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Franchise Costs: Detailed Estimates of Club Pilates Franchise Costs (2016 FDD)

by Franchise Chatter on March 25, 2015

in Fitness Franchises, Franchise Costs

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This post was updated on October 2, 2016 to reflect information from Club Pilates’s 2016 FDD (Item 7).

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

For a Studio

1.  Initial Franchise Fee:  $49,500

  • The Initial Franchise Fee is non-refundable. The Initial Franchise Fee for a single studio is $49,500. The franchisor does not provide financing for the Initial Franchise Fee.

2.  Initial Training Program (Fees):  $0

  • You (or if you are an entity, your Designated Operator) and, unless you and the franchisor agree otherwise, at least one Certified Pilates Instructor (which may be you or your Designated Operator) must attend the franchisor’s proprietary Initial Training Program. This program is comprised of two modules, namely the Owner/Operator Module and the Orientation Program.
  • The franchisor will not charge any tuition or training fee in connection with the Initial Training Program, provided all individuals attend at the same time.

3.  Travel and Living Expenses While Training:  $500 to $3,000

  • You will be responsible for the costs and expenses associated with the Initial Training Program (e.g., transportation, meals, lodging, and other expenses).

4.  Real Estate/Lease:  $3,750 to $11,250

  • If you do not own adequate Studio space, you must lease suitable premises. These figures assume that the leased premises will be at least 1,500 square feet (25′ x 60′ rectangle).
  • The figures assume a base monthly rental rate of $2.50 per square foot. Landlords may also vary the base rental rate, and charge rent based on a percentage of gross sales.
  • In addition to base rent, the lease may require you to pay common area maintenance charges, your pro rata share of the real estate taxes and insurance, and your pro rata share of HVAC and trash removal.
  • The estimate covers the first 3 months of operation, and 1 month’s rent as a security deposit.

5.  Leasehold Improvements:  $1,000 to $30,000

  • The cost of leasehold improvements will vary depending on (i) the size and configuration of the premises; (ii) pre-construction costs (e.g. demolition of existing walls and removal of existing improvements and fixtures); and (iii) cost of materials and labor which may vary based on geography and location.
  • The low end of the range reflects modest improvements to a smaller location, and the high end reflects significant physical improvements to a larger Studio.

6.  Signage:  $5,000 to $10,000

  • You will need to purchase appropriate signage for your Studio that the franchisor approves.
  • The cost of your signage may be more or less than this estimate, and depends on the size, type, and method of installation you choose.
  • Each landlord has different restrictions it places on interior and exterior signage that may affect your costs.

7.  Insurance:  $300 to $900

  • This estimate is for 3 months of your minimum required insurance.

8.  Pilates and Other Exercise Equipment:  $70,000 to $75,000

  • The initial required amount of Pilates and other exercise equipment for a standard Studio is approximately 13 Pilates Reformers, 2 Pilates Ballet Bars, 12 Spring Boards, 12 EXO Chairs, and smaller pieces of related exercise equipment (e.g. balls, mats, etc.), although Club Pilates may raise or lower this requirement depending on the size of your Gym, which is included in the Initial Furniture, Fixtures, and Equipment (FFE) Package you must purchase from the franchisor.
  • Financing for the equipment may be available. If you choose to finance the equipment, your initial costs will be less than the range in the chart; however, your overall payments may be higher.

9.  Proprietary Initial Inventory Kit:  $5,000

  • The inventory does not fluctuate as a function of seasonal sales. The typical for-sale items held in opening inventory are Club Pilates apparel, including t-shirts, yoga pants, toe sox and jewelry, essential oils, and related accessories.

10.  Utility Deposits:  $0 to $1,000

  • Typically, a utility deposit will be required only if you are a new customer of the utility company.

11.  Licenses and Permits:  $0 to $3,000

  • The range of costs covers the expense to acquire the required local business permits. The estimated costs include building permits, fire inspection, sales tax permit, and retail sales permits.
  • You should investigate applicable requirements in your area and the related costs, including receiving advice from regulatory agencies and your own lawyer.

12.  Furniture, Fixtures, and Related Supplies:  $7,000

  • This is a range of expenses that will be incurred when decorating and furnishing the Studio, including (a) surveillance cameras and office expenses, and (b) the initial FFE Package that you must purchase from the franchisor.
  • You are required to have at least one surveillance camera installed in the Studio. You may be required to purchase the camera(s) and related accessories from an Approved Supplier. The cameras must be web accessible.
  • Both the low-end and the high-end numbers represent a straight purchase of all furniture, fixtures, and related supplies (rather than leasing or making installment payments on these items).

13.  Computer System and Related Equipment:  $3,000

  • You must acquire a personal computer, a printer, and a Point-of-Sale system for use in the operation of the Studio. Your computer system must be equipped with a high speed connection to the Internet and must include a local area network with a dedicated server.
  • You can expect initial cash outlays to be lower if the items can be leased rather than purchased.

14.  Shipping:  $4,207 to $7,012

  • The franchisor arranges for the shipping of all of your equipment and furniture/fixtures. This amount reflects shipping costs to the East Coast and may vary based upon the location of your Studio.

15.  Installation:  $3,995

16.  Additional Funds – 3 Months:  $5,000 to $15,000

  • This is an estimate of certain funds needed to cover your business (not personal) expenses during the first 3 months of operation of the Studio.
  • These expenses include initial employee wages, management compensation (but not any draw or salary for you), ongoing purchases of equipment and supplies, marketing fees, continuing improvement of the Studio’s physical features, local advertising, utilities, repairs, and maintenance.
  • This estimate is based on the franchisor’s affiliates’ experience in owning and operating Club Pilates Studios for more than 7 years.

17.  Total Estimated Initial Investment:  $158,252 to $224,657

  • All of the above figures are estimates of certain initial start-up expenses. The franchisor cannot guarantee that you will not have additional expenses in starting or operating the Studio.

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