Real Estate

Review the lease to understand the lease obligations. Some questions to ask may include:

• Is the Seller current on rent?
• What is the remaining term on the lease?
• Does the lease contain renewal options?
• Does the remaining term coincide with the term of the franchise agreement?

Connect with the landlord to talk about the possibility of the lease agreement or if he/she will require you to sign a new lease. Coordinate the lease assignment or signing in conjunction with the closing.

Financing

Coordinate financing approval for your acquisition prior to approval from Anytime Fitness for the club sale. Contact Tim Smith at: 651-438-5020 or tim.smith@sebrands.com

Franchise Documents

• Submit a Confidential Application, Release for a background check, and a copy of the Purchase Agreement or Letter of Intent to Anytime Fitness, LLC. Make sure seller and buyer obtain approval from Anytime for club sale.
• Review the Anytime Fitness Franchise Disclosure Document (FDD).
• Coordinate with Anytime Fitness and the Seller to sign the franchise agreement before you purchase the business or in conjunction with the closing

Club Enhancements

Find out what types of club enhancements if any, will be required as part of the club sale. Here are a few examples of enhancements that may be required:

• Security system updates
• Paint scheme
• Interior signage
• Equipment upgrades

Training

New Franchisee Training (Operations Week & Consumer Week) — A "Principal Owner" holding at least 10% ownership on the executed Franchise Agreement on file must attend 2 weeks of mandatory training in Woodbury, Minnesota. While there is no charge for this training, attendee is responsible for travel and living expenses while attending. Actual cost will vary depending on the distance to be traveled, method of travel, and personal circumstances. Both weeks of training must be completed prior to the transfer of ownership. Coaching is done with principal owner only

Continuing Engagement Credits Policy

Each calendar year, your business must obtain at least 1,200 continuing engagement credits (CEC) within our system. These are credits that have been established for attending various training programs, as follows:

• Conference (Franchisees are required to purchase a Conference ticket annually.)
• Vitals
• New Franchisee Training
• Live Programming
• Multiple Club Operator Training

UCC Lien Search

Run a UCC (Uniform Commercial Code) and tax lien search on the seller. Contact your Secretary of State’s office for more information.

State Tax Search

Contact state tax authorities to confirm whether or not sales tax was properly collected on membership sales, fitness classes, group training sessions, 1-on-1 personal training sessions, etc.

Membership List and Remittance

Obtain a membership list and remittance reports from the seller. Some reports to request may include:

• Active Member Report (Month to Date List of All Active Members and Agreement Details)
  • Paid in Full Memberships (PIF): Membership dues that are paid in full at the point of sale
  • Coupon/Statement: Member has not set up a credit or debit card or a bank account to debit his/her payments
  • Cash, Open-End: Membership dues that are paid in cash directly to the club on a month to month basis
  • Month-to-Month Memberships: Member Agreements that are not on a term basis and are renewed at the end of each month unless the member decides to leave which he/she may do without any financial penalty
• Daily Delinquency Report (Month to Date Detail of Delinquent Members, Delinquent Reason and Aging and Financial Impact)
• Account Reconciliation Report (End of Month Comparison of Positive Impact (new, renew, etc.), Negative Impact (cancel, expired, returned for collections) and Net of Impact Totals)
• Attrition Report (Monthly Summary of Breakdown by percentage of members lost to canceled, expired, collections, transfers)

Personal Training Member List and Revenue

View personal training client list and review status. Some questions to ask may include:

• How many sessions are left with each client?
• How many are already paid for in advance?

Membership Adjustments and Credits Due

Review any HMO, insurance, or corporate partnership discounts that the seller may be offering, as well as all non-paying (comped members) entered into Club Hub ( the online member management system).

