In this FDD Talk 2017 post, you’ll learn the following:
- Section I – Background information on The Bar Method franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Bar Method franchise, based on Item 7 of the company’s 2017 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Bar Method franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of The Bar Method’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 average gross revenue, number/percent exceeding average, median gross revenue, minimum gross revenue, and maximum gross revenue for the:
- 6 franchised Bar Method studios in super urban/urban locations in operation for 12 to 36 months as of December 31, 2016;
- 19 franchised Bar Method studios in super urban/urban locations in operation for 37 months or more as of December 31, 2016;
- all 25 franchised Bar Method studios in super urban/urban locations in operation during the entire 12-month period from January 1, 2016 until December 31, 2016;
- 10 franchised Bar Method studios in light urban/suburban/rural locations in operation for 12 to 36 months as of December 31, 2016;
- 49 franchised Bar Method studios in light urban/suburban/rural locations in operation for 37 months or more as of December 31, 2016;
- all 59 franchised Bar Method studios in light urban/suburban/rural locations in operation during the entire 12-month period from January 1, 2016 until December 31, 2016;
- all 84 franchised Bar Method studios in operation during the entire 12-month period from January 1, 2016 until December 31, 2016
Section I – Background Information
12 Things You Need to Know About the Bar Method Franchise
1. The Bar Method has opened a few new locations so far in 2017, with more opening later this year. One of the newest locations is in Kailua, Hawaii. To prepare for the grand opening, all classes at the Kailua location from July 8 to July 15 were donation based, with all proceeds going to Make-A-Wish Hawaii. The Bar Method Studio in Honolulu also had two donation-based classes on July 9.
2. At the beginning of the year, The Bar Method opened its newest Texas location in the city of Southlake. The Southlake studio is owned and operated by former Dallas Cowboys Cheerleader Nicole Bulcher and her sister Erin Bulcher. According to Nicole Bulcher, “The Bar Method is the only workout I feel is efficient enough for my life, intelligent enough for my standards and challenging enough every time to bring me back.”
3. In addition to the studios that have already opened this year, new Bar Method locations will be opening soon in Westport, Connecticut; Portland, Maine; Baltimore, Maryland; Winchester, Massachusetts; Detroit, Michigan; and a few other cities in the U.S.
Opened 100th Location
4. In early December 2016, The Bar Method opened its 100th studio in Phoenix, Arizona. The milestone came as the company ended its celebration of its 15th anniversary. Elissa Scannell, the owner of the Phoenix location, first discovered The Bar Method in Washington, D.C., where she was working at the time as a political consultant.
5. To celebrate the grand opening of the Phoenix location on December 10, free classes were offered throughout the day, along with refreshments and raffle prizes. There was also a special offer of $75 for 30 days of unlimited classes; the first 100 customers to sign up received a limited-edition pair of Bar Method grippy socks.
Creating a Unique Exercise
6. The Bar Method’s creator, Burr Leonard, says that she “dreamed of creating an exercise technique that would give students beautiful, lean, toned, and healthy bodies for life and would empower them to realize their own dreams.”
7. In order to create an exercise technique that was effective and unique, Leonard started with an exercise method she loved, The Lotte Berk Method, and fine-tuned the exercises with the help of physical therapists. Leonard also drew on (her father) George Leonard’s book, Mastery, to create a teaching system “that would empower students to make lasting changes to both their bodies and lives.”
8. According to Leonard, there are 10 reasons why The Bar Method works:
- a. It quickly reshapes students’ muscles.
- b. It slims down students’ bodies.
- c. It maximizes results with its strategic class design.
- d. It is safe and therapeutic.
- e. Teachers are rigorously trained.
- f. It helps students achieve their individual goals.
- g. Exercises are tailored for a wide range of body types and ages.
- h. It improves posture and coordination.
- i. All of its locations deliver high quality classes.
- j. The studios are beautiful, supportive places to work out.
