Basecamp studios you commit to open, when you sign the Development Agreement. All portions of the Development Fee are deemed fully earned by us once paid and are non-refundable.

The number of Basecamp Studios we will allow you to open under an ADA may be limited by various factors, including the capacity of the DMA in which you choose to develop. For example, we will not sell a 10 location ADA in a DMA that has a holding capacity of 5 Basecamp studios at the time you purchase. We may not allow a single franchisee to purchase more than 70% of the potential or existing locations within any given DMA.

If you purchase an ADA that gives you the right to develop 5 Basecamp Studios, you may be given a development schedule that requires the development of all of those Studios within a 3 year period. If you purchase an ADA that gives you the right to develop 10 Basecamp Studios, you may be given a development schedule that requires the development of all of those Studios within a 5 year period.

Retail Product Package

Before you begin operating, you must purchase a package of retail products to offer for sale in your Basecamp Studio from us. The cost of the package is approximately $5,000 and is non-refundable and is due before we ship the goods.

Construction Documents

You must retain an architectural vendor to create a complete set of detailed construction documents and to complete construction of your facility in compliance with our mandatory specifications (“Construction Documents”), and to obtain any required permits, and conform the premises to local ordinances or building codes. If you do not use our designated architectural vendor to create the Construction Documents, we will charge you a fee of $2,700 to review the Construction Documents created by another vendor. If this is your first Basecamp Studio, we may require you to obtain your Construction Documents from our designated architectural vendor. This fee is not refundable and is due upon receipt of an invoice..

Build-Out Package

You must purchase your signage, initial marketing materials, furniture, fixtures and a design kit from us. You will order all these items as a package through our on-line portal. We estimate that the total payments for the Build-Out Package will range from approximately $64,000 to $70,000. The actual amount you pay for these components may vary based on how many non-mandatory items you purchase from us, the requirements and size of your particular Basecamp Studio, and what products we are offering at the time of your purchase. This fee is not refundable and is due at the time of purchase.

Technology and Fitness Equipment Package

You must purchase your fitness equipment, certain technology services, technology, network hardware, and security systems, including iPads, computers, audio and video systems, software and other related components to operate your Studio as a package offered by our affiliate, ProVision. These systems include a point of sale system and software and cloud based technology. You will use these systems for marketing and sales, business intelligence, club management, fitness programming, communications with us and other studios, web integration, online team collaboration, and to manage your social content, reviews and advertisements. The actual amount you pay for these components may vary based on how many non- mandatory items you purchase from us, the requirements of your particular Basecamp Studio, and what products we are offering at the time of your purchase. ProVision will provide you with technology support, monitoring, and installation services for your Basecamp Studio. The cost to purchase the Technology and Fitness Equipment Package ranges from $100,000 to $120,000. This range does not include the cost of taxes, shipping or installation. This cost may be financed through a third party. These payments are not refundable and are due at the time our affiliate specifies.

Technology Set-up Fee

You must purchase from our affiliate ProVision, a Technology and Fitness Equipment Package that includes various technology systems you need to operate your Basecamp Studio. You will pay ProVision

a one-time set-up fee and a monthly fee for these technology solutions. The set-up fee is $500 and is not refundable and is due before the set-up of the systems. See Item 6 for information on the monthly fee.

Training Fees

Before your Studio opens your Fitness Manager must attend and complete our Train the Trainer Program and a minimum of 3 of your instructors must attend and complete our Instructor Training Program. Cost for the Instructor Training Program is $4,000. Cost for the Train the Trainer Program is $2,000 if the bootcamp portion of it occurs contemporaneously with the Instructor Training Program. If the bootcamp portion is conducted at a different time we will conduct the bootcamp portion at your location or another location we designate and the cost will be $2,000 plus our travel and living expenses. The costs for these trainings are nonrefundable and must be paid before the applicable training begins. For more information on these trainings see Item 11.

ITEM 6
OTHER FEES

 

Type of Fee

Amount (Note 1)

Due Date

Remarks

Royalty Fee

8% of Gross Revenue each week We reserve the right to increase this fee upon notice to you

Payable on 10th day of each month for the prior month. (Note 2)

Gross Revenue, includes all amounts generated by your Basecamp Studio, including membership package sales and gift cards (all counted at time of sale), and excluding bona fide refunds, credits given or allowed to customers for the return of merchandise and amounts collected from customers and remitted by you to any governmental taxing authority in satisfaction of sales taxes. Chargebacks are not deducted from collections.

General Advertising and Marketing Fund Contributions

Currently, 2% of Gross Revenue each month

Payable on the 10th day of each month for the prior month. (Note 2)

We reserve the right to increase the General Advertising and Marketing Fund Contribution upon 60 days’ written notice to you, but it will not exceed 3% of monthly Gross Revenue.

Grand Opening Program (Note 3)

$40,000

As incurred

If you fail to spend the minimum required amount on the Grand Opening Program, you must pay us the difference and we can either spend it in your market on your behalf or place the money in the General Advertising and Marketing Fund.

Local Marketing Requirement (Note 4)

$2,500 per month.

As incurred

If you do not meet this minimum requirement, you must pay us the difference and we can either spend it in your market on your behalf or place the money in the General Advertising and Marketing Fund.

Technology Fee (Note 5)

Currently, $799 per month.

Payable monthly on the first business day of each month.

You pay this fee to our affiliate, ProVision. We may increase the Technology Fee upon written notice to you.

Marketing Materials

Variable, but currently sold at our cost plus shipping

When incurred.

You must purchase marketing materials for brand level promotion. We may prescribe minimum amounts you must purchase.

Conference Fee

Currently, $439 for early registration, increasing to $659 at the Conference

When you register for the Conference

If we hold a Conference you must pay this fee for one Basecamp Studio, regardless of how many studios you open, even if you do not register for our Conference. Payment of this fee covers registration for a Principal Owner of your Basecamp Studio to attend our Conference. (Note 6)

No Show Fees

Currently, $500-$1,000 depending upon trainer, or our actual costs of rescheduling whichever is greater

Immediately after notice from us.

If we are scheduled for an on-site visit or if you register for a training program, and you cancel, fail to attend, fail to have the appropriate parties attend, or fail to stay for the entire program, and you did not provide us at least 2 weeks’ notice that you would not be attending, then you must pay this fee.

Renewal Fee

$5,000

At least 15 days before the term of your Franchise Agreement expires.

You only pay this fee if you want to renew your franchise.

Training Compliance Fee

Currently, $4,500

Immediately after notice from us.

You only pay this fee if you or any of your instructors teach Basecamp Fitness classes without completing the required instructor training. The fee consists of a $500 fine and $4,000 flat fee for an on-site instructor certification course.

New Instructor Training (Note 7)

Currently, $4,000

Payable before training begins.

3 days of training at your location.

Train the Trainer

Currently, $2,000 plus travel and living expenses for trainers if training held outside of a corporate- designated location

Payable before training begins.

If you are an existing Basecamp Studio and your Fitness Manager has not attended this training or you employ new Fitness Managers, these individuals must attend and complete this training to our satisfaction.

Transfer Fee

$7,500 or $15,000 (Note 8)

Before you transfer the franchise.

You only pay this fee if you sell your franchise or your interest in it.

Relocation Fee

$1,500 plus our expenses

When you submit a request to move your Basecamp Studio.

You only pay this fee if you want to relocate your Basecamp Studio. If we do not approve your request, we will refund the fee.

Audit

Cost of audit

30 days after billing

Payable only if audit shows an under- statement of at least 2% of Gross Revenue for any month.

Inspection Fee

Currently, up to $500 per failed inspection

Immediately after notice from us.

We will have someone conduct an inspection of your Basecamp Studio on a periodic basis, no more than annually. If you fail the inspection based on our criteria, we will re- inspect at a time we determine and you must pay this fee to cover our costs of re-inspection. If you pass the inspection, you will not incur this cost.

Additional On-site Operations Training

Currently, $500-$1,000 per day plus travel costs and expenses, per trainer

Immediately after notice from us.

If you request and we agree we will send one or more experienced Basecamp Fitness instructor(s) and one or more operations staff member(s) to your Basecamp Studio for 2 days to provide you and your staff with on-site studio operations and coaching training. If you are not meeting our coaching and/or operations standards, we may require you to take and pay for this training. We can also require you to take and pay for this training if we determine it is needed to keep the System competitive. This fee increases to $1,000 if you request a Master Trainer for the training.

Standard Default Fee

$250 per violation per month

Immediately after notice from us.

In addition to our right to terminate the Franchise Agreement and any other rights we may have, if you breach certain provisions of your Franchise Agreement, and you fail to cure the default during the cure period provided, you must pay us a fee of up to $250 per month until the default is cured in order to offset our costs incurred to address the default.

Insurance Handling Fees

Currently $100

Immediately after notice from us.

You only pay this fee to us if you fail to obtain insurance, and we obtain the insurance coverage for you. This fee does not include the cost of insurance premiums, for which you must also reimburse us.

Indemnification

Will vary under circumstances

As incurred

You must reimburse us if we are held liable for claims arising from your Basecamp Studio.

Cost of Enforcement or Defense

All costs including accounting and attorneys’ fees, will vary under the circumstances.

Immediately after notice from us.

You only pay this amount if we are successful in any legal action we bring against you, or in defending any claim you bring against us.

Interest

Lesser of 1.5% per month or highest rate of interest allowed by applicable law.

As incurred

Payable on all overdue amounts.

Late Report Fee

$100 per violation

As incurred

Payable only if a required report or financial statement is not delivered when due.

Insufficient Funds Fee

$100 per check that you submit to us that is returned for insufficient funds, and $100 each time that we are unable to collect via EFT due to insufficient funds.

As incurred

 

Construction Document Review Fee

$2,700Immediately after notice from usYou must pay us this fee if this is your first Basecamp Studio and you do not use our designated architectural vendor to complete your Construction Documents.

CEC Credit Deficiency

$1.00 per credit deficiency multiplied by the number of Basecamp Studios you own

Immediately after notice from us

You only pay this fee if you fail to meet your Continuing Engagement Credit minimum in any given year. We will deposit the fee in the General Advertising and Marketing Fund. See Item 11 for more information.

Compliance Drawing Fee

$250 per additional Drawing

As incurred

If you would like additional Compliance Drawings you must pay this fee to us for each additional Drawing.

Cleaning Fee

Costs we incur and are charged by third parties

As incurred

Only payable if you fail to maintain your Studio in a condition that meets our standards and we designate one of our personnel to assist you and/or have third party cleaners clean your Studio to bring it up to standards.

 

Liquidated Damages

$10,000 multiplied by number of undeveloped Basecamp studios

Immediately after notice from us

Only payable if your ADA is terminated and you have not developed all Basecamp studios under the ADA you agreed to develop.

Except as otherwise stated, all fees paid to us or our affiliates are non-refundable under any circumstances, and are uniform for all new franchisees. You must pay fees and other amounts due to us via electronic funds transfer or other similar means. You must comply with our procedures and perform all acts and deliver and sign all documents, including authorization (in the form attached to this Disclosure Document or other form that we may require) for direct debits from your business bank operating account, which may be necessary to assist in or accomplish payment by this method. Under this procedure you authorize us to initiate debit entries and/or credit correction entries to a designated checking or savings account for payments of fees and other amounts payable to us and any interest that may be owing. You will make the funds available to us for withdrawal by electronic transfer no later than the payment due date. If you have not timely reported the Gross Revenue for your Basecamp Studio to us for any reporting period, then we will be authorized, at our option, to debit your account for (a) 110% of the fees transferred from your account for the last reporting period for which a report of the Gross Revenue was provided to us; or (b) the amount due based on information we have retrieved from your operating system.

