Business Context and Reporting Period
This Form 8-K Current Report was filed by Planet Fitness, Inc. on July 27, 2017. The filing addresses Item 5.02 regarding the appointment of a new director to the Board of Directors.
Key Financial Metrics
The filing does not report consolidated revenue, profit, cash flow, margins, debt, or liquidity metrics for the Company. However, it discloses specific transactional amounts related to the new director's franchise operations:
- Royalties and Fees Paid by New Director: Approximately $1.2 million for the year ended December 31, 2016, and $0.7 million for the six months ended June 30, 2017.
- Equipment Purchases by New Director: $0.6 million for the year ended December 31, 2016, and $0 for the six months ended June 30, 2017.
- Vendor Fees Paid to Director's Company: The Company paid an immaterial amount to Radianse Systems (owned by the new director) for software services in both the year ended December 31, 2016, and the six months ended June 30, 2017.
Material Changes
The primary material change reported is the expansion of the Board of Directors from five to six members. Former New Hampshire Governor Craig Benson was appointed to fill the vacancy as a Class I director, with his term standing for re-election at the 2019 annual meeting.
Outlook, Risks, and Related Party Transactions
The filing details significant related party transactions involving the newly appointed director, Gov. Craig Benson:
- Franchisee Status: Gov. Benson is a Planet Fitness franchisee through BL Technologies Investments, LLC. He has opened 11 stores as of June 30, 2017, with two additional stores under franchise agreements but not yet open. He is obligated to open 24 additional stores over the next 11 years.
- Vendor Relationship: Gov. Benson owns approximately 10.5% of Airpointe of New Hampshire, Inc. (DBA Radianse Systems), a software vendor providing amenity tracking compliance services to corporate and franchise locations. The Company has engaged Radianse to provide these services to all corporate-owned stores and make them available to franchise locations.
- Compensation: Gov. Benson will participate in the standard non-employee director compensation program, which was amended on July 27, 2017, to allow directors to elect Class A common stock in lieu of annual cash retainers.
Investor Verification Checklist
- Verify the terms of the Area Development Agreement (ADA) and franchise agreements to ensure they are commensurate with agreements executed with other franchisees.
- Review the Company's Proxy Statement filed on March 30, 2017, for details on the non-employee director compensation program.
- Monitor future filings for the status of the 24 additional stores Gov. Benson is obligated to open.
- Assess the materiality of fees paid to Radianse Systems as the Company expands the use of their software across all locations.