VAULT — FRANCHISE DISCLOSURE DOCUMENT PREPARATION

Version: 1.0 Date: 2026-07-28 Owner: Tajanay Hines, CEO / Emmett Walker, CSO Target FDD Launch: Q3 2028 (24-month runway from today)

OVERVIEW

Before VAULT can sell a single franchise, it must have a legally compliant Franchise Disclosure Document (FDD) and, where required, state registration. The FDD is not optional, not a formality, and not something to rush. It is also the foundation of the entire franchise system. Getting it wrong exposes Taj personally and the VAULT brand structurally. Getting it right turns the FDD into a sales tool and a credibility signal to serious franchisee prospects.

This document maps the 24-month preparation timeline, the 23 required FDD items, attorney selection guidance, state registration requirements, and cost expectations.

24-MONTH PREPARATION TIMELINE

Phase 1: Foundation (Months 1-6, Q3-Q4 2026)

Objective: Build the operational and financial foundation the FDD will document.

• Open VAULT Charlotte flagship. Begin operations.
• Establish VAULT IP LLC as the separate franchisor entity that will own the trademarks, trade dress, and system documentation (see 00_FRANCHISE_STRATEGY.md for entity structure rationale).
• File federal trademark applications for VAULT name, logo, and any signature program names (e.g., specific class names, proprietary service names). Federal registration takes 12-18 months minimum. Start today.
• Begin building the operations manual in parallel with running the flagship. Document every process as it is built, not after. The FDD requires a complete ops manual as an exhibit.
• Engage a franchise attorney in consulting mode (not full FDD engagement yet). Get a preliminary opinion on the business model, fee structure, and any state-specific issues early.
• Build the first full year of GAAP-compliant audited financials for the Charlotte flagship. FDD Item 21 requires 3 years of audited financial statements for the franchisor entity. Year 1 starts now.

Phase 2: System Documentation (Months 7-12, Q1-Q2 2027)

Objective: Develop the full franchise system that will be franchised.

• Complete VAULT Operations Manual (the master document that franchisees will run from): service delivery standards, staffing models, equipment specifications, vendor approved lists, marketing standards, technology stack requirements, physical build-out specifications, brand standards.
• Develop the VAULT Franchisee Training Program curriculum. FDD Item 11 requires disclosure of all initial and ongoing training.
• Finalize the real estate and site selection criteria (minimum square footage, geographic exclusivity radius, ADA compliance requirements, HVAC and utilities specs for the wellness programming). These become FDD Items 11 and 12.
• Document the technology platform (booking, membership management, point of sale). The franchise system’s tech stack must be specified in the FDD.
• Begin the Franchise Agreement draft with franchise attorney. The FA is attached to the FDD as an exhibit. It is the binding contract. It must be drafted before the FDD is complete.
• Year 2 of flagship financials begins.

Phase 3: FDD Drafting (Months 13-20, Q3 2027-Q2 2028)

Objective: Draft, review, and finalize the complete FDD.

• Full FDD engagement with chosen franchise attorney. Expect 3-6 months of active drafting, back and forth, and revisions.
• Engage franchise CPA for audited financials of VAULT IP LLC (the franchisor entity). Note: the franchisor entity may have limited operating history at this point. The FDD will disclose this. It is not disqualifying for early-stage franchisors, but franchisee prospects will see it.
• Complete Item 19 Financial Performance Representation (FPR). This is optional but the most powerful sales tool in the FDD. It discloses what franchisees can expect to earn based on the Charlotte flagship’s actual performance. It must be accurate and defensible. Do not inflate. FTC enforcement and private litigation both target inaccurate FPRs.
• Complete all 23 FDD items (see below).
• State registration filings begin for all 14 registration states where VAULT intends to offer franchises (see below).

Phase 4: State Registration and Franchise Sales Launch (Months 21-24, Q3-Q4 2028)

Objective: Receive state approvals and make first lawful franchise offer.

• Receive state registration approvals (timelines vary: California typically 4-6 months, Maryland 60-90 days, others vary).
• Provide FDD to first prospective franchisees. Federal law requires a 14-day waiting period between FDD delivery and signing any agreement or accepting any money.
• Do not accept letters of intent, deposits, or any binding commitment until the FDD has been legally delivered and the waiting period has run.
• Annual FDD update required within 120 days of each fiscal year end. Budget for annual legal and CPA fees ongoing.