Notes:

(1)  If your state, or any governmental body in your state, charges a tax on any fee you owe to us or to our affiliates, then you are required to pay an additional amount equal to the amount of this tax. This does not apply to any federal or Minnesota income taxes we or our affiliates have to pay.

(2)  If the payment falls on a banking holiday, the payment will be due on the next business day.

(3)  You must spend a minimum of $40,000 on a Grand Opening Program we have approved for your Basecamp Studio beginning 12 to 16 weeks before your scheduled opening and ending 30 days following the opening of your Basecamp Studio. We recommend that you spend at least $60,000 on your Grand Opening Program. If you do not meet the minimum spend requirement, you must pay us the difference between what you were required to spend and what you actually spent and we can either spend it in your market on your behalf or place the money in the General Advertising and Marketing Fund, as we determine.

(4)  After the Grand Opening Program, you must spend a minimum of $2,500 per month on local advertising of your Basecamp Studio and we recommend that you spend at least $4,000 per month. If you do not meet the minimum spend requirement, you must pay us the difference between what you were required to spend and what you actually spent and we can either spend it in your market on your behalf or place the money in the General Advertising and Marketing Fund, as we determine.

(5)  You will pay this monthly fee to our affiliate, ProVision for the support of certain components in the Technology and Fitness Equipment Package. You may still need to purchase various technology and equipment that is not included in the Technology and Fitness Equipment Package. This fee does not include any fitness equipment maintenance that you may also need to purchase.

(6)  A person owning a 10% or greater interest in you or your Basecamp Studio (“Principal Owner”), must attend our Conference when offered, typically every other year. If they do not register for a Conference, we will bill you for the “early bird” minimum conference fee after the Conference.

(7)  Each instructor at your Basecamp Studio must successfully complete our Instructor Training Program. Cost for this training is $4,000.

(8)  If you transfer the franchise before you open the Basecamp Studio, the fee will be $15,000 If you transfer the franchise after you open, the transfer fee is $7,500.

ITEM 7
ESTIMATED INITIAL INVESTMENT

YOUR ESTIMATED INITIAL INVESTMENT

Type of Expenditure (Note 1)

Low Amount

High Amount

Method of Payment

When Due

To Whom Payment is to be Made

Initial Franchise Fee (Note 2)

$42,500

$50,000

Lump sum

Upon signing the Franchise Agreement

Us

Travel and Living Expenses While Training (Note 3)

$5,000

$6,400

As incurred

As incurred during training

Airlines, hotels, restaurants

Real Estate and Leasehold Improvements (Note 4)

$30,645

$206,645

V aried times

Before Opening

Landlord and building contractor

Architect/Design Fees (Note 5)

$8,500

$8,500

As specified in contract

At time of design

Architect

Technology and Fitness Equipment (Note 6)

$115,000

$138,000

As agreed

Varied times

Affiliate and Vendors

Millwork & Furniture

$33,500

$36,403

As agreed

Varied times

Us or vendors

Supplies (Note 7)

$4,220

$4,520

As agreed

Varied times

Us or vendors

Signage (Note 9)

$30,467

$33,052

As agreed

Varied times

Us or vendors

Initial Inventory/Merchandise (Note 10)

$5,000

$5,000

As agreed

At delivery

Us or vendors

Grand Opening Advertising (Note 11)

$40,000

$60,000

Lump sum

Before opening

Us or vendors

Insurance (Note 12)

$3,050

$3,450

As incurred

Varied times

Third parties

Miscellaneous Expenses (Note 13)

$14,123

$14,123

As agreed

Varied times

Vendors

Additional Funds and Working Capital for First 3 Months (Note 14)

$168,754

$168,754

As incurred

Varied times

Vendors or third parties

TOTAL (Note 15)

$500,760

$734,848

 

 

 

Notes:

(1)  Unless otherwise provided, the low and high ranges in the table are based on a Basecamp Studio with 3,200 square feet. These fees are non-refundable unless otherwise noted.

(2)  The Initial Franchise Fee is described in Item 5. If you sign an Area Development Agreement, you must commit to opening more than one Basecamp Studio, and you will pay the Development Fee at the time you sign the Area Development Agreement. The Development Fee will be credited to the Initial Franchise Fee due under each Franchise Agreement you or your affiliate signs for each Basecamp Studio developed under the Area Development Agreement. The Development Fee is described in Item 5.

(3)  The person you designate as the “Principal Operator” of your Basecamp Studio, your studio manager and fitness manager must attend our Initial Training Program at a location we designate. If your Principal Operator is not also a Principal Owner, then this individual must attend training, and along with your studio manager and fitness manager must sign confidentiality and non- disclosure agreements that meet our requirements and you must provide a copy to us before they attend training. In addition, if your Principal Operator is not also a Principal Owner, then a Principal Owner must also attend and complete this training to our satisfaction before you open your Basecamp Studio. Additional personnel of your studio must attend and complete the other required trainings before opening. While we do not currently charge for the Initial Training Program, you must pay all travel and living expenses for your attendees. The estimates are the estimated costs for 1 person to attend the Initial Training Program at our corporate offices in Woodbury, MN for 5 days.

(4)  Our estimate for initial expenses for real estate and improvements assumes you will lease space for your Basecamp Studio and these assumptions are based on our costs in leasing and building out two Basecamp studios in the Minneapolis, Minnesota market. The typical size of a Basecamp Studio is 2,500 to 4,500 square feet. Rent costs are generally between $20 and $50 per square foot in the Minneapolis, Minnesota market, not including CAM or taxes, and will vary in other markets. The cost for build-out is approximately $100 per square foot in the Minneapolis, Minnesota market, will vary in other markets, and includes at a minimum, a work-out area, concrete floors, demised exterior walls, HVAC, roof, and utilities stubbed to the premises sufficient for a Basecamp Studio. Our estimates are based on these assumptions.

As described in Item 8, we offer a Construction Management Services program through our approved vendor to oversee the construction of your Basecamp Studio. We do not currently require you to participate in the Construction Management Services program, however we may transition this to a mandatory program. If this occurs, you must purchase Construction Management Services if you have not already signed a Franchise Agreement with us or have not commenced the construction of your Basecamp Studio. As of the issuance date of this Disclosure Document, we anticipate that the cost of the Construction Management Services will be $8,500.

The amount of your leasehold improvements will likely vary substantially based on existing conditions, size, design, including the availability and prices of labor and materials. The amounts do not include the costs of any necessary site development or site engineering work, nor do they include capitalized costs of rent or other occupancy costs, over either the life of the lease or the life of your investment. In addition, these amounts do not reflect costs for the purchase of unimproved land and construction of a free-standing Basecamp Studio, which also would result in a significantly greater initial investment. You should carefully investigate all of these costs in the area where you wish to establish your Basecamp Studio. In addition, we assumed the general contractor will include permitting fees in the construction costs.

(5)  You must retain an architectural vendor to create a complete set of detailed Construction Documents. You must pay a fee of $2,700 if you do not use our designated architectural vendor to create the Construction Documents. We do not construct, remodel or decorate your premises. The estimates assumes standard tenant improvements within a structure, designed for commercial use, and excludes items such as structural modifications, site work, energy studies, surveys and/or exterior improvements. For purposes of these estimates we have assumed you will use our approved architectural vendor.

(6)  Many of these items are included in the Technology and Fitness Equipment Build-Out Package you will purchase from us. The total cost of equipment will vary depending on various factors, including the size of your facility. These estimates include the estimated taxes, shipping and install costs that are not included in the Item 5.

(7)  Before beginning operations, you must purchase equipment and supplies as described in the Operations Manual, including membership brochures, posters, and other items. This estimate also includes additional marketing materials, like branded promotional products, printed materials, and similar items, which you may purchase through our marketing portal. You may purchase initial supplies from us (see Item 5) or from a third party vendor.

(8)  This estimate includes the amount you pay to our affiliate, ProVision for various technology services, the set-up fee and monthly fee you pay to us for the Technology and Fitness Equipment Package and the cost of other third party technology you must acquire to operate your Basecamp Studio, including various music licenses.

(9)  Some of this signage is included in the Build-Out Package you will purchase from us. The total cost for the signage varies depending on the size of the signs, quantity, and the requirements of the landlord and governing authority.

(10)  This is the cost for our Retail Product Package.

(11)  The estimate also includes amounts you must spend to advertise your Basecamp Studio for the Grand Opening Program. Factors that may affect the actual amount you spend include the type of media used, the location of your Basecamp Studio, the size of the area you are advertising to, local media cost, and the time of year.

(12)  Some state laws also require the purchase of a bond. Because the requirements vary by state, and may depend on your net worth, we cannot estimate the amount you will need to obtain a bond, or the assets you may need to collateralize that bond. We have negotiated a base rate of $250 per year for bonds through our designated vendor, however your actual cost may vary based on your individual circumstances. Further, you will need to purchase and maintain in effect at all times during the term of the Franchise Agreement a policy or policies of insurance, naming us and our affiliates as additional insureds on the face of each policy. You must have and maintain general liability insurance with complete operations coverage, broad form contractual liability coverage, property damage all with current minimum limits of $1,000,000 per person and $1,000,000 per occurrence, $3,000,000 in the aggregate, and other insurance in the types and amounts as we may require or as required by law. The insurance policy must be written by a carrier who has a minimum rating acceptable to us. Our insurance estimate assumes that you will personally operate your Basecamp Studio and have no employees. Therefore, the estimates do not include premiums for worker’s compensation insurance, employer’s liability insurance or automobile liability insurance. Your insurance costs may be substantially higher if you have to buy employer’s liability insurance, automobile liability insurance, or any other insurance required by your landlord. Before you make a decision to purchase the franchise, you should confirm that insurance is available for a fitness center of the type you intend to operate, given that you will not staff the premises all of the time.

(13)  This amount includes security deposits, utility costs, licensing fees, and professional expenses such as legal and accounting.

(14)  This amount includes estimated operating expenses you should expect to incur during the first 3 months of operations, not including any fees or other amounts you owe us. These figures do not include any taxes or other permitting or licensing fees that you may pay.

(15)  These figures are estimates only. We have relied on our experience and that of our predecessors in operating 5 company-owned Basecamp Studios in California and our experience in operating one in Minneapolis, Minnesota to compile these estimates. This is only an estimate of your initial investment and is based on our estimate of nationwide costs and market conditions prevailing as of the date of this Disclosure Document. It is possible to significantly exceed costs in any of the areas above. You must bear any deviation or escalation in costs from the estimates that we have given. You should review these figures carefully with a business and a legal advisor before making any decision to purchase a franchise. Many factors that are unique to your location can make a dramatic difference in the estimates provided. We do not offer financing for any part of the initial investment. The availability and terms of financing will depend on factors like the availability of financing generally, your credit worthiness, your relationship with local banks, your experience in the fitness industry, and any additional collateral you may offer to a lender to secure the loan. Our estimates do not include any finance charges or fees, interest or debt service obligations.

