Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of CycleBar Franchise Costs (2017 FDD)

by Franchise Chatter on January 5, 2016

in Fitness Franchises, Franchise Costs

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CycleBar Franchise Photo

This post was updated on August 18, 2017 to reflect information from CycleBar’s 2017 FDD (Item 7).

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

1.  Franchise Fee:  $30,000 to $49,500

  • The standard Franchise Fee for opening a single unit is $49,500.
  • The low estimate would be the initial Franchise Fee for a single Studio if you sign a Development Agreement and commit to develop ten or more Studios.
  • In addition, if you are an honorably discharged veteran of the Unite States military that purchases a Studio through the VetFran program, the franchisor will discount your Franchise Fee for your first Studio by $1,500.

2.  Training Fee:  $15,000

  • The Training Fee includes the cost of providing the initial training program to your Required Trainees.

3.  Travel Expenses to Training:  $500 to $2,500

  • This estimate is for the cost of three people to attend initial training in Ohio. You are responsible for the travel and living expenses, wages, and other expenses incurred by your trainees during initial training.
  • The actual cost will depend on your point of origin, method of travel, class of accommodations, and dining choices.

4.  Site Selection Expenses:  $5,000

  • This estimate is for the cost of using the franchisor’s approved site selection company to identify your Site.

5.  Security Deposits for Lease and/or Utilities:  $5,000 to $18,500

  • This estimate includes deposits payable to the landlord and any deposits on utilities required to open the Studio. These amounts will vary based on your location and the terms of your lease.

6.  Rent for 3 Months:  $0 to $54,500

  • The figures in the table reflect the franchisor’s estimates for leasing a newly-constructed Studio.
  • This estimate is based on actual lease terms reported to the franchisor by its project manager and real estate brokers relating to 59 franchisees who had signed leases for Studios ranging between 1,767 square feet and 4,042 square feet square feet and had been issued certificates of occupancy for such Studios prior to December 31, 2016 (the “Reporting Studios”).
  • The standard prototype Studio is a one-story 2,500 square foot space.
  • The low estimate assumes that you will be able to negotiate a rent abatement for your initial months of operation. The high estimate assumes that you lease a Studio in a high-demand area and do not receive a rent abatement.
  • Your rent will depend on the Site’s size, condition, and location, and demand for the premises among prospective lessees.

7.  Construction Management:  $17,000 to $22,000

  • This estimate includes the cost of hiring a third-party vendor that the franchisor designates to be the project manager for the construction of your Studio. The high estimate includes the variable costs of the project manager traveling to visit the Site multiple times during the construction process to monitor progress and verify adherence to designs and standards.

8.  Construction Due Diligence:  $6,000 to $9,000

  • This estimate includes an as-built/conditions survey, site investigation report, space planning LOI review, lease review, and a due diligence summary.

9.  Design/Architecture/Engineering:  $15,500 to $22,500

  • This estimate includes the cost of hiring designers, architects, and engineers to draft the construction plans for your Studio. This also includes the cost of shipping and printing such plans.

10.  Construction Permits and Permit Management:  $1,000 to $13,500

  • This estimate includes the cost of acquiring construction permits. The high estimate assumes that you hire a third party to assist in managing, expediting, and acquiring permits. Your costs will vary depending upon your Studio’s location.
  • In some markets, the costs of required permits may significantly exceed the franchisor’s estimates.

11.  Net Leasehold Improvements:  $102,000 to $514,955

  • This estimate is based on the actual construction budgets and lease terms reported by the Reporting Studios. It includes the net cost of leasehold improvements, including floor coverings, wall treatments, ceilings, painting, electrical, carpentry, plumbing, HVAC, and similar work, as well as materials and the cost of labor.
  • Reporting Studios were able to negotiate tenant improvement allowances from their landlord ranging from $0 to $411,150. The estimated range reflects the actual budgeted leasehold improvement costs for these franchisees minus the actual tenant improvement allowances that they have received in accordance with the terms of their leases.

12.  Bike Equipment Lease for 3 Months:  $7,500 to $9,000

  • This estimate includes the cost of leasing your bikes for the first three months of operation. The franchisor recommends that you lease your bikes from its designated suppliers.
  • The cost will vary based on the number of bikes needed for your Studio which will range from 45 to 55 bikes, your credit worthiness, and market conditions.

13.  Additional Fitness Equipment:  $2,000 to $2,500

  • This estimate includes fitness equipment, other than the bikes, such as weight bars and bar racks on the bikes and in the Studio.

14.  Furniture, Fixtures, and Equipment:  $75,000 to $95,000

  • This estimate includes the furniture, fixtures, and equipment to be used in the Studio, including cabinetry, retail displays, lockers, benches, audio equipment, lighting systems, closed-circuit camera equipment, telephones, office furniture, and appliances.

15.  Signage and Graphics:  $17,100 to $29,000

  • This estimate includes the cost of outdoor identification on the Studio, and displays and signage throughout the Studio.

16.  Supplies and Accessories:  $15,100 to $19,200

  • This estimate also includes the cost of purchasing an initial supply of office supplies and cleaning supplies, a defibrillator, decorative items, bathroom and shower accessories, toiletries, and other ancillary items used in the operation of the Studio.

17.  Retail Inventory Package:  $8,000 to $12,000

  • This estimate includes your initial inventory of apparel, shoes, and towels, which you must offer for sale to your customers. The size of your inventory will depend on the size of your Studio and the products that you elect to stock.

18.  Studio Management and Technology System:  $22,250 to $25,000

  • This figure includes the cost of acquiring the hardware, software, other equipment, and network connections that the franchisor specifies in the Manuals necessary to operate the CycleStats technology platform, the CylceBeats music system, the point of sale system, and the online reservation system.
  • You must purchase these components from suppliers that the franchisor approves or designates and must execute any related software licenses required by designated vendors.

19.  Business Licenses:  $500 to $1,000

  • This estimate includes the cost of acquiring business licenses and permits. Your costs will vary depending upon your Studio’s location.

20.  Technology Fee for 3 Months:  $2,700

  • This figure includes payment of the Technology Fee to the franchisor for your first 3 months of operation.

21.  Professional Fees:  $1,000 to $9,000

  • This estimate includes the cost of professional fees that you may incur in establishing your business. Such expenses may include fees payable to attorneys, accountants, and finance originators.

22.  Insurance for 3 Months:  $950 to $1,250

  • This estimate is for your first three months of insurance coverage.

23.  Grand Opening Marketing Budget:  $25,000 to $30,000

  • You must spend a minimum of $25,000 for grand opening advertising and promotions in the four weeks prior to opening your Studio and the four weeks after opening the Studio in accordance with a plan that you must submit to the franchisor.

24.  Additional Funds for 3 Months:  $5,000 to $25,000

  • This estimate includes additional funds you may need to pay employee salaries and wages, utilities, payroll taxes (including payroll to cover the pre-opening training period for your staff), Royalty Fees, Marketing Fees, legal and accounting fees, additional advertising, health and workers’ compensation insurance, bank charges, miscellaneous supplies and equipment, staff recruiting expenses, state tax and license fees, deposits, prepaid expenses, and other miscellaneous items.

25.  Total:  $379,100 to $987,605

  • The total amount is based upon the experiences reported to the franchisor by the Reporting Studios.

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