Franchise Costs: Detailed Estimates of Pure Barre Franchise Costs (2016 FDD)

This post was updated on July 10, 2016 to reflect information from Pure Barre’s 2016 FDD (Item 7).

Detailed Estimates of Pure Barre Franchise Costs Based on Item 7 (Estimated Initial Investment) of Pure Barre’s 2016 Franchise Disclosure Document

1.  Initial Fee:  $46,500

• If you enter into an Option Agreement before signing a Franchise Agreement, you will pay an Option Fee of $5,000. This amount will be applied to the Franchise Agreement’s Initial Fee if you enter into a Franchise Agreement, but this payment is not refundable if you do not elect to enter into a Franchise Agreement.

• You must sign the Franchise Agreement within 30 days of signing an Option Agreement in order to apply the Option Fee to the Initial Fee.

2.  Grand Opening:  $1,000 to $2,000

• You must spend a minimum of $1,000 to promote and host a grand opening event. However, your expenses in promoting and hosting this event may exceed $1,000.

3.  Training Expenses and Pre-Opening Assistance:  $6,000 to $12,500

• These are estimated costs (for example, any costs of travel and accommodations for yourself and your employees) that you might incur for you and your employees to attend the initial training program.

• In addition, depending on Pure Barre’s evaluation of your readiness to open your Studio, it may require you to allow it (or its affiliates) to provide you:  pre-sales assistance (for instance, if you fail to meet specified pre-opening membership goals); pre-opening call center services (for instance, to provide assistance in lead generation and follow up with respect to membership sales); and/or pre-opening training assistance which will typically occur at your Studio (for instance, to help your trainers satisfy their “test out” requirements). If Pure Barre determines that you do not require any of this type of pre-opening assistance, you will not pay it anything toward these services.

4.  Construction, Remodeling, Leasehold Improvements, and Decorating Costs:  $60,000 to $150,000

• Pure Barre Studios are typically between 1,300 and 1,700 square feet. This figure represents Pure Barre’s estimate of your cost to build-out and decorate your Studio to its standards.

• Pure Barre’s experience is that, if you are developing a Studio in one of the boroughs that comprise New York City, this item can be as high as $275,000 because of higher labor and logistics costs and other factors.

• Your actual costs for this item may be reduced by contributions or reimbursements agreed to by the landlord. Pure Barre’s affiliates have been able to negotiate tenant improvement concessions in some cases of up to $50 per square foot.

• Where a landlord agrees to provide or reimburse for tenant improvements, it might insist that the tenant reimburse any unamortized tenant improvement dollars if the lease is terminated prior to the end of the term.

• Pure Barre is unable to estimate with any precision the costs of leasing or purchasing real estate because of the wide variation from region to region and between urban and rural areas. Pure Barre Studios are generally located in retail shopping centers or street front retail areas.

5.  Fixtures, Furnishings, Equipment, and Signs:  $18,000 to $25,000

• This includes at least 25 each of Pure Barre-branded floor mats, exercise balls, and exercise tubes, all of which you must purchase from PB Product.

• Interior and exterior signs, the ballet barre, lighting package, stereo system, and microphone must be purchased from Pure Barre’s approved vendor before opening.

• You may decide to purchase more equipment from Pure Barre depending on your anticipated number of clients.

• Total expenditures in this category also includes weights, a computer (which is estimated to cost between $750 and $1,500), a telephone, and wall mirrors, which you may purchase from a vendor of your choosing, as long as those products comply with Pure Barre’s specifications.

6.  Initial Inventory and Supplies:  $6,000 to $12,000

• This includes an initial stock of retail Pure Barre-branded merchandise, such as DVDs, apparel, and accessories, which you must purchase from Pure Barre’s affiliate before opening, at a cost of approximately $3,000, which is non-refundable.

• The total amount of the investment also includes your office supplies purchased directly from office supply vendors, and MindBody software and merchant account, which you must obtain directly from MindBody, Inc. MindBody, Inc. charges a monthly subscription fee of $75 to $95, depending on the number of users.

• You are permitted, but not required, to order other approved retail items for sale to customers from other approved vendors, and any associated costs are not reflected above.

7.  Security Deposits, Utility Deposits, Business Licenses, and Other Prepaid Expenses:  $3,000 to $8,000

• This figure represents Pure Barre’s estimate for security or utility deposits, to obtain all necessary business licenses, and for any other pre-paid expenses when establishing your franchise. The fees you pay may be more or less than this estimate depending on your location and the terms of service to which you subscribe.

• Pure Barre’s experience is that, if you are developing a Studio in one of the boroughs that comprise New York City, this item can be as high as $58,000 because of higher labor and logistics costs and other factors.

8.  Insurance Premiums:  $3,000 to $5,000

• The price of insurance coverage has varied widely in recent years. Pure Barre currently requires commercial general liability, automobile liability, workers’ compensation and employer’s liability, and umbrella liability coverage, and Pure Barre is permitted to change the required coverages upon notice to you.

• Pure Barre’s experience is that, if you are developing a Studio in one of the boroughs that comprise New York City, this item can be as high as $10,000.

9.  Additional Funds – 3 Months:  $11,000 to $21,000

• Based on the operating history of existing franchisees, Pure Barre estimates these amounts will be required to cover your initial start-up expenses such as payroll, utilities, additional inventory, music licensing, and other operating costs for the first three months after opening.

• This category does not include royalties or other periodic fees you pay to Pure Barre, nor does it include real estate expenses, your salary, living expenses, or debt payments incurred during the start-up phase. This category does include  essential items and services purchased from Pure Barre, or from related companies or vendors.

10.  Total:  $154,500 to $282,000

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