ITEM 8
RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES

All equipment, furnishings, fixtures, signs, software, software support and security monitoring, supplies, maintenance services, insurance and products you purchase for use or sale in your Basecamp Studio must meet our specifications. Additionally, all membership types you offer as well as workouts provided through your Basecamp Studio must meet our specifications. Those specifications may include minimum standards for delivery, performance, design, appearance, and quality. We will issue the specifications to you before you begin operating. We may include these specifications in the manual that we provide to you online, or we may issue them separately. While we do not have specifications for local advertising you create to promote your studio, we do require that you obtain our prior approval to the use of any advertising materials you prepare. You may not establish or have established any website, web page, social media and/or social networking site, profile or account, relating to or making reference to us, your Basecamp Studio, or to the Basecamp Fitness System.

You can expect that the items you purchase to meet our specifications will represent over 90% of the total purchases you will make to begin operations. Once you begin operating, we expect the items you purchase that meet our specifications will represent between 70% and 90% of your total expenses.

If you want to purchase items for your Basecamp Studio that we have not previously approved, or items that differ from our specifications, you must notify us in writing. If we request, you must submit samples and other information we require for testing or to otherwise determine whether the product, material or supply meets our specifications and quality standards. We do not impose any fee for our consideration.

We may require you to purchase certain furniture, equipment, inventory, supplies, services and other products used or offered at your studio from vendors we approve, in which case we will provide you with a list of approved suppliers. These will include mandatory vendors (persons from whom you must purchase certain items or services), designated vendors (for items or services that must be purchased from vendors we approve), and preferred vendors (for vendors we have approved, but in categories where we do not require you obtain our approval of the vendor). These suppliers may pay vendor rebates to us and they may include our company and affiliates of ours. We may modify our mandatory, designated, and/or preferred vendor(s) at any time.

As of the issuance date of this Disclosure Document, we have the following sole suppliers in our System:

  1. We are currently the sole supplier of the items logo’d with our Marks, including any branded mobile applications, all products for re-sale and workout formats that you must use at your Basecamp Studio. We are the sole supplier for those technology systems included in the Technology and Fitness Equipment Package. These systems include a point of sale system and software and certain cloud based technology. We are also the sole supplier for the signage, initial marketing materials, furniture, fixtures, a design kit and all fitness programming.

  2. ProVision, an affiliate of ours, is currently the sole supplier for certain fitness equipment, technology services, technology, network hardware, and security systems, including iPads, tablet devices, computers, audio and video systems, software and other related components which you must purchase to operate your Basecamp Studio.

  3. We have a sole supplier of studio management, billing, payment and scheduling software which you must use to operate your Basecamp Studio.

If you choose to use a vendor other than our designated architectural vendor for the creation of your Construction Documents, you will pay us $2,700 to review your Construction Documents. See Item 5. The Construction Documents supplied by the alternate service provider must provide the same level of information and detail as the prototypical Construction Documents created by our designated architectural vendor and use the same format, style and structure. The service provider will be responsible for distribution and coordination of documents to all designated vendors that utilize the Construction Documents as part of the development process. If this is your first Basecamp Studio, we may require you to obtain your Construction Documents from our designated architectural vendor.

We currently offer construction management services through an approved third-party vendor, to assist franchisees with the build-out of their studios (“Construction Management Services”). Construction Management Services generally include consulting services regarding construction-related lease requirements, construction estimates, general contractor bidding and selection (you select the general contractor), the exterior sign review and approval process, utilities set up, obtaining building permits, site conditions and work progress, FF&E operation, maintenance and trouble-shooting; providing a punch list of open issues; construction warranty work; and obtaining occupancy approval. As of the issuance date of this Disclosure Document, the Construction Management Services are optional. However, we may transition the Construction Management Services program to a mandatory program. If this occurs, you must purchase Construction Management Services if you have not already signed a Franchise Agreement with us or have not commenced the construction of your Basecamp Studio. We anticipate that the cost of the program will be $8,500. You must pay our approved vendor for the Construction Management Services when you sign its Project/Construction Management Services Agreement. This payment is not refundable. While our vendor provides consulting services in these various areas if you sign its construction management agreement, you alone are responsible for all fees, costs, and expenses associated with your Basecamp Studio’s build-out, including plans and specifications, permits, licenses, construction and materials, FF&E, installation and insurance.

When we have a designated vendor (other than a mandatory vendor), if you want to purchase from other vendors the items or services for which that vendor has been designated, you must notify us in writing and obtain our approval. If you seek approval of a new supplier (or if the supplier applies directly to us for approval), we will require the supplier pay us a nonrefundable fee of $300 before we will consider approving their application. This fee is intended to defer our cost of reviewing the supplier. (We do not require you to pay any fee.) We may also require the supplier to sign a supplier agreement with us.

You must participate in all consumer sales and satisfaction programs or surveys that we require, including loyalty programs as well as obtain and maintain all technology we require to deliver member exercise programming.

We may also negotiate preferred vendor contracts with vendors. The preferred vendor contracts will usually provide favorable pricing to our franchisees. A list of current preferred vendor contracts will be available to you from us at any time after you sign your Franchise Agreement.

As further described above, we have the right to designate a single source or sources from whom you must purchase any required products and services, and we and/or our affiliates may be that single source or one or more of the sources. Except as described above, as of the issuance date of this Disclosure Document, neither we nor our affiliate are the only approved suppliers of any required products and services.

In reviewing prospective suppliers, we consider whether the product or service is consistent with our concept and brand; how they and/or their products or services would enhance our brand and make it more attractive to customers or franchisees; how the product or service would improve the studio experience of a customer; how the product or service would increase revenue of a franchisee’s business; how the product

or service would increase the efficiency of a franchisee; if the product or service is already available through other sources, would approval of another vendor enhance competition or dilute our ability to maximize pricing benefits for our franchisees; is the product of a commercial quality with a proven record of durability; does the supplier support our values; and other factors. In addition, we consider demand from franchisees, the need for the vendor based on business trends, and the ability of the vendor to serve franchisees throughout the United States. (The criteria is posted on our website for potential vendors.) We will generally notify you and the supplier of our approval or disapproval within 2-12 months of our receipt of all the information and samples we request. If we revoke approval of any supplier or any item offered by a supplier, we will send you written notice of our revocation of an approved supplier or item.

In the future, we may derive revenue from your purchases or leases of goods, services, supplies, fixtures, equipment, inventory and products from our mandatory, designated or preferred suppliers. This income may be in the form of percentage rebates on the purchases you make from the vendor or fixed amounts on supplies and services. There are no caps or limitations on the maximum amount of rebates we may receive from our suppliers as the result of franchisee purchases. During 2019 neither we nor our affiliates received any revenue from the sale of goods or services to our franchisees.

We do not have any purchasing or distribution cooperatives as of the issuance date of this Disclosure Document although we reserve the right to create them in the future and may require your participation in them. We may negotiate purchase arrangements with suppliers and distributors of approved products for the benefit of our franchisees and we reserve the right to receive rebates on volume discounts from our purchase of products that we may re-sell to you. We do not provide material benefits, such as renewing or granting additional franchises to franchisees, based on their use of designated or approved suppliers and distributors.

None of our officers own any interest in any of our other suppliers, other than us and our affiliate ProVision.

ITEM 9
FRANCHISEE’S OBLIGATIONS

This table lists your principal obligations under the franchise and other agreements. It will help you find more detailed information about your obligations in these agreements and in other items of this Franchise Disclosure Document.

Obligation

Section in Franchise Agreement

Section in Development Agreement

Disclosure Document Item

a. Site selection and acquisition/lease

Sections 1, 9, and Rider

Sections 1 and 3.A

Items 7 and 11

b. Pre-opening purchases/leases

Sections 1, 6, 7, and 9

Section 1.C

Items 5, 7 and 8

c. Site development and other pre-opening requirements

Sections 6, 7, 8, and 9

Sections 1,3 and Rider

Items 5, 7 and 11

d. Initial and ongoing training

Sections 2, 7, and 8

Not Applicable

Items 8, 11, and 16

e. Opening

Sections 1, 7, and Rider

Sections 3.A,3.B, and Rider

Items 7, 11 and 12

f. Fees

Sections 1, 2, 4, 5, 6, 7, 8, 9, 12, 13, 14, 20, and Rider

Sections 2, 6.B, 7.C, and Rider

Items 5 and 6

g. Compliance with standards and policies/operating manual

Sections 1, 2, 3, 8, and 9

Section 8.A, 8.C

Items 8, 11, 14, and 16

h. Trademarks and proprietary information

Sections 3, 9, and 10

Not Applicable

Items 13 and 14

i. Restrictions on products/services offered

Section 9

Not Applicable

Items 8, 11, and 16

j. Warranty and customer service requirements

Section 9

Not Applicable

Not Applicable

k. Territorial development and sales quotas

Not Applicable

Section 3 and Rider

Item 12

l. Ongoing product/service purchases

Sections 8 and9

Section 8.C

Items 6 and 8

m. Maintenance, appearance and remodeling requirements

Sections 9 and 14

Not Applicable

Item 6

n. Insurance

Section 11

Not Applicable

Item 7

o. Advertising

Sections 3, 5, 6, and 9

Not Applicable

Items 6, 7, and 11

p. Indemnification

Sections 9 and11

Sections 7.C and 9

Item 6

q. Owner’s participation/ management/staffing

Sections 8 and 9

Section 1.A

Item 15

r. Records and reports

Sections 6, 9, and 12

Not Applicable

Not Applicable

s. Inspections and audits

Sections 6, 9, and 12

Not Applicable

Item 6

t. Transfer

Section 13

Section 7

Items 6 and 17

u. Renewal

Section 2

Not Applicable

Items 6 and 17

v. Post-termination obligations

Sections 16, 17, and 18

Section 6

Item 17

w. Non-competition covenants

Sections 10 and 17

Section 9

Items 15 and 17

x. Dispute resolution

Sections 18 and20

Section 9

Item 17

y. Other: guaranty of franchise obligations (Note 1)

Personal Guaranty (which follows the Franchise Agreement)

Personal Guaranty (which follows the Area Development Agreement)

Item 15

Notes:

(1) Each individual who is an owner of any business entity that is the franchisee, and their spouse, must sign a personal guarantee of all the obligations of the franchisee under the Franchise Agreement and the Development Agreement. This Guarantee also includes an agreement to be bound by the confidentiality and noncompete provisions of the Franchise Agreement.

ITEM 10
FINANCING

We do not offer, directly or indirectly, any financing to you to help you establish your business. We do not guarantee any note, lease or other obligation you incur. However, we do have an arrangement with a third- party equipment lender who will provide financing to our franchisees who meet this lender’s requirements.

