Franchise Costs: Detailed Estimates of The Bar Method Franchise Costs (2018 FDD)

Updated March 7, 2019.

Detailed Estimates of The Bar Method Franchise Costs Based on Item 7 (Estimated Initial Investment) of The Bar Method’s 2018 Franchise Disclosure Document

1.  Initial Franchise Fee:  $52,000

• As a special incentive for existing franchisees, the franchisor may offer existing franchisees (or their Affiliated Entity(ies)) who are acquiring a second and subsequent franchise a reduced initial franchise fee of $40,000.

• Any existing Bar Method Studio that you or your Affiliated Entity(ies) acquire from the franchisor, 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 franchisee fee for an additional franchise, then your initial franchise fee is $39,000.

2.  Financing Fee:  $0 to $2,000

• The franchisor and its affiliates do not offer financing for any part of the initial investment. However, it may recommend brokers to assist you in obtaining financing. You are not required to use the franchisor’s recommended brokers, or any broker at all.

• The range for the financing fees listed above includes amounts that you may pay to a broker (if you choose to use one) for items like closing costs and SBA loans, financial broker fees, and contingency accounts required by the SBA and other loan providers.

3.  Insurance:  $750 to $2,500

4.  Lawyers, Architects, Designers, and Engineers; Business License Expenses:  $20,000 to $35,000

• This estimate includes estimated legal costs; architectural, engineering, design, and construction costs related to the development of your Studio including plans, drawings, design specifications, permits, and zoning approvals using the franchisor’s required Studio design.

5.  Lease, Utility, and Security Deposit:  $16,500 to $41,000

• Bar Method Studios typically occupy approximately 1,800 to 3,000 square feet of space, although some highly-populated areas with appropriate demographics might justify larger spaces.

• 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. 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.

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

• You will need to alter the interior space to meet the franchisor’s then-current specifications, before you open your Studio.

• These figures cover the costs related to demolition, repair, insulation, doors and hardware, partition walls, acoustical ceilings, flooring, painting, decoration, installation of fixtures, cabinets, plumbing, HVAC, electrical, fire and security systems, decorating, signage, and similar costs for a facility up to approximately 3,000 square feet.

• Some landlords may pay some or all of your tenant improvements as part of your lease negotiations.

• This estimate does not include construction of premises from the ground up.

7.  Furniture, Fixtures, Equipment, and Other Fixed Assets (Including the Studio Management System Hardware):  $20,000 to $40,000

• These figures cover your other “Operating Assets,” which are the required furniture, fixtures, and equipment necessary to begin operations of the Studio as specified in the franchisor’s confidential manual.

• This includes the mat covers, stretching straps, balls, risers, and other initial equipment that you must purchase from the franchisor.

• The franchisor expects your payments to it for this initial equipment to range from $3,000 to $5,500, depending on the size of your Studio.

• This range also includes office equipment, Studio Management System (defined below) hardware, related supplies, and a sound system.

• “Studio Management System” means the integrated, computer-based, web-based, and application systems and services (both hardware and software) that the franchisor periodically specifies for administering the management and operation of your Studio, which 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.

• You must purchase a telephone system, copy/print/scan machine, headsets, amplifier, mixer, speakers, and wireless microphone system as specified in the franchisor’s confidential manual.

• The franchisor may change the selection of equipment and supplies you must provide at any time.

8.  Signs:  $5,000 to $10,000

9.  Studio Management System Software and High-Speed Internet:  $250 to $350

• These figures cover the estimated cost for the Studio Management System software and might include any one or more of the software platforms, applications, class scheduling, point of sale, client management and progress tracking, prospect management, sales and marketing, billing and collections, accounting and payroll, and communications functions.

10.  Retail Package (the Retail Opening Inventory):  $2,000 to $3,500

• The Retail Package is the initial opening retail inventory that you will purchase from the franchisor. This includes socks, shirts, towels, water bottles, logoed apparel, and/or other retail products.

• The franchisor expects your payments to it for the Retail Package will range from $2,000 to $3,500, depending on the types and amounts of inventory you decide to buy.

11.  Training Expenses, Salaries, and Costs During Training:  $1,500 to $6,000

• Before you open your Studio for business, the franchisor will provide Teacher Training to your Operating Partner and, at your option, one additional staff member free of charge. The franchisor will also provide New Owner Operations Training to your designated Operating Partner and, at your option, one additional owner or designee at no additional charge.

• Therefore, this range only includes your personnel’s estimated costs and expenses relating to training such as for lodging, transportation, and meals while they attend the franchisor’s Teacher Training and New Owner Operations Training programs.

• If the franchisor determines that you or any of your personnel cannot complete the Teacher Training and/or New Owner Operations Training to its satisfaction, then it may require you or your personnel to attend additional training programs at your expense. The franchisor currently charges $750 per half day for this additional training.

• If you decide to send any additional teachers or owners to either the Teacher Training or the New Owner Operations Training, the franchisor will charge you a training fee for that additional person in the amount of $1,450.

• This range does not include an amount for additional attendees, nor does it include an amount for additional training programs if you or any of your personnel cannot complete the initial training programs to the franchisor’s satisfaction.

12.  Grand Opening Advertising:  $5,000 to $7,500

• You must spend a minimum of $5,000 on your grand opening. This may include a grand opening party, advertising, and social media budget according to the standards the franchisor requires.

13.  Additional Funds – 6 Months:  $30,000 to $50,000

• These figures include estimates of your initial start-up expenses (other than the items identified separately in the table) for your Studio’s first 6 months of operation, including miscellaneous supplies, inventory, cleaning services, payroll costs (but not any draw or salary for you or the Operating Partner or for the other owners of the Studio), and other miscellaneous costs.

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

14.  Total Estimated Initial Investment:  $303,000 to $499,850

• The franchisor 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 this Item 7.