Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of Fitwall Franchise Costs (2015 FDD)

by Franchise Chatter on February 28, 2016

in Fitness Franchises, Franchise Costs

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Detailed Estimates of Fitwall Franchise Costs Based on Item 7 (Estimated Initial Investment) of Fitwall’s 2015 Franchise Disclosure Document

1.  Initial Franchise Fee:  $45,000

2.  FitOS Set-up Fee:  $18,000

3.  Real Estate Leasing:  $15,000 to $45,000

  • Locations for Fitwall Studios are those that are typically described as “prime retail.” Fitwall Studio sizes vary from 1,900 square feet to 2,300 square feet.
  • Typically, you will need to lease a space at least three months in advance; however, you may attempt to negotiate abatement from the landlord.
  • In general, the franchisor attempts to negotiate the payment of its leases to coincide with the start of operations so no material pre-opening occupancy expenses are incurred. However, in some cases, it may be necessary to begin lease payments before opening in order to secure a particular location, or to accommodate the optimal timing of a new store opening.
  • The figures in the estimate are calculated on the following assumptions:  (1) you will have to pay four months’ rent (made up of no rent before you open, three months’ rent after you open, and one month’s rent as a security deposit); (2) for space in the range of 1,900 to 2,300 square feet; (3) at $3.00 to $7.00 per square foot per month.

4.  Construction Costs:  $63,000 to $225,000

  • You will need to construct improvements, or “build out,” the premises at which you will operate your Fitwall Studio. Among other things, you will need to arrange for proper wiring and plumbing, floor covering, wall covering, partitions, heat, air conditioning, lighting installation, storefront modifications, painting, cabinetry, bathroom facilities, etc.
  • You will need to hire a qualified architect and qualified licensed contractor.
  • Landlords sometimes provide tenant improvement allowances. Tenant improvement allowances are not included in the Item 7 chart because if they are offered, the terms vary widely.

5.  Fitwall Equipment:  $70,000 to $90,000

  • The estimate is for the proprietary Fitwall stations (including step and bar attachments as well as band kits for each wall) that you will need to conduct the workouts at your Fitwall Studio.
  • The franchisor estimates that you will purchase 14 to 18 Fitwall stations from it.

6.  Equipment:  $3,500 to $5,500

  • The estimate is for the equipment you will need to operate your Fitwall Studio. Equipment includes things such as weight equipment for the private training room, mats, washing machines, dryers, store lighting, and retail displays.

7.  Technology System:  $14,000 to $25,000

  • The franchisor requires its franchisees to obtain and use the computer and technology hardware, operating software, and communications capabilities it specifies from time to time.

8.  Furniture and Fixtures:  $15,000 to $36,000

  • The estimate is for the furniture and fixtures you will need to operate your Fitwall Studio.

9.  Signage and Graphics:  $1,500 to $6,000

  • The cost of signage and graphics will vary from location to location depending on lease requirements, local ordinances and restrictions, store frontage, and related factors.

10.  Professional Fees:  $3,000 to $15,000

  • The estimate is for legal, accounting, administrative, permitting, architectural, design, traffic studies, demographic studies, brokerage, and miscellaneous other professional fees that you may incur before you open for business.

11.  Opening Inventory:  $5,000 to $10,000

  • This estimate is for the initial inventory only. Items of beverages, apparel, and food item inventory, which you are required to obtain from the franchisor’s designated sources of supply, are paid for at standard prices and terms.

12.  Office Equipment and Supplies:  $1,200 to $3,500

  • You will need to supply your Fitwall Studio with certain office equipment and supplies, such as first aid kits, fire extinguishers, toilet paper, paper towels, hand and bath towels, hand soap, shower supplies, and other office supplies and similar items.

13.  Grand Opening Marketing and Promotion:  $5,000

  • The amount in the table is for the Grand Opening Marketing Program you are required to conduct under the Franchise Agreement.

14.  Insurance:  $200 to $1,000

  • The estimate is for the annual premium for the policies required under the Franchise Agreement.

15.  Initial Training Expenses:  $1,000 to $3,500

  • The franchisor provides initial training for you or your Operating Principal, your Franchised Business Manager (if you have one), and Head Coach.
  • The estimates assume travel, meals, auto, and lodging for two to three individuals.

16.  Business Licenses and Permits:  $100 to $500

  • Local, municipal, county, and state regulations vary on what licenses and permits are required by you to operate.

17.  Utility and Security Deposits:  $100 to $1,000

  • The figure is the estimated cost of telephone and utility deposits.

18.  Additional Funds (three months):  $30,000 to $50,000

  • You will need additional capital to support ongoing expenses, such as payroll and utilities, to the extent that these costs are not covered by sales revenue.

19.  Total Estimated Initial Investment:  $290,600 to $585,000

  • The franchisor relied on its affiliates’ experience when preparing these figures.

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