Franchise Costs: Detailed Estimates of The Bar Method Franchise Costs (2017 FDD)

This post was updated on July 30, 2017 to reflect information from The Bar Method’s 2017 FDD (Item 7).

Detailed Estimates of The Bar Method Franchise Costs Based on Item 7 (Estimated Initial Investment) of The Bar Method’s 2017 Franchise Disclosure Document

1.  Initial Franchise Fee:  $50,000

• If you sign a Development Rights Agreement with The Bar Method, you will pay it an initial franchise fee of $50,000 for your first franchise, a reduced initial franchise fee of $40,000 for your second franchise, and a $30,000 initial franchise fee for your third and each subsequent franchise that you develop, open, and operate under the Development Rights Agreement.

• Also, as a special incentive for its existing franchisees, The Bar Method may offer existing franchisees (or their Affiliated Entity(ies)) who are acquiring a second franchise a reduced initial franchise fee of $40,000, and those acquiring a third or subsequent franchise a reduced initial franchise fee of $30,000.

• Any existing Bar Method Studio that you or your Affiliated Entity(ies) acquire from The Bar Method, its affiliate, or another franchisee would not count toward these thresholds.

• If you are an existing franchisee whose current Franchise Agreement provides for a discounted initial franchise fee for an additional franchise, then your initial franchise fee is $37,500.

2.  Architects, Designers, and Engineers:  $12,000 to $16,000

3.  3 Months’ Rent and Security Deposit:  $16,500 to $41,500

• Bar Method Studios typically occupy approximately 2,000 to 4,000 square feet of space, although some highly populated areas with appropriate demographics might justify larger spaces.

• Rent amounts can vary depending upon the area in which the Studio is located, its size, the condition of the premises, the landlord’s contribution to your leasehold improvements, and other factors.

• You probably will also have to pay the landlord a first and last months’ rent deposit and possibly a lease security deposit when you sign the lease.

• You might choose to purchase, rather than rent, real estate on which a building suitable for the Studio already is constructed or could be constructed.

• Real estate costs depend on location, size, visibility, economic conditions, accessibility, competitive market conditions, and the type of ownership interest you are buying.

• Because of the numerous variables that affect the value of a particular parcel of real estate, this initial investment table does not reflect the potential purchase cost of real estate or the costs of constructing a building suitable for the Studio.

4.  Leasehold Improvements and Decorating Costs:  $150,000 to $250,000

• These figures cover the costs to construct, build-out, remodel, and decorate your Studio according to The Bar Method’s standards. The amounts vary depending primarily on the Studio’s size, location, and condition.

5.  Furniture, Fixtures, Equipment, and Other Fixed Assets:  $13,000 to $40,000

• These figures cover your other “Operating Assets,” which are the required furniture, Studio Management System (defined below) components, audio equipment, bars and other exercise equipment, mirrors, lighting components, other equipment, furnishings, and signs that The Bar Method periodically requires for the Studio.

6.  Signs:  $5,000 to $10,000

7.  Studio Management System and Software:  $2,000 to $3,000

• These figures cover your “Studio Management System,” which is the integrated, computer-based systems and services that The Bar Method periodically specifies for administering the management and operation of your Studio.

• It might include any one or more of class scheduling, point of sale, client management and progress tracking, prospect management, sales and marketing, billing and collections, accounting and payroll, and communications functions.

8.  Initial Inventory and Supplies:  $1,000 to $3,000

• These figures include amounts for retail inventory, office supplies, and studio room supplies, including products you will buy from BMM.

9.  Training Fees, Salaries, and Expenses During Training:  $4,000 to $10,000

• This includes training fees and amounts for your designated Operating Partner and one additional owner or staff member for lodging, transportation, and meals while they attend The Bar Method’s New Owner Training and its instructor Certification training program.

• The estimates are for 2 individuals attending The Bar Method’s New Owner Training in San Francisco and instructor Certification.

• This figure also includes an amount for additional training programs if you or any of your personnel cannot complete the initial training programs to The Bar Method’s satisfaction.

10.  Grand Opening Advertising and Marketing:  $2,000 to $10,000

11.  Miscellaneous Opening Costs:  $2,000 to $5,000

• These figures include amounts for business licenses, legal and accounting expenses, utility deposits and other costs, insurance, and other prepaid expenses.

12.  Additional Funds – 3 Months:  $30,000 to $90,000

• These figures include estimates of your initial start-up expenses (other than the items identified separately in the table) for your Studio’s first 3 months of operation, including miscellaneous supplies, inventory, cleaning services, payroll costs (but not any draw or salary for you), and other miscellaneous costs.

• These figures are estimates, and The Bar Method cannot guarantee that you will not have additional expenses in starting to operate your Studio.

• Your costs depend on how closely you follow The Bar Method’s methods and procedures; your management skill, experience, and business acumen; local economic conditions; the local market for your services; the prevailing wage rate; competition; and the sales level reached during the initial period.

13.  Total Estimated Initial Investment:  $288,500 to $529,500

• The Bar Method relied on its and its affiliates’ experience in developing, licensing, and franchising Bar Method Studios since 2001 to compile the estimate for additional funds and other estimates in Item 7.

• The Bar Method and its affiliates do not offer financing for any part of the initial investment. The availability and terms of financing depend on many factors, including the availability of financing generally, your creditworthiness and collateral, and lending policies of financial institutions.

• The estimate does not include any finance charge, interest, or debt service obligation.

• Except for the security deposit under the Site’s lease, which typically is refundable if you comply with the lease, no amounts in the table are refundable.