Geneva Capital, LLC (“Geneva”), offers financing of up to $100,000 for a new location, including, among others, tangible equipment, security system, and signage (but excluding your initial franchise fee and working capital), based on credit approval. Financing is offered as a lease that typically requires 1 advance payment of up to 20%. Geneva also collects a security deposit equal to 1 month’s lease payment. Lease terms vary from 12 to 36 months. Geneva offers both true tax and capital leases. Fixed equivalent interest rates typically vary from 7.99%, to 11.99% per annum, based on your financial and credit worthiness. Geneva will not require you to pledge any other assets to secure the lease, but you must provide a personal guaranty. The amount of your lease payments will depend on the amount financed, the term of the lease,

and the interest rate. You will have the right to purchase the equipment at the end of the lease at fair market value, typically capped at 10% or 20% of the original equipment cost, assuming you have not defaulted under the lease. The ability to prepay your obligations is negotiated on a case by case basis.

You will be in default under Geneva’s lease documents if you fail to pay amounts owed when due or you breach any other provision of the lease documents. If you commit a payment default, you must pay a late charge of 15% of the payment which is late or $25.00, whichever is greater or, if less, the maximum charge allowed by law. Regardless of the type of default, Geneva may retain your security deposit, elect not to renew any or all time-out controls programmed within the equipment, terminate or accelerate the lease and require that you pay the remaining balance of the lease (discounted at 3% per annum), and any purchase option due, and/or return the equipment to Geneva. Geneva may recover interest on the unpaid balance at the rate of 18% per annum or, if less, the highest rate permitted by law. It may also exercise any remedies available to it under the Minnesota Uniform Commercial Code or the law of its assignee’s principal place of business. It may also file criminal charges against you and prosecute you to the fullest extent of the law if any information supplied by you on your credit application or during the credit process is found to have been falsified or misrepresented. You must also pay Geneva’s reasonable attorneys’ fees and actual court costs. If Geneva has to take possession of the equipment, you must pay the cost of repossession including damage to the equipment or real property as a result of repossession.

Under the personal guaranty, which is contained in Geneva’s equipment lease agreement, you waive all notices. If you default under the lease agreement, Geneva may obtain and use consumer credit reports to determine acceptable means of remedies, and you waive any right or claim you may otherwise have under the Fair Credit Reporting Act (Equipment Lease Agreement – Section 12). Because the lease is a noncancelable net lease you are not entitled to any reduction of rent or any setoff for any reason, nor will the lease terminate or will your obligations be affected by any defect in, damage to or loss of possession or use of any of the equipment (Equipment Lease Agreement – Section 2). You waive any and all rights or remedies not in the lease (Equipment Lease Agreement – Section 14) and you and your guarantors, consent to personal jurisdiction in the state that Geneva or its assignee, as applicable, has its principal place of business and you and your guarantors waive trial by jury. If Geneva transfers the lease the transferee will not have to perform any of Geneva’s obligations and the rights of the transferee will not be subject to any claims you have against Geneva (Equipment Lease Agreement – Section 11). A copy of the current Geneva lease documents as of the date of this Disclosure Document is attached as Exhibit K-1.

We have signed a separate agreement with Geneva, under which we agreed to assume certain obligations if you default under your lease, including an obligation to assist Geneva in remarketing your equipment. Under that agreement, we also agreed to establish a pool to compensate Geneva for certain amounts of the losses it incurs, and to guaranty payment of certain amounts of those losses. This agreement also provides for a percentage of the lease amount to us as a referral fee and for a percentage of the lease amount added to the guaranty pool. There is no direct affiliation between Geneva Capital and us.

We and our affiliates have the right to sell, assign or discount to a third party all or part of any amounts you may owe to us or to our affiliates.

ITEM 11
FRANCHISOR’S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING

Except as listed below, we are not required to provide you with any assistance.

Before you open your Basecamp Studio, we will:

(1) Designate a Market Area (“DMA”) in which you may look for a site location for your Basecamp Studio (Franchise Agreement – Section 1).

(2) Once you have chosen a site location for your Basecamp Studio, either approve or disapprove that location (Franchise Agreement – Section 1.C).

(3) Once we approve a site location for your Basecamp Studio, provide you with a Protected Territory for your studio (Franchise Agreement – Section 1.E).

(4) Provide you online access to our operations manual that contains mandatory and suggested specifications, standards and procedures (the “Operations Manual”). The Operations Manual consists of one or more manuals, technical bulletins or other written materials available electronically and may be modified by us periodically in our discretion. (Franchise Agreement – Sections 8, 9). The manual currently contains 40 pages. A copy of the table of contents of the Operations Manual is attached to this Disclosure Document as Exhibit B.

(5) Provide you with a prototype floor plan, as well as a list of the equipment, displays, fixtures and furnishings for setting up or remodeling your studio (Franchise Agreement – Section 8.B).

(6) Create a specific studio layout/design for your Basecamp Studio (a “Compliance Drawing”) (Franchise Agreement – Section 8.C). If, however, you want to make changes in the Compliance Drawing, you will have to pay the vendor directly for the cost of those changes.

(7) If you do not use our designated architectural vendor to create the Construction Documents, review the Construction Documents created by another vendor (Franchise Agreement – Section 8.D).

(8) Provide, at our expense, the Initial Training Program for you, or if you are a legal or business entity, a Principal Owner, your studio manager and fitness manager. (Franchise Agreement Section 8.E.). See below for additional information on the Initial Training Program and other training.

(9) Sell to you, or have our affiliate sell to you, a variety of items to operate and promote your Basecamp Studio, including the items included in our Retail Product Package, the Build-Out Package, and the Technology and Fitness Equipment Package, and various other items described in the Operations Manual. (Franchise Agreement – Section 7.A).

(10) Assist you in developing and implementing a pre-opening and grand opening program we approve (Franchise Agreement – Section 6).

(11) If you are signing an Area Development Agreement identify a market area within which you will open the number of Basecamp Studios you and we agree on (Area Development Agreement – Sections 1, 3 and Rider).

During the term of the Franchise Agreement, we will:

(1) Make a representative reasonably available to speak with you on the telephone, or at our option, online or via email during normal business hours to discuss your operational issues and support needs or we may send a representative to your Studio (Franchise Agreement – Section 8).

(2) Arrange a mystery shopping service to shop your Basecamp Studio periodically during the term of your Franchise Agreement, and provide the results to you (Franchise Agreement – Section 8).

(3) Establish and maintain an Internet website for the Basecamp Fitness brand and provide with a local landing page for your Basecamp Studio on that site (Franchise Agreement – Section 9).

(4) Make available additional and advanced training that we feel is necessary to familiarize you and your management team on changes and updates in the franchise System (Franchise Agreement – Section 2, 7 and 8).

(5) Maintain and administer the General Advertising and Marketing Fund (Franchise Agreement – Section 5.B). See below for more information on this Fund and other advertising requirements.

Training

Initial Training Program

Before the opening of your Basecamp Studio, we provide an initial training program (“Initial Training Program”) to the person you designate as the “Principal Operator” of your Basecamp Studio, your studio manager and fitness manager. The Initial Training Program may be provided in-person at our corporate offices in Woodbury, Minnesota, at another location designated by us, and/or in a virtual, online or webinar format. The training is held on an as needed basis to accommodate demand. There is no charge to you for this training, but you are responsible for all travel and living expenses you and your personnel incur in attending the training. In addition, if your Principal Operator is not also a Principal Owner, then a Principal Owner of your business must also attend and complete this training to our satisfaction before your open your Basecamp Studio. You are expected to successfully complete this training program at least 30 days before you open your Basecamp Studio.

The following represents a summary of our Initial Training Program as of the issuance date of this Disclosure Document:

INITIAL TRAINING PROGRAM

 

Subject

Hours of Classroom Training

Hours Of On-The- Job Training

Location

Introduction to Basecamp

1

0

Woodbury, MN or another location we designate

Technology Overview

1

0

Woodbury, MN or another location we designate

Staffing Overview

1

0

Woodbury, MN or another location we designate

Operations / Vendor Management / Retail

6

0

Woodbury, MN or another location we designate

Presales and Sales

16

0

Woodbury, MN or another location we designate

Marketing Training

4

0

Woodbury, MN or another location we designate

Construction and Equipment

2

0

Woodbury, MN or another location we designate

Financial / KPIs

2

0

Woodbury, MN or another location we designate

Coaching Basecamp Classes

20

0

Woodbury, MN or another location we designate

Total Training Time

53

0

 

The Initial Training Program will be provided by multiple facilitators, including our Brand President, Ben Camper and Jesse Jones, our Regional Director. Ben has been with Basecamp Fitness since March 2020 and has been in the fitness industry since July 2017. Ben oversees our Initial Training Program. Jesse has been with our predecessor since October, 2012 and us since our formation. He has 12 years of experience in the fitness industry. Jesse is mainly responsible for the coaches training and development. Additional people will be involved in the initial training program. These people will have at least one year of experience in the subject they teach. Other members of our training staff at our designated training center may conduct training as necessary, and we may delegate our duties and share our training responsibilities. The Operations Manual serves as our primary instructional material during the Initial Management Training Program.

If you have more than one Franchise Agreement with us, we may, at our option, for additional locations waive the requirement that you undertake this training.

Train the Trainer Program

Before the opening of your Basecamp Studio, your Fitness Manager(s) must attend and complete to our satisfaction our Train the Trainer Program. This program must begin at least 8 weeks before the Instructor Training below can occur. It begins with 1 hour weekly training sessions that will occur via phone calls, webinars, online or in another virtual format, and includes an approximately 4 hour bootcamp during the Instructor Training discussed below and ends with two 1 hour monthly training sessions that will occur via phone calls, webinars, online or in another virtual format. The cost of this training is currently $2,000 if the bootcamp portion of the training occurs contemporaneously with the Instructor Training described below. If the bootcamp portion is conducted at a different time we will conduct the bootcamp portion at your location or another location we designate and the cost will be $2,000 plus our travel and living expenses. If you are an existing Basecamp Studio and your Fitness Manager has not attended this training or you employ new Fitness Managers, these individuals must attend and complete this training to our satisfaction. You are responsible for the costs and expenses of your personnel attending this training.

Instructor Training Program

Before the opening of your Basecamp Studio, a minimum of at least 3 of your instructors must attend and complete to our satisfaction our Instructor Training Program. We will train as many instructors as you wish to participate at the same time at your Basecamp Studio. Cost is a flat rate of $4,000. Each instructor at your Basecamp Studio must successfully complete our Instructor Training Program and they may not teach any Basecamp classes until after they have successfully completed this training

Continuing Education Programs Launch Training

Launch Training

We may offer a training program called “Launch Training”, which typically occurs within the first 60 days of opening. For this training we will send a representative to your Basecamp Studio for 2 days to provide you and your staff with on-site studio operations, coaching and customer experience training. There is no cost to you for this training when we provide it in connection with the opening of your Basecamp Studio. We can institute, charge for, or discontinue, this program at any time.

Re-Launch Training

We may provide franchisees with an existing Basecamp Studio an optional training program called “Re- Launch Training” in which we will send one or more experienced Basecamp instructor(s) and one or more operations staff member(s) to your Basecamp Studio for 2 days to provide you and your staff with on-site studio operations and coaching training. The cost of this training is currently $500-$1,000 per day, per trainer, plus the cost of travel, lodging and meals, but we can adjust that rate periodically. If you are not meeting our standards for operations or coaching Basecamp classes we may require you to take this training and you must pay for it. We can institute, charge for, or discontinue, this program at any time. The cost increases to $1,000 per day if you request a Master Trainer for the training.