THE 23 REQUIRED FDD ITEMS

Per 16 C.F.R. Part 436 (FTC Franchise Rule), effective as of the current regulatory framework:

Item 1: The Franchisor and Any Parents, Predecessors, and Affiliates Name, address, and business history of VAULT IP LLC, Tajanay Hines personally, and any related entities (Trill Entertainment, The Walker Group if involved).

Item 2: Business Experience Five-year employment and business history for all officers, directors, and managers of the franchisor. Taj’s background, Emmett’s CSO role, and any future C-suite hires must be disclosed here.

Item 3: Litigation All material litigation, arbitration, and regulatory actions involving the franchisor, its predecessors, its affiliates, and its officers in the prior 10 years. This includes any consumer complaints, regulatory investigations, or lawsuits. Resolve any open matters before FDD filing.

Item 4: Bankruptcy Disclosure of any bankruptcy filings by the franchisor entity or any principal in the prior 10 years.

Item 5: Initial Fees All fees paid to the franchisor before opening: initial franchise fee (VAULT: $150,000), technology setup fee, training fee, grand opening fund contribution, and any other pre-opening charges.

Item 6: Other Fees All ongoing fees: royalty (VAULT: 7% of gross revenues), marketing fund contribution (VAULT: 2% of gross revenues pass-through), technology platform fee (per location, monthly), renewal fee, transfer fee, audit fee if applicable.

Item 7: Estimated Initial Investment The full build-out cost table for a franchisee to open a VAULT location. Must include low and high estimates for: real estate (lease deposit and tenant improvement allowance gap), construction and build-out, furniture and equipment, technology, initial inventory, working capital (3-6 months), training travel, grand opening marketing, and the initial franchise fee itself. This table is the most scrutinized item by sophisticated franchisee candidates.

Item 8: Restrictions on Sources of Products and Services Discloses what the franchisee must buy from approved suppliers, what must be purchased from the franchisor, and any revenue the franchisor receives from those relationships. VAULT will likely specify approved equipment, software, and branded wellness products.

Item 9: Franchisee’s Obligations A cross-reference table mapping every franchisee obligation to the relevant section of the Franchise Agreement and Operations Manual.

Item 10: Financing Whether the franchisor offers or arranges financing. If VAULT does not provide financing, this section states that. If a preferred lender relationship is established later, it must be disclosed here.

Item 11: Franchisor’s Assistance, Advertising, Computer Systems, and Training Pre-opening and ongoing support: site selection assistance, build-out support, initial training program (location, duration, curriculum outline), ongoing training, field support visits, technology platform provided, marketing support, and grand opening support. This is a key selling point. Be specific and accurate.

Item 12: Territory Whether franchisees receive an exclusive territory, the geographic boundaries of that territory, the radius or population-based definition, and any reserved rights VAULT retains (corporate locations, adjacent markets, e-commerce, etc.).

Item 13: Trademarks Status of all trademark registrations and applications for the VAULT brand. This is why federal trademark filing happens in Phase 1. Franchising a brand without registered marks is a significant risk and a credibility problem.

Item 14: Patents, Copyrights, and Proprietary Information Any patented processes, copyrighted materials (training content, proprietary programming), or trade secrets that franchisees will use. VAULT’s signature wellness methodology, class formats, and branded programming names should be protected and disclosed here.

Item 15: Obligation to Participate in the Actual Operation of the Franchise Business Whether the franchisee must be an owner-operator or can be a passive investor. VAULT’s franchise model should specify whether an on-site managing owner is required (recommended for service quality) or whether professional management is permitted.

Item 16: Restrictions on What the Franchisee May Sell Limits on the services and products franchisees may offer. VAULT franchisees must offer the full VAULT service menu and may not add unapproved services.

Item 17: Renewal, Termination, Transfer, and Dispute Resolution The full legal terms of the franchise relationship: initial term length (typically 10 years for wellness/fitness concepts), renewal terms and conditions, grounds for termination (with and without cure period), transfer rights and fees, right of first refusal on sale, and dispute resolution mechanism (arbitration vs. litigation, venue).

Item 18: Public Figures Any celebrity, athlete, or public figure endorsing or associated with VAULT. If Emmett’s industry relationships or any artist associations are used in marketing, they must be disclosed here with compensation terms.

Item 19: Financial Performance Representations Optional but strongly recommended. Discloses actual or projected financial performance based on the Charlotte flagship. Must be prepared carefully with franchise attorney and CPA. Any representation made outside the FDD on financial performance is a violation of the FTC Rule. Train all sales staff accordingly.

