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F79/100FDD 2023

Fitness 1440 — Litigation & Risk

Health & Fitness · FDD Items 3, 4 & 5

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Lower Risk

No litigation cases disclosed in FDD Items 3 and 4.

Source: FDD Items 3–5

FDD Items 3 & 4

Litigation Metrics

Cases disclosed
0
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
79 / 100
FranchiseVerdict composite
Rating
AVOID
STRONG / MODERATE / CAUTION / AVOID

7(a) FOIA data · FY2020–present

SBA Loan Performance

Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.

Total 7(a) loans
15
Government-backed loans issued
Default rate
16.7%
vs <3% typical · system-wide
5-yr default rate
—
Defaults
1 loans
Loans charged off or defaulted
Total loan volume
$5.0M
Avg loan size
$337K
Participating lenders
10

FDD Items 5, 6 & 17 — what you give up

Contract Risk Indicators

Mandatory arbitration
Not required
You retain the right to sue in court
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
2 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
Arizona
State whose law governs disputes — relevant if you're not based there

What drove the 79/100 rating

Risk Score Breakdown

  1. 01MINORSystem shrinking 6.1% YoY (36 units) indicates declining franchisee success and brand momentum
  2. 02MINORNo average revenue or net income disclosure (Item 19) prevents ROI validation and unit economics assessment
  3. 03MINORHigh capital requirement ($369K-$1.9M) combined with declining unit count suggests poor franchisee profitability
  4. 04MINORDual royalty structure (6% or $2,495/month minimum) creates cash flow pressure, especially for underperforming locations
  5. 05MINOR10-year term lock-in is lengthy given system contraction and lack of performance transparency
  6. 06MINORFitness industry highly competitive with low barriers to entry; franchise model advantages unclear

Severity inferred from FDD text — not a regulatory or legal classification

Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.