PPV Members (Pay-Per-Visit)

PPV Members (Pay-Per-Visit) are members through an insurance reimbursement program. They are enrolled at participating clubs without paying a down payment or monthly gym membership. The program administrator offers the club a specific "per-visit" monthly rate which can be earned based on the member usage for that month. Our processing partner, Healthy Contributions, tracks the member's visits and compensates the member's "home" Anytime Fitness club following a processing timeline. Some questions to ask may include:

• How many PPV members?
• What types of programs are they currently opted into with Healthy Contributions?
• What are the associated fees for participating in these programs?
• What is the monthly revenue generated from these members?

Corporate Partnerships

These are members who receive a special negotiated discounted rate between the club and a local business. Some items/questions to ask may include:

• List of accounts/members associated with corporate partnerships
• Current agreement in place with each corporate partnership
• How is the billing designation handled for these members (invoice/EFT/month-to-month/term)?

Complimentary Members (Comp)

These are members who do not pay membership fees. Some items/questions to ask may include:

• A list of current comp members
• The reasons for the comp membership for the associated members

Metrics/Key Performance Indicators (KPI’s)

Review club's month over month Club at a Glance (CaaG) metrics.( CaaG ) gives the ability to see club metrics, club rankings and set goals. The six rankings that contribute to an overall club ranking are:

• Dues: Amount of Dues from ABC deposited to the club each month via ABC Remits: "total amount of any profit center titled "Dues" (does not contain any other profit centers collected i.e. minus club enhancement fees, down payments, tanning revenue, personal training revenue, hydro massage revenue, cash in-club (no paid in full)".
• Members: Pulled from ABC, the active member count that includes both Paid in Full and monthly dues members.
• Average Member Value: Defined as monthly dues ONLY divided by members.
• 12 Month Rolling Attrition: Defined as all members in, and all members out (including transfers), not penalizing those who left, and returned within 30 days. Rolled over 12 months.
• Draft %: Defined as the amount of agreement dues pulled from a bank account (Checking, or Savings), vs a Credit Card, excluding bad debt %.
• PLEASE Score: The PLEASE Score program is the measurement of delivering the PLEASE service standards (our commitment to our customers that they will receive Surprisingly Personable Experiences) in the club and is based off the Net Promoter philosophy.

Employees and Personal Trainers

We recommend that you, at a minimum, review the following:

• Compensation: Review the job descriptions and payroll structure with current staff.
• Personal Training Revenue: How is personal training revenue currently being processed and reported?
• Personal Trainer Employment Status: Independent Contractor or Employee?
• PT Suite/Live Programming: Is Live Programming being offered in the club?

Utilities

• What will happen with the utilities upon your takeover?
• Are all accounts current?

Profit & Loss Reports

Ask the seller to provide you with the P & L's for the club. We recommend that you, at a minimum, review historical data. We also recommend that you compare revenues to membership lists and membership process and analyze whether all expenses of operating the business have been included in the P&L.

Other Contracts

Does the seller have other contracts related to the operation of the business? If they do, you should understand their terms and determine whether you want or need to assume them. Coordinate any assignment with the closing.

Collections

Review members outstanding in collections and decide with seller how all collections should be wrapped up prior to closing.

Security

Prior to purchasing a club, it is very important you inspect the club's security components as you might inspect a home prior to purchase. Technology changes rapidly, and you want to ensure that everything in the club is in proper working order.

Security Compliance Inspection

A Security Compliance Inspection relies on a walk-through inspection with a ProVision Security Certified Installer to determine the condition and compliance of the existing security components. Through a multistep checklist, the installer will assess the condition of each system component and complete a detailed report identifying actions needed to rectify any issues. The results of the Installer's report are sent to ProVision Security Solutions Coordinator, who will provide you with an estimate for any security maintenance and/or upgrades that the club requires. This information assists owners and buyers in understanding operation, maintenance and any upgrades which may be required.

To request service for a Security Compliance Inspection, please contact ProVision Security Solutions at projects@provisionsecurity.com or via phone at 866-315-0777.

Permits

Permits are generally attached to the business entity. Make sure to update permits with the new entity or transfer existing.