There may be a combination of things going on. Rhododendrons are by nature woodland plants and a full sun position, especially in a climate that has hot summers, is not ideal. They also have very shallow root systems and dislike being planted too deeply. I usually instruct clients to plant so that the top of the root ball is slightly above grade. They also prefer very good drainage but a consistently moist (not wet) soil with a fair degree of acidity (pH of 4.5-6.0) and a pretty organic soil as well (include additions of bark fines, chopped leaves, compost or peat moss).

Your rhodies could be suffering from any or all of these factors. They are also prone to root rots if the soil stays water logged for any length of time.

gardengal48 what would you recommend our next steps be? Should we transplant them, or replant so the root ball is more shallow?

It's always a good idea to leave the top 10% or so of the rootball above the ground level covered with loose, coarse mulch only. The third photo from the bottom also seems to show black plastic beneath the bark mulch. If this is the case and the rhododendrons are planted in small holes in the plastic, they will have difficulty receiving enough water and the soil can heat up to a damaging degree.

All of gardengal's comments are accurate, but all in all these rhododendrons do not look too bad. The discolored leaves are, at least in part, old leaves about to be shed naturally. One or two gallon rhododendrons, especially those purchased from one of the big box stores, often have congested, small root systems. Best thing to do is to dig up the plants, untangle the roots, soak if they seem dry, then replant in a wide shallow depression without any plastic mulch. More detailed planting instructions for rhododendrons can be found in lots of places online. The Roseum series contains several tough, hardy rhododendrons, but patience is necessary. Be very sparing with any fertilizer.

If you will be replanting, I would also make the whole border along the fence a bed, with all grass and landscape fabric/plastic removed, and the entire fence line length mulched well instead of just small circles. That will give your rhodies a good zone with no root competition to grow in. I edge my beds to keep grass out; though it's some work up front, it's easier maintenance in the long run and looks more finished. Either a deep V cut into the soil along the edge of the lawn, renewed about twice a year, or bury the black plastic big box store edging up to the rim and place a line of brick or patio block on the rhodie side of it to run the mower wheels on. In the photo below, you can see just a bit of the rolled rim of the edging in the lower right hand corner just above the soil level so it's mostly hidden by grass.

Also, it's difficult to tell how far the plants are from the fence in your photo, but they can get to 8' wide, so be sure to replant them 4' from the fence and allow another 3' on the side toward the lawn before installing the edging. It will look somewhat empty for now, so if you want to you can plant some perennials or a groundcover to fill in near the front while your rhododendrons are growing larger or even annual vines such as sweet peas or scarlet runner beans to grow up the fence.