Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of YogaFit Franchise Costs (2015 FDD)

by Franchise Chatter on November 22, 2014

in Fitness Franchises, Franchise Costs

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YogaFit 3

This post was updated on July 26, 2015 to reflect information from YogaFit’s 2015 FDD (Item 7).

Detailed Estimates of YogaFit Franchise Costs Based on Item 7 (Estimated Initial Investment) of YogaFit’s 2015 Franchise Disclosure Document

  • The expenses in Item 7 are estimates of your initial investment for one Studio prior to commencing operations and for the first three months thereafter. YogaFit cannot guarantee that you will not have additional expenses starting the business.
  • Your costs will depend on how closely you follow the YogaFit system standards; your management skill, experience, and business acumen; local economic conditions; acceptance by local consumers of YogaFit’s approved service; prevailing wage rates; competition; and other factors.
  • If you develop three Studios under YogaFit’s Market Accelerator Program, you will incur these expenses for each of the three Studios. In preparing your budget, you also should consider the potential effect of inflation on future costs.
  • All payments are non-refundable unless otherwise permitted by a third party supplier.

1.  Initial Franchise Fee:  $25,000

2.  GO FAST Kit:  $16,300

3.  Security and Media Package (including FitnessOnDemand):  $19,000

4.  Grand Opening Marketing:  $4,000

  • You must conduct certain marketing, advertising, and public relations activities in connection with the opening of your Studio, as YogaFit specifies in writing. YogaFit requires you to spend, in addition to any national or local advertising fee, at least $4,000 for such grand opening activities.

5.  Mirrors:  $2,000 to $2,900

6.  Miscellaneous Equipment:  $2,400

7.  Exterior Signage:  $2,500 to $4,000

8.  Flooring (and installation):  $7,800 to $9,000

9.  Leasehold Improvements (not including flooring):  $0 to $95,000

  • The costs of construction and leasehold improvements depend upon the size and condition of the Studio premises, the nature and extent of leasehold improvements required, the local cost of contract work, and the location of your Studio.
  • In some cases, your landlord may agree to pay for some or all of the leasehold improvements as part of your lease negotiations.
  • The flooring (including installation) must be installed by the approved vendor.

10.  Deposits, Utilities, and Insurance:  $2,700 to $5,700

  • The estimated expenses for your business location are based on leasing a 1,250 to 2,200 square foot facility, include your security deposit, utility deposits, and insurance and assume that your landlord will provide several months of free rent. A typical lease location is in a strip center and the typical Studio has approximately 1,250 to 2,200 square feet of space.
  • The space must be enclosed and separate from other businesses with its own locking door. A security deposit is typically refundable only if you have not breached your lease.
  • The estimated deposit for utilities include electric, gas, and water, but your deposit may vary due to policies of local utility companies.
  • This estimate includes premium for three months of YogaFit’s SAPP insurance plan. If you need additional insurance for your Studio (for example, state workers’ compensation or a surety bond), you may have additional costs. A surety bond may range from $100 to $500, depending on the state. Workers’ compensation coverage may range from $450 to $1,000 and may be more depending on the number of employees and your state’s requirements.

11.  Training Expenses:  $500 to $2,000

  • There is no separate training fee payable to YogaFit for the initial franchise training program, as it is included in the Initial Franchise Fee. You must make arrangements and pay the expenses for you and your General Manager to attend the training program, including transportation, lodging, meals, and wages.
  • The high figure represents the estimated cost of airfare to and from the training locale, lodging expenses (assuming double occupancy for three nights), and dining expenses for two people attending four days of training.
  • The low figure assumes the two individuals will drive from home to the training locale in the same vehicle, and includes fuel costs, lodging expenses (assuming double occupancy for three nights), and dining expenses.

12.  Business Licenses and Professional Fees:  $1,000 to $4,000

  • YogaFit recommends that you hire your own attorney to help you evaluate the franchise offering, to identify the laws and regulations that may apply to your Studio, to help you set up a business entity, to review and negotiate your lease, to assist you in adapting the Membership Agreement to laws and regulations in your state or locality, and for whatever other purpose you deem appropriate.

13.  Additional Funds (3-month period):  $10,000

  • The figures in the chart represent the estimated amount of working capital you will need to cover other initial operating expenses for a period of three months. These figures are estimates, and YogaFit cannot guarantee you will not have additional expenses starting the business.
  • Expenses not included are hourly labor costs and rent. Some states may have staffing requirements that may increase this number significantly.

15.  Total:  $93,200 to $199,300

  • To compile these estimates, YogaFit relied on its affiliate’s experience in operating similar businesses. (Snap Fitness and Kosama are both affiliates of YogaFit.)
  • The estimate of initial investment funds is based on owner-operated businesses, or incorporating franchise operations to an existing complementary business and does not include salaries or benefits for full-time employees. As your business grows, you may choose to hire employees to carry out support service tasks.
  • The estimate does not include any finance charges, interest, or debt service obligations, or your living expenses. You should have sufficient capital or other means to pay for living expenses for at least 12 months.
  • The estimated initial investment for developing three Studios under YogaFit’s Market Accelerator Program ranges from $264,600 to $582,900 (calculated as three times the investment required for a single Studio, less the initial franchise fee discount offered under the Market Accelerator Program).
  • You should allow for inflation, discretionary expenditures, fluctuating interest rates and other costs of financing, and local market conditions, which can be highly variable and can result in a substantial, rapid, and unpredictable increase in costs.

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