Item 20: Outlets and Franchisee Information Table showing the number of franchise outlets and company-owned outlets opened, closed, transferred, or terminated in the prior 3 years (by state). Also includes a contact list of all current franchisees, which prospective franchisees may (and should) contact for validation. At launch, VAULT will have zero franchisees. This section will be sparse in Year 1, which is normal.

Item 21: Financial Statements Audited financial statements of the franchisor entity (VAULT IP LLC) for the prior 3 fiscal years. In Year 1 of franchising, you may only have 1-2 years of audited statements depending on when the entity was formed. The FTC Rule permits this for newly formed franchisors, but it must be disclosed clearly and will raise questions from sophisticated buyers.

Item 22: Contracts Copies of all agreements the franchisee will be required to sign: the Franchise Agreement, any area development agreement, lease addendum, technology agreement, personal guarantee, confidentiality and non-competition agreement.

Item 23: Receipts Two detachable acknowledgment pages signed by the prospective franchisee confirming they received the FDD on a specific date. These are the legal proof of the 14-day waiting period.

FRANCHISE ATTORNEY SELECTION

Engage a franchise-specialized attorney or firm. General business attorneys do not have sufficient FDD expertise. Franchise law is a specialized field governed by federal regulation and 14 state-specific regimes.

Recommended Firms

Cheng Cohen LLC (Chicago) One of the most respected boutique franchise law firms in the country. Represents both franchisors and franchisees. Deep experience with emerging brands. Partner-level attention for mid-market clients. Estimated FDD cost range: $60,000 to $90,000 for initial FDD drafting and first-round state registrations.

Faegre Drinker Biddle and Reath LLP (Multiple offices) Full-service firm with a large and highly regarded franchise practice. Particularly strong in state registration compliance and multi-state franchise systems. More expensive than boutique firms due to overhead. Estimated FDD cost range: $90,000 to $130,000.

Pillsbury Winthrop Shaw Pittman LLP (Washington DC / Multiple offices) AmLaw 100 firm with a recognized franchise group. Best suited for brands with significant private equity interest or brands planning international expansion simultaneously with domestic franchise launch. Estimated cost: $100,000 to $150,000+.

Recommendation for VAULT at this stage: Cheng Cohen. They work with growing brands, understand the economics of a first FDD, and their cost estimate is the most appropriate for a Y3 franchise launch. Engage them in consulting mode starting in Phase 1, then move to full engagement in Phase 3.

STATE REGISTRATION REQUIREMENTS

In 14 states (plus the District of Columbia), franchisors must register their FDD with a state agency before making any franchise offer or sale to residents of that state. These are called “registration states.” The remaining states require only disclosure (delivery of the FDD) with no state filing.

The 14 Registration States

Washington DC has additional disclosure requirements that function similarly to registration states.

Strategic priority for VAULT: New York, California, and Washington DC are the highest-value markets and have the longest review timelines. File applications in those three states first, simultaneously with the baseline FDD completion.

North Carolina (where SoftPlay Era operated) is NOT a registration state. VAULT’s Charlotte home market requires FDD delivery only, not registration. This is an advantage for the initial franchise launch.

ESTIMATED LEGAL AND FINANCIAL COSTS

Legal (Franchise Attorney)

Use $75,000 to $150,000 as the planning range for initial FDD completion and first-round registration (national but not all 14 states in Year 1). Full 14-state registration in Year 1 adds $15,000 to $30,000.

Financial (CPA and Audited Statements)

Total FDD Preparation Investment

Planning figure: $150,000 all-in through first franchise sold. Budget this in the VAULT capital stack for 2027-2028.

NON-NEGOTIABLE COMPLIANCE RULES

1. Never make a franchise offer (verbal or written, including any teaser materials, letters of intent, or marketing materials) before the FDD is complete and delivered per FTC Rule requirements.

2. Never accept money from a prospective franchisee before the 14-day waiting period has expired after FDD delivery.

3. Never allow anyone other than the franchise attorney to make financial performance representations to prospective franchisees. Any number or projection not in Item 19 is an illegal unregistered representation.

4. Maintain a signed receipt (Item 23) for every FDD delivered. These are your legal protection if a franchisee ever claims non-disclosure.

5. Update the FDD annually within 120 days of fiscal year-end, or more frequently if a material change occurs (new litigation, fee change, new affiliate, etc.). Selling franchises on an outdated FDD is a federal and state violation.

Last updated: 2026-07-28 Owner: Tajanay Hines / Emmett Walker (CSO)