Additional Training

If you require additional operations training beyond what is provided by us, you can request that we send a representative to provide further assistance to you. If we provide additional assistance at your request, we must agree in advance to the charges you will pay and the length of the visit. The cost of additional assistance will depend on your needs and the amount of assistance you desire. We may also require you to receive additional assistance if you are not meeting our requirements, if we determine additional pre- opening or post-opening assistance is required, or if we determine that it is necessary for us to provide additional assistance to you to keep the System competitive. (Franchise Agreement – Sections 7, 8). Such additional assistance will be at your expense as described above. Our current published rate for additional assistance is $500-$1,000 per day, per representative, plus the cost of travel, lodging and meals, but we can adjust that rate periodically in our Operations Manual. This training may be a mix of online and in-person training. The cost increases to $1,000 per day if you request a Master Trainer for the training.

Conference

We may hold a conference on a regular basis (likely, every other year) to discuss sales techniques, new programming and products, training techniques, bookkeeping, accounting, performance standards, advertising programs, merchandising procedures, and other topics. This conference may be live or a virtual event. You must pay the conference fee, if any (currently $439, based on early registration), and, if applicable, all travel and living expenses to attend. Your Principal Owner must attend these conferences. If that person does not attend, you will be billed for the “early bird” Conference Fee following the Conference. The conferences may be held at various locations that we will designate. (Franchise Agreement – Section 8).

Vitals Training

During the time you operate your Basecamp Studio, there may be additional training that we require you to attend in order to stay current on the policies, procedures, and techniques of operating a Basecamp studio. These programs are intended to maximize the profitability of your business. In the years that we do not offer a Conference, you must send a representative to a “Vitals” program, if offered. The program typically includes 2 to 3 hours of training in two or more of the following areas: marketing, client engagement, customer service, and other topics that we designate from time to time. When the training is held in one of the regions, it will be held in a hotel in that region. This training may be conducted live or as a virtual event. We offer this training generally every other year in those years in which we do not have a Conference scheduled. We currently do not charge you to attend the Vitals program, but you are responsible for travel costs, room and board, and the salaries, fringe benefits, and other expenses you and your employees incur in attending these programs. We can charge for this training in the future.

Continuing Engagement Credits

Each calendar year, your Basecamp Studio must obtain at least 1,200 continuing engagement credits within our System. The credits are not tied to hours, but to specific events or participation you have in our system.

There are no additional fees for receiving continuing engagement credits, or taking additional training, but you are responsible for any expenses you or your employees incur in completing any activity. We do not currently, but in the future may offer you the opportunity to take virtual or other online training to receive continuing engagement credits. If you fail to meet the minimum requirements in any year, you must pay us a fee of $1.00 per Basecamp Studio for each credit deficiency, which we will deposit in the General Advertising and Marketing Fund. As an example, if you have 1 Basecamp Studio, and you achieved only 1,000 credits for the year, you would pay us a fee of $200, but if you had multiple Basecamp Studios, you would pay $200 for each of those Basecamp Studios. The credits required are prorated for any partial year you are open. This fee is due to us on February 1 following any year in which you fail to meet the minimum requirement.

No Show

If you register for training, and fail to attend, or fail to have the appropriate parties attend, and you did not provide us with 2 weeks’ notice, or leave early, then you must pay us a “no show” fee. This fee is currently $500-$1,000 depending on the trainer, or the actual costs of rescheduling travel, whichever is greater. (Franchise Agreement – Section 8.E).

Advertising Programs

General Advertising and Marketing Fund

Under the Franchise Agreement, each franchisee must contribute amounts to the Basecamp Fitness General Advertising and Marketing Fund (the “General Advertising and Marketing Fund” or the “Fund”) currently equal to 2% of monthly Gross Revenue. You must contribute to this Fund at the same time that you pay your Royalty Fee, based on the amount of Gross Revenue you generated in the previous reporting period. We require all our franchisees to contribute to this Fund, and our company-owned will also studios contribute to the Fund at the same percentage rate as franchisees. We may periodically increase the General Advertising and Marketing Fund Contribution, but the General Advertising and Marketing Fund Contribution will not exceed 3% of monthly Gross Revenue.

We account for the contributions to the Fund separately from our other revenues, and we do not use them to pay any of our general operating expenses other than our costs of administering the Fund, including salaries and overhead in administering the Fund and all other reasonable direct or indirect expenses that may be incurred by us or our authorized representatives and associated with the programs funded by the Fund, such as salaries, administrative costs, travel expenses and overhead like rent and utilities, we may incur in activities related to the operation and administration of the Fund and its programs. We may also reimburse ourselves, our authorized representatives or our affiliates from the Fund for any expenses we incur related to the promotion of the Basecamp Fitness brand, the Marks or the System, including conducting market research, preparing advertising, promotion and marketing materials and collecting and accounting for contributions to the Fund, administrative costs, independent audits, reasonable accounting, bookkeeping, reporting and legal expenses, taxes.

The purpose of the Fund is to develop marketing and advertising programs that maximize general public recognition and acceptance of our brand. This means we may use monies in the Fund for any purpose that promotes the System or the Marks, including the creation, production and placement of consumer advertising; agency costs and commissions; costs of preparing, producing and conducting local, regional or national media of our choice, including: television, radio, internet, magazine, direct mail and newspaper, billboard, social media and digital advertising, and direct mail campaigns, and other public relations activities; developing and/or hosting, maintaining and optimizing our website, other websites, and other applications or similar activities; implementing keyword or adword purchasing programs; administering regional and multi-regional advertising programs, and other media advertising; in-house staff assistance and related administrative costs; local and regional promotions; public relations campaigns including the cost of retaining public relations firms and other advertising, promotion or marketing agencies; developing marketing and advertising training programs and conducting market research (including sampling) and secret shopper programs; and other advertising, promotion and marketing activities, including participating at trade shows. Advertising may be placed in local, regional or national media of our choice. We do not guarantee that advertising expenditures from the General Advertising and Marketing Fund will benefit you or any other franchisee directly, on a pro rata basis, or at all.

We have an in-house marketing department, and also work with national, regional and local agencies. It is our responsibility to determine how monies in the Fund are spent. We will direct all advertising or other promotional programs produced using monies from the Fund and have the sole right to approve or disapprove creative concepts, materials and media used in those programs, the placement of the advertisements and the allocation of money in the Fund to production, placement or cost. We are not required to use monies in the Fund to benefit you or any individual market or location, or on a pro rata or other basis. However, we will not spend any portion of these monies for advertising principally designed to solicit the sale of franchises. We may periodically furnish you at no cost with samples of advertising, marketing and promotional formats and materials that are paid for by the Fund.

Any unused funds in any calendar year will be applied to the following year’s funds. Any interest the Fund earns will be used for advertising before we use any principal. At your request, we will make available to you an annual accounting for the General Advertising and Marketing Fund that shows how the Fund proceeds were spent for the previous year, but these statements will not be audited. We have no fiduciary duty to you or any other party regarding the operation or administration of the Fund. We may loan funds to the Fund. If we do, the terms of repayment and any interest charged will be as we determine.

We do have an advertising council that advises us on advertising matters but may form one in the future if we so choose.

Advertising Cooperatives

Although we currently do not, in the future we may establish local advertising cooperatives in market areas in which 2 or more Basecamp Studios are operating. If we establish a cooperative in your area, or there is an existing cooperative in your area when you become a franchisee, you must participate and contribute your share to the cooperative. These cooperatives will, with our approval, administer advertising programs and develop advertising, marketing and promotional materials for the area the cooperative covers. We may require the cooperative to use an advertising agency or other partner we chose.

The amount of the contribution you must contribute will be determined at the time we establish the cooperative but will not be more than 2% of your weekly Gross Revenue. All franchisees and company- owned Basecamp Fitness studios in the market area will be expected to contribute at the same rate to the cooperative. Each Basecamp Studio contributing to a cooperative will have one vote on matters involving the activities of the cooperative. But the cooperative may not produce or use any advertising, marketing or promotional plans that have not be approved by us.

The cooperative will operate from written governing documents. Each cooperative will prepare annual financial statements which will be available for review by a franchisee participating in the cooperative, upon request of that franchisee. We may change, dissolve or merge any cooperative at any time.

Grand Opening Program

If you are a franchisee who is new to the Basecamp Fitness System and you are opening a new Basecamp Studio, you must spend a minimum of $40,000 on a Grand Opening Program we have approved for your Basecamp Studio beginning 12 to 16 weeks before your scheduled opening and ending 30 days following the opening of your Basecamp Studio. We recommend that you spend $60,000 on your Grand Opening Program. If you fail to spend the minimum required amount on the Grand Opening Program, you must pay us the difference between the amount you spent and the minimum required amount and we can either spend it in your market on your behalf or place the money in the General Advertising and Marketing Fund.

Local Advertising Spend Requirement

You must spend a minimum of $2,500 per month on local advertising and we recommend that you spend at least $4,000 per month on local advertising. If you do not meet this requirement, you must pay us the difference between what you actually spent and the minimum that you were required to spend and we can either spend it in your market on your behalf or place the money in the General Advertising and Marketing Fund.

Indirect costs you incur in managing your local advertising campaigns, such as salaries and benefits of your employees, will not be counted toward your monthly expenditure. Additionally, any costs you incur for advertising conducted at your Basecamp Studio, such as in-store materials and signage will not count towards these minimum expenditure requirements. Amounts you spend for the Grand Opening Program discussed above will not count toward your monthly expenditure.

Marketing Resources, Pre-Approvals For Marketing Materials

You must order sales and marketing materials from our approved suppliers and per our standards and specifications. If you desire to use your own advertising materials for any marketing activity, you must obtain our prior approval. Use of our Marks and other brand identification materials must be consistent with our approved standards. You may not use our Marks and other brand identification materials on items to be sold or services to be provided without our prior written approval. You may not establish or have established on your behalf, any websites, profiles or accounts or use any social media relating to us, your Basecamp Studio, or to the Basecamp Fitness System. You are ultimately responsible for ensuring that your advertising complies with all applicable laws before using it.

Site Selection and Opening

You will be given the right to open a Basecamp Studio in a DMA that we agree on at the time you sign your Franchise Agreement. You will have 12 months from the date you sign the Franchise Agreement to secure a location we approve in the DMA and open and begin operating your Basecamp Studio. We will provide you with consulting services to assist you in evaluating and selecting a site for your Basecamp Studio in this DMA and may provide you recommendations on sites in this DMA. It is your obligation to select a site for your studio and obtain our approval of that site. While we will assist you, and we may identify various potential sites in your market area, we have no obligation to locate or select a site for you, or negotiate the purchase or lease of a site, and we do not own the premises and lease them to you. Before you acquire any site, you must submit to us information and materials we require and obtain our approval to your site. The factors we take into account in approving a site are the visibility of the site, the location of competitors, whether the site is easily accessible, surrounding businesses and various other factors. A Basecamp Studio should be between 2,500 and 4,500 square feet. We will generally tell you within 30 days whether or not we approve your proposed site. If you and we are unable to agree on a site for your Basecamp Studio, the opening of your Basecamp Studio may be delayed.

