Updated October 1, 2019.
Detailed Estimates of CycleBar Franchise Costs Based on Item 7 (Estimated Initial Investment) of CycleBar’s 2019 Franchise Disclosure Document
- The following estimates are premised on the assumption that you will locate the Studio in an existing building that is suitable for use as a Studio that is approximately 2,000 square feet in size.
- Because of the numerous variables that affect the value of a particular piece 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.
- CycleBar’s standard franchise offering expects and assumes that you will lease your exercise bikes and certain other equipment from CycleBar’s approved supplier.
1. Initial Franchise Fee: $60,000
- The standard Initial Franchise Fee for opening a single unit is $60,000.
2. Initial Training Fee: $0
- There is no training fee due in connection with the cost of providing CycleBar’s initial training program to you, your Operating Principal, and your Designated Manager (“Required Trainees”); however, you may be required to pay a training fee for: (i) each person in excess of three trainees; (ii) each person who is repeating the course or replacing a person who did not pass; and (iii) each subsequent Operating Principal, Designated Manager, or employee who attends the course.
3. Travel Expenses to Training: $500 to $2,500
- This estimate is for the cost of up to three people to attend initial training in California. 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. Real Estate/Lease: $14,000 to $50,000
- This estimate is for: (i) deposits payable to the landlord and any deposits on utilities required to open the Studio; and (ii) CycleBar’s estimates for leasing a newly-constructed Studio.
- This estimate is based on actual lease terms reported to CycleBar by its project manager and its real estate brokers relating to its franchisees who had signed leases or are currently negotiating leases for Studios ranging between 1,767 square feet and 4,042 square feet (the “Reporting Studios”).
- CycleBar’s standard franchise offering assumes that your Studio will be 2,000 square feet that is on one level.
- 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, visibility, accessibility, and location; local market conditions; and demand for the premises among prospective lessees.
5. Net Leasehold Improvements: $43,000 to $166,000
- This estimate 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.
- When calculating the low and high end of this range, CycleBar accounted for the average tenant improvement allowance afforded to the owners of Reporting Studios by their respective landlords.
6. Bike Equipment Lease for 3 Months: $12,000
- CycleBar’s standard franchise offering and this Item 7 chart assume and expect that you will lease the exercise bikes and certain ancillary equipment that you need to open and initially commence operations of your Studio from a third-party supplier that CycleBar approves or designates.
- As such, the range above is designated to capture and account for the typical deposit and lease payments you will make to a supplier CycleBar approves (CycleBar has preapproved several as of the Issue Date) to lease this equipment (typically, between 45 to 55 bikes).
- If you determine not to follow CycleBar’s System-recommended practice of leasing this equipment associated with the standard franchise offering described above, the estimated cost to purchase this equipment outright will be substantially more (approximately $115,000) and will be paid to CycleBar or its designated supplier of such equipment.
7. Furniture, Fixtures, and Equipment: $56,000
- This estimate includes the amount you must pay to CycleBar for the Initial FFE Package comprised of: fitness equipment other than the bikes, as well as the certain other furniture, fixtures, and equipment required to build out and operate the Studio (such as cabinetry, retail displays, lockers, benches, lighting systems, telephones, and office furniture).
8. Signage and Graphics: $13,500
9. Supplies and Accessories: $10,000
- This estimate also includes the cost of purchasing CycleBar’s approved water system, 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.
10. Retail Inventory Package: $12,000
- CycleBar does not expect that initial inventory will fluctuate as a function of seasonal sales.
- This estimate includes the amounts you must pay to CycleBar for the Retail Inventory Package comprised of apparel and certain other merchandise that you are authorized and must offer for sale at your Studio.
11. Studio Management System: $22,000
- This estimate includes the cost of acquiring the Studio Management System CycleBar designates from CycleBar and/or its designated supplier.
- You must purchase these components from CycleBar and must execute any related software licenses required by designated vendors.
12. Audio Visual Equipment: $45,000
- This figure includes the cost of acquiring the Audio Visual Package. You must purchase these components from designated vendors and must execute any related software licenses these vendors require.
13. 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.
14. Technology Fee for 3 Months: $2,700
- This figure includes payment of the Technology Fee to CycleBar over the first 3 months you are open and operating your Studio.
15. Insurance for 3 Months: $950 to $1,500
- This estimate is for your first three months of insurance coverage.
16. Initial Marketing Spend: $15,000
- You are required to expend this “Initial Marketing Spend” in coordination with the pre-opening sales plan CycleBar approves or designates for your Studio as part of the opening support program that CycleBar’s approved supplier provides in connection with your Studio, as CycleBar determines appropriate in its discretion (the “Opening Support Program”).
- Typically, CycleBar expects your Opening Support Program to commence approximately eight weeks prior to the “soft opening” of your franchised Studio through your actual opening of the Studio (which is usually four weeks after the soft opening).
17. Additional Funds for 3 Months: $12,000 to $28,000
- This is an estimate of the amount of additional operating capital that you may need during the first three months after opening your business.
- This estimate includes additional funds you may need to pay employee salaries and wages, the Initial Instructor CycleStar Bootcamp Tuition Fee, 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.
- This estimate also includes the cost of professional fees that you may incur in establishing your business.
18. Total: $319,150 to $497,200
- This total amount is based upon: (i) the information reported to CycleBar by the Reporting Studios; (ii) the experience of CycleBar’s sister brands in developing other fitness concepts and information related to their respective studio investment costs; and (iii) current estimates CycleBar has received from its approved suppliers and other third-party vendors as of the amended Issue Date.