9. The Bar Method was founded in 2001 by Burr Leonard and her husband Carl Diehl in the Marina district of San Francisco, California. Leonard and Diehl founded The Bar Method after ending a 10-year license agreement with Lotte Berk to run Lotte Berk Method studios in the U.S.
10. In 2003, Leonard’s sister, Mimi Leonard Fleischman, opened a second Bar Method location in Los Angeles, California and later that year, the first licensee opened a third location in San Mateo, California. By the end of 2007, The Bar Method had seven locations in the U.S. and a year later, Leonard incorporated The Bar Method Franchising Company.
11. Over the next few years, The Bar Method continued to open new studios around the country. In 2012, Diehl retired from the company. That same year, Mainsail Partners, a private equity firm, acquired a 40% interest in The Bar Method and Burr Leonard became CEO and President. Today, there are over 120 locations across the U.S. and Canada.
Entrepreneur’s Franchise 500
12. Although The Bar Method has been franchising for nearly a decade, the company has yet to appear on Entrepreneur’s annual Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of The Bar Method franchise costs, based on Item 7 of the company’s 2017 FDD (updated).
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on The Bar Method’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.
Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis
- 98 Bar Method Studios operated in the United States as of December 31, 2016, of which franchisees owned 96 and the franchisor’s affiliates owned 2.
- In 2016, 2 franchised Bar Method studios closed. Both studios had been in operation for more than 1 year.
- Two of the affiliate-owned Bar Method Studios and 84 of the franchised Bar Method Studios operated for at least 12 full months under the same ownership as of December 31, 2016. Based on the franchisor’s experience, new Bar Method Studios open less than 12 months are still in their initial ramp-up period and have non-recurring revenue fluctuations that sometimes result from the studio’s grand opening.
- This financial performance representation lists the average Gross Revenue during 2016 for the 84 franchised Bar Method Studios in operation during the entire 12-month period from January 1, 2016 until December 31, 2016 (the “Covered Studios”).
- Franchisees own and operate all of the Covered Studios.
- The number of individual studio rooms that each Covered Studio contains can significantly impact the Covered Studio’s Gross Revenue. Two of the Covered Studios have 3 rooms, 37 have 2 rooms, and 45 have only 1 room.
- The sizes of the Covered Studios vary, but most of them range from 2,400 to 3,500 square feet.
- The Covered Studios are located across the country but are concentrated in the Eastern and Western parts of the U.S. Twenty-five of the Covered Studios are in super urban or urban markets, 54 are in light urban or suburban markets, and 5 are in rural markets.
- Bar Method defines market sizes as follows:
- 1. super urban (8,000+ households per square mile);
- 2. urban (4,000 to 7,999);
- 3. light urban (2,000 to 3,999);
- 4. 1st tier suburban (1,000 to 1,999);
- 5. 2nd tier suburban (600 to 999);
- 6. exurban/small (100 to 599); and
- 7. rural (0 to 99).
- Bar Method grouped all the Covered Studios into one of these categories using estimated households per sq. mile for Q1 2016.
- Synergos Technologies, Inc., uses 2010 US Census and 2010-2014 American Community Survey data to calculate these estimates, which are commonly used demographic tools for many different retail companies.
- All of the Covered Studios have some amount of retail sales forming part of their Gross Revenue, but in most cases retail sales typically represent only 5% or less of a Covered Studio’s Gross Revenue.
- The franchisor classifies the Covered Studios based on how long they had operated at their current location as of December 31, 2016. The first group is the newest Covered Studios, which operated for between 12 and 36 months as of December 31, 2016. The second group is more mature Covered Studios that had operated for 37 months or more as of December 31, 2016.
- The Covered Studios are also separated by market type: super urban/urban and light urban/suburban/rural. The type of market in which each Covered Studio is located can significantly impact the Covered Studio’s Gross Revenue.
Super Urban/Urban Locations (4,000+ HH per square mile)
Length of Operation as of December 31, 2016: 12 to 36 Months