You may not open your Basecamp Studio until: (1) we notify you in writing that all of your pre-opening obligations have been fulfilled; (2) the Initial Training Program is completed to our satisfaction; (3) all amounts due to us have been paid; (4) we have been furnished with copies of all insurance policies and certificates required by the Franchise Agreement, or other documentation of insurance coverage and payment of premiums that we request; (5) you notify us that all approvals and conditions set forth in the Franchise Agreement have been met; (6) you have received all required permits and licenses; and (7) you have ordered, received and installed your equipment, supplies, inventory and computer systems. You must be prepared to begin operating your Basecamp Studio immediately after we state that your Basecamp Studio is ready for opening.

We estimate that the typical length of time between the signing of the Franchise Agreement and the opening of your Basecamp Studio will be approximately 12 months. Some factors which may affect this timing are the competition for sites in your DMA, your ability to acquire space for your studio through lease or purchase negotiations, your ability to secure any necessary financing, your ability to comply with local zoning and other ordinances, your ability to obtain any necessary permits and certifications, the timing of the delivery of equipment, tools and inventory and the time to convert, renovate or build the facility. Unless we otherwise approve, you must open your Basecamp Studio on or before the Projected Opening Date on the Rider to the Franchise Agreement, but in no event more than 12 months from the date the Franchise Agreement becomes effective. Your failure to open your Basecamp Studio on or before the Projected Opening Date will constitute a default of your Franchise Agreement and allow us to terminate your Franchise Agreement.

Under the Area Development Agreement, you will have the right to develop, open, and operate multiple Basecamp Studios. Each Basecamp Studio must be developed and opened according to our then-current System standards and other approval requirements. You or your affiliates must sign our then-current form of Franchise Agreement for each Basecamp Studio you develop and open under the Area Development Agreement, which may contain materially different terms and conditions than the Franchise Agreement attached to this Disclosure Document. We will determine or approve the location of future Basecamp Studios and any protected territories for those Basecamp Studios based on our then-current System standards for sites and protected territories.

Software and Computer Equipment

Technology Solutions

You must purchase certain technology services, technology, network hardware, and security systems, including iPads, tablet devices, computers, audio and video systems, software and other related components to operate your Studio from our affiliate, ProVision. ProVision will provide you with technology support, monitoring, and installation services for your Basecamp Studio. The cost to purchase these items ranges from $50,000 to $60,000. This range does not include the cost of taxes, shipping or installation.

You must also purchase from us a Technology and Equipment Fitness Package that includes various technology systems you need to operate your Basecamp Studio. These systems include a point of sale system and software and cloud based technology. You will use these systems for marketing and sales, business intelligence, club management, fitness programming, communications with us and other clubs, web integration, online team collaboration, and to manage your social content, reviews and advertisements. You will pay us a one-time set-up fee and a monthly fee for these technology solutions. The set-up fee is $500 and the monthly payment is $799. We will also license to you a branded mobile application for use by your customers.

Ongoing Maintenance and Use

Neither we, nor any affiliate nor to our knowledge, any third party, is obligated to provide you with ongoing maintenance, repairs, upgrades or updates to your computer hardware or software. We may require you to upgrade or update the computer system (including hardware and software) during the term of the franchise, and we anticipate that you will be required to do so. You may be required to pay initial and/or ongoing license, support or service fees associated with such upgrades or updates. There are no contractual limitations on the frequency and cost of the obligation. Other than as described above, we do not have any contractual obligation to upgrade or update any of your hardware or software, during the term of this franchise.

You must have sufficient computer skills to be able to operate your computer system and to access e-mail and the Internet. You must have access to the Internet and maintain an email account that allows us to communicate with you on a regular basis. You will use your computer and the software discussed above for scheduling, customer management, point-of-sale transactions, employee management and education, eCommerce, inventory management, business and payroll reporting, marketing, and social media integration. The software we provide to you will also give you access to our online franchisee support center, ongoing product development and online education.

We have the right to independently access your electronic information and data through our proprietary data management and intranet system, and to collect and use your electronic information and data in any manner we choose to promote the development of the System and the sale of franchises. There is no contractual limitation on our right to receive or use information through our proprietary data management and intranet system. You are solely responsible for protecting yourself from viruses, computer hackers, and other communications and computer-related problems. We strongly recommend that your computer system be used for business purposes only, and not for entertainment, personal social networking site access, or other matters unrelated to your business.

ITEM 12
TERRITORY

When you sign a Franchise Agreement, you will receive the right to operate a single Basecamp Studio at a specific location that we must approve within the DMA we agree on at that time. DMAs represent market areas, that vary in size and we use the market areas that are established by The Nielsen Company, LLC, which is an independent, unaffiliated, third party to define our DMAs. The boundaries of a DMA will change if The Nielsen Company, LLC or its successor changes the applicable defined market area. In determining how many Basecamp Fitness studios to place in a particular DMA, we consider various factors including, population density and growth trends, apparent degree of affluence of population, the density of residential and business entities, traffic generators, competition, availability or suitable real estate, other commercial considerations, and other criteria. The capacity of a DMA (the number of Basecamp studios a particular DMA may hold) may change during the term of your agreements with us.

You may locate your Basecamp Studio at any site we approve within that DMA, so long as the site you select is not also within a territory of another Basecamp Studio or an Anytime fitness franchisee (for a limited time as discussed below). You must operate the studio at that site. If the site becomes unavailable to you for any reason, it is your obligation to select a new location, and to obtain our approval of that location before you acquire the site, and before you obtain any rights in the location. Once the location for your Basecamp Studio has been approved, we will grant you a protected territory.

If you identify a potential site in the DMA for your Basecamp Studio you must send us a complete site report containing demographic, commercial and other information and photographs that we may reasonably require. In approving or disapproving a proposed site we consider various factors including, density of population, growth trends of population, apparent degree of affluence of population, the density of residential and business entities, traffic generators, competition, proximity to other Basecamp studios, size and other commercial considerations, appearance and other criteria. We do not have to accept a proposed location that does not meet our criteria. We or an affiliate can acquire the site or we can give other Basecamp franchisees searching for sites in the DMA the right to acquire the site if we approve it.

Your rights in the DMA are not exclusive and we, other franchisees and/or Area Developers may also be looking for sites in the same DMA at the same time. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control. Proposed sites within the DMA will be emailed to all franchisees and/or Area Developers who have rights in the DMA at the time we approve the site regardless of whether the proposed site was identified by our real estate team or was submitted for approval by you or another franchisee. In deciding whether and to whom to award a proposed site we consider various factors including, how long a franchisee has been looking for a proposed site within the DMA (generally awarded to those who have been looking longest), length of time to the required opening date (generally awarded to those with closest required opening date), proximity to a franchisee’s existing studio if applicable, and a franchisee’s financial ability to support the Basecamp Studio. Given these factors, you may not be awarded a particular proposed site, even if you submitted it to us for approval. If we provide you a proposed site and you do not accept it within the time we specify or another franchisee accepts it before you do then you will not have any rights to the site. If you do not acquire a site that we have approved within the timeframe we have given you we or an affiliate can acquire the site or give another franchisee the right to acquire the site.

We currently intend to offer you the assistance of our real estate team to assist you in finding a proposed location for your Basecamp Studio within your designated DMA and to provide you with demographic and other information to which it has access regarding proposed locations within your designated DMA. However, we may be looking for our own sites or sites for other franchisees, we are not obligated to provide you such assistance and you are solely responsible for locating and securing an acceptable, proposed location that is approved by us in order to fulfill the development obligations in your Franchise Agreement(s). You are responsible if we terminate the ADA because you are unable to secure one or more acceptable, proposed locations to fulfill the development schedule in your ADA. If you fail to meet the terms of the development schedule in your ADA or you fail to develop a Basecamp Studio on or before the required opening date in your Franchise Agreement, we can terminate your ADA and/or Franchise Agreement(s) in their entirety and you are not entitled to a refund of any of the Development Fees or Initial Franchise Fees paid.

When you have found a location in the DMA that is approved by us, we will amend your Franchise Agreement to identify your location, proposed opening date and the “protected territory” around your location. To identify your protected territory we will use mapping and demographic software to draw a circle around your location. The determination of your protected territory is within our sole discretion. The radius of the circle identifying the protected territory may vary, but will be no larger than 3 miles and your protected territory will include a population of no more than 50,000 people.

We may attach a map to your Franchise Agreement that will identify the protected territory or we may simply describe an area surrounding your location. The map or description may not be a specific radius from your Basecamp Studio, because it will take into account traffic patterns and natural boundaries. However, the territory will range from approximately one-half mile from your studio (in densely populated metropolitan areas) to as much as 3 miles (in small towns). Protected territories may overlap, but we will not approve anyone opening a Basecamp studio, or relocating a Basecamp Fitness studio, into a protected territory given to another studio. (By way of example, one person may have a Basecamp Fitness studio in the center of City A, with a territory of 2 miles in all directions, while another person has a Basecamp Fitness studio in the center of City B, located 3 miles away from the site of the first franchisee’s Basecamp Fitness studio, and also with a territory of 2 miles. While the protected territories overlap, each franchisee’s studio is located outside the protected territory of the other franchisee, and it cannot be relocated within the other franchisee’s protected territory). We cannot unilaterally change your protected territory, and there are no minimum quotas required; as long as your Franchise Agreement is in effect, you will retain the rights described in this paragraph.

The criteria we use for determining the boundaries of the protected territory in your Franchise Agreement include density of population, growth trends of population, apparent degree of affluence of population, the density of residential and business entities, traffic generators, driving time, and natural boundaries. Your protected territory is exclusive. During the term of your Franchise Agreement, we will not place or license to anyone else the right to place a Basecamp Fitness studio that is physically located in your protected territory. However, we and our affiliates can place Basecamp Fitness studios, or grant others the right to do so, outside your protected territory, including studios operated under the Basecamp Fitness name, even if they compete for customers with your studio, and even if the territorial boundaries for that franchise overlap with the boundaries for your territory. We and our affiliates also have the right to operate, and to grant franchises or licenses to others to operate, any fitness business and any other business from locations within this territory under trademarks other than “Basecamp Fitness”, without compensation to you.

You must provide us at least 60 days’ prior notice, pay a relocation fee and obtain our consent before you intend to relocate your Basecamp Studio. The new location must be within your protected territory, and it may not be located within any territory we grant to any other franchisee. You must upgrade the new space to comply with all of our current specifications.

We do not restrict the customers you may serve, and you generally may solicit customers outside your territory, including through channels of distribution such as the Internet, telemarketing or other direct marketing sales. All of your advertising, including your website, must be approved by us, and you must obtain our written approval before you establish any other website, web page, or social networking or social media site, profile or account, relating to or making reference to us, your studio, or to the Basecamp Fitness system. We and our affiliates have the right to sell products and services (like apparel and related products) both inside and outside your territory, using the “Basecamp Fitness” name, any derivative or any other name, through any channel of distribution, including the Internet, catalog sales, telemarketing, or other direct marketing, without any compensation to you.

Upon signing the ADA you will acquire the right to develop the specified number of Basecamp Studios within the identified DMA and you will sign the Franchise Agreement for your first Basecamp Fitness Studio contemporaneously with signing the ADA. You will sign our then-current Franchise Agreement for each subsequent Basecamp Fitness Studio that you open according to the development schedule in the ADA. We will determine or approve the location of any future Basecamp Studios and any protected territories for those Basecamp Studios based on our then-current standards for sites and territories. We do not permit an ADA that would permit the development of Basecamp Studios in multiple DMAs.

