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Franchise Costs: Detailed Estimates of iLoveKickboxing.com Franchise Costs (2017 FDD)

by Franchise Chatter on February 7, 2016

in Fitness Franchises, Franchise Costs

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This post was updated on July 23, 2017 to reflect information from iLoveKickboxing.com’s 2017 FDD (Item 7).

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

1.  Initial Franchise Fee:  $49,999

  • This fee must be paid in full at the time indicated. The initial franchise fee for a single Outlet anywhere except Manhattan is $49,999. The initial franchise fee for a single Outlet in Manhattan (including the Territory Surcharge of $50,001, which only applies to Manhattan) is $100,000.
  • If you sign an MOA, instead of $49,999 for a development area anywhere except Manhattan, you would pay iLoveKickboxing.com a Development Fee of (i) $110,000 for 3 Outlets, or (ii) $145,000 for 5 Outlets, or (iii) $145,000 for the first 5 Outlets, plus $17,500 for each additional Outlet thereafter, up to 10 (maximum of $232,500).
  • If you sign an MOA for a development area in Manhattan, you would pay a Development Fee of (i) $220,000 for 3 Outlets, (ii) $300,000 for 5 Outlets, or (iii) $300,000 for the first 5 Outlets, plus $40,000 for each additional Outlet thereafter, up to 10 (maximum of $500,000).
  • In order to be eligible to sign the Franchise Agreement and MOA, you may be required to provide the franchisor with reasonable proof of your financial ability to make the initial investment described below and you must authorize the franchisor to conduct a credit check to confirm your financial ability to purchase and develop the Outlet.

2.  Travel and Living Expenses While Training:  $1,500 to $5,000

  • Training typically is accomplished within 4 full days at ILKB headquarters and these expenses represent your travel and lodging costs.

3.  Real Property:  $12,000 to $30,000

  • You will need to rent a suitable retail site for your Outlet and the rent or lease deposit amount will vary depending on the location. A security deposit and first month’s rent are standard requirements to enter into a commercial lease, and the estimate above includes 3 months of rent and the deposit.

4.  Equipment, Fixtures, Other Fixed Assets, Leasehold Improvements, and Decorating Costs:  $40,000 to $180,000

  • You will need to conduct the necessary build-out of your leased space according to the franchisor’s requirements. The amounts listed in this type of expenditure are estimates that are based on basic build-out of the Outlet design but do not include many variables related to the pre-existing condition of any one location.
  • The cost of your build-out may be reduced by a Tenant Improvement (“TI”) allowance or rebate from the landlord, which varies depending on the terms of each lease agreement. However, you will be required in most cases to complete the build-out, satisfy all related invoices to contractors and service providers, and obtain a Certificate of Occupancy in order to qualify for the TI rebate from the landlord.
  • Presently, the only items of equipment you must obtain are punching bags, specialized flooring, and lockers. You will also need to purchase a point-of-sale system, business computer, printer, printed materials (such as business cards and brochures), referral gifts, and promotional items.
  • The cost of equipment ranges from $500 to $2,000. The cost of operational materials ranges from $250 to $750.
  • You will purchase your iLoveKickboxing.com branded heavy bags directly from Century LLC. You will purchase a TV, wall mount, wireless mouse, and keyboard to use with the heart rate monitor system.

5.  Architectural Services, Construction Evaluation Fees, and Engineering:  $3,750 to $10,000

  • Architectural renderings and building permits may be required for the build-out of your Outlet, the cost for which has been included in these estimates. Real estate expenses and TIs (if any) related to “conversions” would be substantially lower.

6.  Signs:  $4,500 to $8,000

  • The quantity, size, type, and cost of signs will vary substantially per lease space and in accordance to stipulations of each landlord and local government regulations. These estimates include the average filing fees for obtaining the necessary sign permits.

7.  Insurance:  $1,200 to $5,000

  • The currently required minimum coverage and limits of insurance are (i) General Liability at minimum limits of $1,000,000 per occurrence/$3,000,000 annual aggregate including products, completed operations, and professional liability; (ii) Auto Liability at minimum limits of $1,000,000 combined single limit covering all owned, hired, and non-owned vehicles; and (iii) Workers’ Compensation to meet the statutory coverage of the state where your Outlet is located.

8.  Legal Costs:  $2,500 to $4,500

  • This is an estimate only regarding the fees for an attorney to advise you on this franchise opportunity. Legal fees will vary considerably.

9.  Initial Inventory and Supplies:  $5,000 to $14,000

  • This refers to the initial inventory of authorized products to be sold in the Outlet and other items of merchandise and supplies you must stock in order to open for business.
  • You must purchase iLoveKickboxing.com branded hand wraps and standard boxing gloves directly from Century LLC. The cost varies depending on how many web registrations your location receives before opening.

10.  Miscellaneous Opening Costs:  $1,500 to $4,000

  • This includes security deposits, utility deposits, business licenses, and other prepaid expenses.

11.  Grand Opening Advertising Expense:  $6,000 to $10,000

  • You must spend at least $500 within the first 30 days to build local customer awareness of your Outlet. Recommendations on how to promote the grand opening of your Outlet will be provided by the franchisor, including promotional ideas, sample advertising copy, and flier design.

12.  Heart Rate Monitor Initial Setup Fee:  $995

13.  Heart Rate Monitor Device:  $1,000 to $4,000

  • Performance IQ Systems (“PIQ”) is iLoveKickboxing.com’s designated supplier of a heart rate monitor offering. This will show performance data for each member who buys a monitor from you. You must participate in this program.
  • You must pay a one-time setup fee of $995 directly to PIQ and you must purchase the heart rate monitor devices from PFA at a cost of $39.99 per unit. You will sell these to your members for $59.99.

14.  Additional Funds (1st 3 months):  $28,000 to $73,000

  • This estimates the additional funds you will need for your first 3 months of operation. These expenses include payroll costs.

15.  Total:  $157,944 to $398,494

  • The franchisor relied on the over 24 years of experience of its CEO in determining these figures.

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