Temporary Restrictions on Basecamp Franchises under Friends and Family Program

As discussed in Item 5 we are running a Friends and Family Program. Under that Program, for a minimum of 120 days beginning March 31, 2020, financially qualified, franchisees of Anytime Fitness, The Bar Method and Waxing the City who are in good standing (i.e., no uncured default(s)), will receive preferential pricing, as outlined in Item 5 and they will be given preference in purchasing Basecamp Fitness franchises over new franchisees for Basecamp Fitness franchises they buy during this period. During this period, no Basecamp Fitness studio proposed locations will be approved by us if they are located within the protected territory granted to an Anytime Fitness franchisee for the operation of their Anytime Fitness franchise.

An existing Anytime Fitness franchisee who purchases a Basecamp Fitness franchise in a DMA during the time period discussed above may choose to locate the Basecamp Studio in the protected territory granted in connection with their Anytime Fitness, so long as that location is approved by us, or they may locate the Basecamp Studio in other open, available space within the DMA, at a location that is approved by us. However, we will not approve a location for a Basecamp Fitness studio that is owned by an existing Anytime Fitness franchisee if the proposed location is within the protected territory granted to another Anytime Fitness franchisee in connection with their Anytime Fitness club, unless that other Anytime Fitness franchisee expressly consents to the location of the Basecamp Fitness studio within the protected Anytime Fitness territory.

As described in Item 1, we have 2 affiliates that offer franchises under different trademarks and sell goods and services that are similar to those offered by us. Our affiliate, Anytime Fitness operates and franchises the operation of fitness centers designed to operate with minimal overhead and labor costs under the trademark, “Anytime Fitness®” and “Anytime Fitness Express®” (although it no longer operates any Anytime Fitness Expresses). Anytime Fitness has the same principal business address as we do and would not maintain physically separate offices or training facilities. Our affiliate, The Bar Method Franchising franchises the operation of boutique fitness studios that offer barre-based exercise classes using proprietary and non-proprietary instructional techniques, formats and methods designed to provide fitness training in an attractive atmosphere. The Bar Method Franchising currently offers Bar Method franchises for sale, and our affiliate TBM currently operates a Bar Method studio. The Bar Method Franchising has the same principal business address as we do and would not maintain physically separate offices or training facilities.

There may be now, or in the future, Anytime Fitness and/or Bar Method locations in the same market as current or future Basecamp Fitness franchisee territory(ies). If there is a conflict between us and an Anytime Fitness franchisee or a Bar Method franchisee or between a Basecamp Fitness franchisee, and/or an Anytime Fitness franchisee and/or a Bar Method franchisee, in either case regarding territory, customers or franchisor support, our management team will attempt to resolve the conflict after taking into account the specific facts of each situation and what is in the best interest of the affected system or systems. However, we do not have a policy, and are not responsible for resolving conflicts between or among Anytime Fitness franchisees or Bar Method franchisee, but may develop a policy concerning this issue in the future.

ITEM 13
TRADEMARKS

The Franchise Agreement gives you the right to operate a Basecamp Studio under the trade names, trademarks and service marks that we establish.

The following marks have been registered on the Principal Register of the United States Patent and Trademark Office (“USPTO”). These and the mark below the chart are the principal trademarks you will use in operating your Basecamp Studio:

Mark

Registration Number

Registration Date

BASECAMP

3635120

June 9, 2009

Bascamp Logo

4646648

November 25, 2014

Although we maintain a federal trademark registration for the mark “Basecamp”, we do not have a federal trademark registration for “Basecamp Fitness” as a unitary mark. Accordingly, this mark may not have as many legal benefits and rights as a federally-registered trademark. If your right to use this mark is challenged, you may have to change to alternative marks, which may increase your expenses. We may or may not choose to seek registration of this mark.

There are no currently effective material determinations of the USPTO, the Trademark Trial and Appeal Board, the trademark administrator of any state or any court, any pending infringement, opposition or cancellation proceedings or any pending material litigation involving any of our Marks which are relevant to the use of these Marks. No currently effective litigation affects our use or ownership rights in any Mark. All affidavits required to preserve and renew these Marks have been filed. No currently effective agreement limits our right to use or license the use of our Marks.

You must follow our rules when you use our Marks. You may not use any of the Marks alone or with modifying words, designs or symbols as part of a corporate or business name or in any form on the Internet, including URLs, domain names, e-mail addresses, locators, links, metatags or search techniques. You must indicate, as required in the Franchise Agreement and specified in the Operations Manual, that you are an independent operator. You may not use our Marks with an unauthorized product or service, or in a manner not authorized in writing by us.

We will protect and maintain all rights to use our Marks against encroachment, misuse or unauthorized use and against all challenges to any rights of its use, as we deem appropriate. You must notify us immediately when you learn about an infringement of or challenge to your use of our Marks. We may take the action necessary, in our sole discretion, to prevent the unauthorized use of our Marks, including bringing actions against third parties regarding the use of any of our Marks, but the Franchise Agreement does not require us to take any specific affirmative action. We will control any administrative proceedings or litigation involving our Marks. You must cooperate with us and take all actions as may be desirable in the opinion of our counsel to carry out the defense or prosecution. While we are not required to defend you against a claim based on your use of our Marks, we will either do so, or we will reimburse you for your liability as long as you properly use our Marks, including against claims of infringement or unfair competition arising out of your use of the Marks.

We may change our Marks and require you to adopt new Marks as if they were part of the Franchise Agreement at the time of its execution. You must comply with these changes immediately at your expense after we notify you that we have discontinued, modified or changed one or more of our Marks. We will have no liability or obligation because of the discontinuation, modification or change. You must not directly or indirectly contest the validity of our ownership of the Marks or our right to use or license our Marks, trade secrets, confidential information or business techniques that are part of our business. You must use the designations of ®, TM, and SM in advertising and promotions using our Marks.

We do not know of any infringing uses that could materially affect your use of our Marks.

ITEM 14
PATENTS, COPYRIGHTS, AND PROPRIETARY INFORMATION

There are no patents or pending patent applications that are material to the purchase of a franchise. We do claim copyright protection for the Operations Manual, and to advertising and promotional materials, forms, and related materials that we produce, but we have not registered these materials with the Copyright Office of the Library of Congress. These materials are proprietary and confidential and are our property. You may use them only as long as you are a franchisee, and only as provided in your Franchise Agreement.

There are currently no effective determinations of the United States Copyright Office or any court regarding any of our copyrighted materials, nor are any proceedings pending, nor are there any currently effective agreements between us and third parties pertaining to our copyrighted materials that will or may significantly limit your use of our copyrighted materials. We are not aware of any infringing uses or these materials that could materially affect your use of these materials. We are not required by any agreement to protect or defend our copyrights.

We will be disclosing to you certain information we believe to be confidential or proprietary information and trade secrets. This will be included in our manuals, and in materials we may separately provide to you. You may use these materials, in the manner we approve, in the operation of your Basecamp Studio during the term of your Franchise Agreement. However, you may not use these materials in any other way for your own benefit, or communicate or disclose them to, or use them for the benefit of, any other person or entity. These materials include any trade secrets, knowledge or know-how, confidential information, advertising, marketing, designs, plans, or methods of operation. You may disclose this information to your Principal Operator, but only to the extent necessary to operate the Basecamp Studio, and then only while your Franchise Agreement is in effect.

ITEM 15
OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS

While we do not require that you personally supervise your Basecamp Studio, we recommend that you do so. If you are not the “on premise” manager of the Basecamp Studio, then you must designate a Principal Operator to serve as your on-premise manager. You, and your Principal Operator if you have one, must attend and participate in any on-site visits by our corporate representatives at your Studio. You must participate in any scheduled business review calls scheduled by our corporate representatives and you must provide us with accurate and complete financial statements, including profit & loss statements and balance sheets, for your Studio upon our request, and in advance of any scheduled business review call(s). We do not impose any limitations on whom you can hire as your Principal Operator, but that person must complete our initial training requirements and all other training we reasonably designate, and that person along with your studio and fitness manager must sign a confidentiality and non-disclosure agreement with you that meets our requirements and that you provide to us before they attend training. We also require you to designate a Principal Owner of your business to attend our Conference each year, even if that person is not personally supervising your Basecamp Studio. We do not require the Principal Operator of your business to have any ownership interest in your business.

If you are a legal or business entity, each individual who has any ownership interest in your business, directly or indirectly, must sign the Guaranty and Assumption of Franchisee’s Obligations assuming and agreeing to discharge all of your obligations and comply with all restrictions under the Franchise Agreement. (See the Franchise Agreement (Exhibit E)

All Principal Operators, studio and fitness managers must sign non-disclosure agreements with you.

ITEM 16
RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL

You must sell or offer for sale only those services and products which are approved by us and which meet our standards and specifications. You must follow our policies, procedures, methods, and techniques and comply with all of our mandatory standards and specifications. We can change the services and products that you must offer at any time, without limitation. We can establish maximum and/or minimum resale prices for use with multi-area marketing programs and special price promotions.

We do not generally limit the persons to whom you may sell memberships. However, we do have the right to impose minimum age restrictions and other requirements we deem appropriate, either for safety reasons, or to preserve the goodwill of our Marks for the benefit of all franchisees. Also, because our business model is based on the concept of local memberships, we do not allow you to solicit businesses or organizations for the sale of memberships that would enable persons to join your Basecamp Studio that is not the facility they would principally use.

ITEM 17
RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION

This table lists certain important provisions of the franchise and related agreements. You should read these provisions in the agreements attached to this Franchise Disclosure Document.

Provision

Section in Franchise or Other Agreements

Summary

a. Length of the franchise term

Section 2.A – Franchise Agreement

Section 3.A and 4 and Rider – Area Development Agreement

The initial term is 6 years.

The term depends on the number of franchises to be developed under the Area Development Agreement. It will typically be between 1 and 5 years.

b. Renewal or extension of the term

Section 2.B – Franchise Agreement

Area Development Agreement – Not Applicable

If you are in good standing and you meet our conditions, you can renew your franchise for an additional 5 year period.

You cannot renew the Area Development Agreement.

c. Requirements for you to renew or extend

Section 2.B – Franchise Agreement

Area Development Agreement – Not Applicable

Give written notice, sign new franchise agreement (which may contain materially different terms and conditions than your original Franchise Agreement); update (or move) your location to comply with then-current standards; sign general release; pay renewal fee; show that you have the right to remain in possession of the location for the renewal term; your staff completes any required refreshing training.

You do not have the right to renew or extend the Area Development Agreement.

d. Termination by you

Section 15 – Franchise Agreement

Sections 4 and 5 – Area Development Agreement

If we materially breach the Franchise Agreement and fail to cure the breach within 30 days after notice, you can then terminate the Franchise Agreement by giving us an additional 10 days’ notice. (Subject to applicable state law).

You do not have the right to terminate the Area Development Agreement. (Subject to applicable state law).

e. Termination by us without cause

Franchise Agreement – Not Applicable

Area Development Agreement – Not Applicable

Not applicable. Not applicable.

f. Termination by us with cause

Section 14 – Franchise Agreement

Section 5 – Area Development Agreement

If you do not open in 12 months (subject to an extension as described in Item 5) or are in default under the Franchise Agreement or any other agreement you have with us or with any of our affiliates.

If you are in default under the Area Development Agreement, or you or any of your affiliates are in default under any Franchise Agreement or other agreement you have with us or with any of our affiliates.

The Franchise Agreement and the Area Development Agreement contain cross-default provisions.

g. “Cause” defined – curable defaults

Section 14.B – Franchise Agreement and Section 5 – Area Development Agreement

Most defaults are curable and you will have 30 days to cure.

h. “Cause” defined – non- curable defaults

Section 14.A – Franchise Agreement

Section 5 – Area Development Agreement

You are liquidated or dissolved; fail to operate the business for 7 consecutive days, abandon the business, lose the right to do business, or lose the right of possession of the premises where the Basecamp Studio is located; unapproved transfers; you or any of your owners engage in fraudulent conduct or are convicted of, or plead guilty or no contest to, certain crimes; 3 notices of material breaches within 12 months; you maintain false books or records or submit any false or misleading application, statement or report to us; you misuse our marks or materially impair the value of, or the goodwill associated with our marks or the System; and other stated non-curable defaults.

Similar reasons as for Franchise Agreement, you fail to meet your development obligations in the Development Schedule, or we have delivered to you a notice of termination of a Franchise Agreement in accordance with its terms and conditions

i. Your obligations on termination/non-renewal

Section 16 – Franchise Agreement

Section 6 – Area Development Agreement

Stop operating the Basecamp Studio, stop using our names and marks, return information to us, assign to us or cancel certain registrations, listings, telephone numbers, websites and domain names, and pay all amounts you owe us.

You lose all remaining rights to develop Basecamp Studios.

j. Assignment of contract by us

Section 13.A – Franchise Agreement and Section 7.A – Area Development Agreement

No restriction on our right to assign.

k. “Transfer” by you – defined

Section 13.B – Franchise Agreement and Section 7.B – Area Development Agreement

Includes transfer of contract or business, or transfer of majority control of the Franchise Agreement or of the business.

l. Our approval of transfer by franchisee

Section 13.B – Franchise Agreement

Section 7.B – Area Development Agreement

We have the right to approve all transfers, but will not withhold our consent if all of the requirements for the transfer are met.

We have the right to approve, but you may not transfer only a portion of your rights.

m. Conditions for our approval of transfer

Section 13.B – Franchise Agreement

Section 7.B – Area Development Agreement

Transferee must meet our requirements and sign a new franchise agreement on our then current form for the remaining term of your agreement, which may contain materially different terms and conditions then in your agreement. You must also pay a transfer fee and sign a release (subject to state law). You must meet any additional conditions we specify in the Operations Manual or otherwise in writing.

You must sign franchise agreements for all remaining Basecamp Studios you are permitted to develop, and you must transfer those agreements to the same person or entity to whom you are transferring the Area Development Agreement. You must meet any additional conditions we specify in the Operations Manual or otherwise in writing

n. Our right of first refusal to acquire your business

Section 19 – Franchise Agreement

We have the right to match any offer for your business.

o. Our option to purchase your business

Section 16 – Franchise Agreement

We can purchase from you at book value all or a portion of the assets of your Basecamp Studio and take an assignment of your leases, upon the termination or expiration without renewal of your Franchise Agreement.

p. Your death or disability

Section 13.B – Franchise Agreement and Section 7.B – Area Development Agreement

Your heirs can assume your rights, but if they do, they must meet the transfer requirements.

q. Non-competition covenants during the term of the franchise

Section 17.A – Franchise Agreement and Section 9 – Area Development Agreement

No involvement in any fitness center that offers interval training or high-intensity guided workouts (including as creditor or landlord), wherever located.

r. Non-competition covenants after the franchise is terminated or expires

Section 17.B – Franchise Agreement and Section 9 – Area Development Agreement

No involvement in any fitness center that offers interval training or high-intensity guided workouts (including as creditor or landlord) for 2 years in your Protected Territory or within a 10 mile radius of any Basecamp Studio.

s. Modification of the agreement

Sections 8.I and 20.H, 20.K – Franchise Agreement

Section 8 – Area Development Agreement

No modifications without consent by all parties, but our manuals are subject to change.

No modifications without consent of all parties.

t. Integration/merger clause

Section 20.E., K – Franchise Agreement, Section 9 – Area Development Agreement

Only the terms of the Franchise Agreement, Area Development Agreement and other written agreements are binding (subject to applicable state law). Any representations or promises outside of this Disclosure Document and the Franchise Agreement/Area Development Agreement may not be enforceable.

u. Dispute resolution by arbitration or mediation

Section 18 – Franchise Agreement, Section 8 – Area Development Agreement

Except for certain disputes, all disputes must be mediated, and if not settled by mediation, are then subject to arbitration.

v. Choice of forum

Section 18.E – Franchise Agreement, Section 9 – Area Development Agreement

Subject to state law, mediation (at a location determined by the mediator which is at least 100 miles from either of our offices) and arbitration in Minneapolis, Minnesota. Subject to state law, any litigation must be brought in the United States District Court for the District of Minnesota or the Ramsey County District Court, Minnesota.

w. Choice of law

Section 20.D – Franchise Agreement, Section 9 – Area Development Agreement

Subject to state law, Minnesota law generally applies.

ITEM 18
PUBLIC FIGURES

We do not currently use any public figure to promote our franchise.

ITEM 19
FINANCIAL PERFORMANCE REPRESENTATIONS

The FTC’s Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the Disclosure Document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances.

AVERAGE GROSS REVENUES FOR CORPORATE STUDIOS IN 2019

The following is information concerning the Gross Revenues of the 5 company-owned Basecamp Studios that were in operation for all of 2019.

Average of the 5 Studios: $1,208,770

Median of the 5 Studios:  $1,113,284

Highest of the 5 Studios: $1,732,290

Lowest of the 5 Studios: $826,281

# Studio above the Average: 2 (40%)

# Studio below the Average: 3 (60%)

All 5 of these Studios are in California. The first one opened in March 2013, and the last one opened in January 2017. We opened 1 additional Basecamp Studio in 2019, but it was not included in these numbers because it was not open for the entire year. We did not have any Studios that closed in 2019.

Gross Revenues includes all revenue generated by the Basecamp Studios, excluding bona fide refunds, credits given or allowed to customers for the return of merchandise and sales taxes collected and remitted.

The actual Gross Revenues of each of these Studios varied based on a number of factors, including the specific location of each Studio (which includes the size of the Studio, the demographics of the area, traffic patterns and access to the Studio), the degree of competition surrounding the Studio, and the length of time the Studio had been open. The individual results of your Studio may vary from these Studios based on these and other factors.

Some Basecamp Studios have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much.

Written substantiation for this financial performance representation will be made available to prospective franchisees upon reasonable request.

Other than as set forth above, we do not make any representations about a franchisee’s future financial performance or the past financial performance of franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor’s management by contacting General Counsel and Secretary James Goniea at 111 Weir Drive, Woodbury, Minnesota 55125, telephone (651) 438-5000, the Federal Trade Commission, and the appropriate state regulatory agencies.

ITEM 20
OUTLETS AND FRANCHISEE INFORMATION

Table No. 1
Systemwide Outlet Summary
For Years 2017-2019*1

Outlet Type

Year

Outlets at the Start of the Year

Outlets at the End of the Year

Net Change

Franchised

2017

0

0

0

2018

0

0

0

2019

0

0

0

Company-Owned

2017

4

5

+1

2018

5

5

0

2019

5

6

+1

Total Outlets

2017

4

5

+1

2018

5

5

0

2019

5

6

+1

1. All numbers are as of December 31 of the applicable year.

Table No. 2
Transfers of Outlets from Franchisees to New Owners (other than the Franchisor)
For Years 2017-2019*1

State

Year

Number of Transfers

All States

2017

0

2018

0

2019

0

Total

2017

0

2018

0

2019

0

1. All numbers are as of December 31 of the applicable year.

Table No. 3
Status of Franchised Outlets
For Years 2017-2019*1, 2

State

Year

Outlets at Start of Year

Outlets Opened

Terminations

Non- Renewals

Reacquired by Franchisor

Ceased Operations- Other Reasons

Outlets at End of the Year

All States

2017

0

0

0

0

0

0

0

2018

0

0

0

0

0

0

0

2019

0

0

0

0

0

0

0

Total

2017

0

0

0

0

0

0

0

2018

0

0

0

0

0

0

0

2019

0

0

0

0

0

0

0

1. All numbers are as of December 31 of the applicable year.

2. Although we had no outlets as of December 31, 2019, we had signed one Area Development Agreement for studios in Wisconsin.

Table No. 4
Status of Company-Owned Outlets
For Years 2017-2019*1

State

Year

Outlets at Start of the Year

Outlets Opened

Outlets Reacquired From Franchisee

Outlets Closed

Outlets Sold to Franchisee

Outlets at End of the Year

California

2017

4

1

0

0

0

5

2018

5

0

0

0

0

5

2019

5

0

0

0

0

5

Minnesota

2017

0

0

0

0

0

0

2018

0

0

0

0

0

0

2019

0

1

0

0

0

1

Total Outlets

2017

4

1

0

0

0

5

2018

5

0

0

0

0

5

2019

5

1

0

0

0

6

1. All numbers are as of December 31 of the applicable year.

Table No. 5
Projected Openings as of December 31, 2019

State

Franchise Agreements Signed But Outlet Not Opened

Projected New Franchised Outlets in the Next Fiscal Year

Projected New Company – Owned Outlets In the Next Fiscal Year

Minnesota

0

0-4

1

Wisconsin

1

1-2

0

Total

1

1-6

1

The name of each of our current franchisees and the address and telephone number of each of their outlets is listed in Exhibit C. No franchisees left the System during 2019.

If you buy this franchise, your contact information may be disclosed to other buyers when you leave the franchise System. We did not have any franchisees sign confidentiality clauses with us during the last 3 fiscal years that would prevent them from speaking openly about their experiences with us.

There are no trademark-specific franchisee organizations associated with this System.

ITEM 21
FINANCIAL STATEMENTS

Attached to this Franchise Disclosure Document as Exhibit D is a copy of the audited financial statements of our affiliate, Anytime Fitness, LLC, for the fiscal years ended December 31, 2017, December 31, 2018, and December 31, 2019. Our affiliate, Anytime Fitness, LLC, has guaranteed our performance with you. A copy of the Guaranty of Performance is included as Exhibit J.

ITEM 22
CONTRACTS

A copy of the Franchise Agreement, Franchise Agreement Guaranty, and General Release is attached as Exhibit E.

A copy of the Area Development Agreement and Development Agreement Guaranty is attached as Exhibit F.

Exhibit H is the ProVision Services Agreement.

Exhibit I is an Electronic Transfer of Funds Authorization.

Exhibit J is an Affiliate Guaranty that our affiliate, Anytime Fitness, has signed for your benefit.

Exhibit K is a Franchisee Questionnaire we require you to complete and sign before we will grant you a franchise.

Exhibit L is the Equipment Loan Documents.

ITEM 23
RECEIPTS

The last 2 pages of this Disclosure Document are detachable documents acknowledging receipt of this Disclosure Document. Please sign both receipt pages and return one to us.