FDD Talk 2017: What You Need to Know About the CycleBar Franchise Opportunity (Financial Performance Analysis, Costs and Fees)

In this FDD Talk 2017 post, you’ll learn the following:

• Section I – Background information on the CycleBar franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a CycleBar 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 CycleBar franchise, based on Items 5 and 6 of the company’s 2017 FDD

• Section IV – Presentation and analysis of CycleBar’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:

• 2014, 2015, and 2016 annual gross revenue for the four CycleBar Studios (three franchised and one affiliate-owned) that had operated for more than 12 months as of the end of CycleBar’s 2016 fiscal year

• annual gross revenue in their first and second years of operation for the two CycleBar Studios (one franchised and one affiliate-owned) that had operated for more than 12 months as of the end of CycleBar’s 2016 fiscal year and operated under the CycleBar name when they initially opened

Section I – Background Information

14 Things You Need to Know About the CycleBar Franchise

Opening 100th Studio in Third Quarter of 2017

1.  In early July, CycleBar announced that it is gearing up to open the brand’s 100th studio sometime in the third quarter of 2017 and that it has sold nearly 400 studios since franchising began in 2015. The company says that it is on pace to reach its goal of having 150 CycleBar studios open by the end of 2017.

2.  Heather Harris, President of CycleBar, said, “Through meaningful franchise partnerships with passionate, driven individuals, we are confident CycleBar will continue to grow rapidly across the nation and achieve new milestones.”

3.  In the year ahead, CycleBar plans to strategically target new development in Chicago, Illinois; Atlanta, Georgia; Boston, Massachusetts; Washington, D.C.; Los Angeles, Orange County, and San Francisco, California; and Phoenix, Arizona through single and multi-unit agreements.

4.  As the franchise continues to grow, the company’s focus is on helping new franchise partners become ingrained in their communities as one of CycleBar’s main goals is to engage with local residents both inside and outside of the studio.

Supports March of Dimes Through New Event

5.  In March, CycleBar partnered with March of Dimes to help fund lifesaving research and programs that work to end premature birth, birth defects, and infant mortality. To raise funds and awareness for the cause, 54 CycleBar studios hosted “I Got You Babe” rides on March 25.

6.  Most of the studios that participated in the event were located in major metropolitan areas such as Raleigh, North Carolina; Chicago, Illinois; Atlanta, Georgia; Dallas and Houston, Texas; and Denver, Colorado.

7.  The signup fee for the event was $25 and all proceeds went directly to the March of Dimes foundation. Representatives from March of Dimes were available at each ride to discuss additional planned events in local markets.

8.  Heather Harris, President of CycleBar, said that the company was honored to be working on behalf of March of Dimes and also said, “While our studios are always planning events to benefit local causes, coming together as one unit to raise awareness on the same day is a powerful feeling.”

9.  March of Dimes has had a personal impact on the CycleBar team, as the brand’s Director of Giving, Michelle Hitchcock, received support from the organization after the premature birth of her son one year ago.

New Locations

10.  To meet its 2017 goal of having 150 studios open by the end of the year, CycleBar continues to open new locations around the country. One of its newest locations will be opening this fall at the Brookfield shopping center in Milwaukee, Wisconsin. CycleBar expects to open four studios in Wisconsin by the end of 2017.

11.  In February, CycleBar celebrated the opening of two new studios, one in Henderson, Nevada and the other in Kenwood, Ohio. Both locations celebrated their grand openings on February 23 by offering 50 free classes over 10 days. From February 23 to March 4, customers interested in CycleBar were able to register to take as many classes as they wanted during the CycleBlast.

Company History

12.  CycleBar was founded in 2014 by Bill Pryor and his sister Alex Klemmer in Cincinnati, Ohio. Before starting CycleBar, Pryor and Klemmer owned and operated one of the first independent cycling studios in the U.S., which they started in 2005 in Boston, Massachusetts. The brother and sister team wanted to create a cycling studio that had great instructors, great music, and a great environment.

13.  CycleBar began franchising in 2015 and has grown to nearly 100 studios in the U.S.

Entrepreneur’s Franchise 500

14.  CycleBar has not yet ranked on Entrepreneur’s annual Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of CycleBar franchise costs, based on Item 7 of the company’s 2017 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on CycleBar’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

• As of the end of CycleBar’s 2016 fiscal year, there were four Studios that had operated for more than 12 months (the “Covered Studios”). The Covered Studios include (i) an affiliate-owned Studio in Cincinnati, Ohio (the “Hyde Park Studio”), (ii) a franchised Studio in Wellesley, Massachusetts (the “Wellesley Studio”), (iii) a franchised Studio in Royal Oak, Michigan (the “Royal Oak Studio”); and (iv) a franchised Studio in Carmel, Indiana (the “Carmel Studio”).

• William Pryor, CycleBar’s Chief Executive Officer, and Alexandra Klemmer, CycleBar’s Executive Vice President of Franchisee Relations, co-own the Wellesley Studio and also own a minority interest in the franchisor. That Studio opened in February 2005 under the “Spynergy” name and changed branding to the CycleBar name in November 2014. It operates in the Boston DMA from a strip location with 1,800 square feet and about 50 bikes.

• Lisa Hillman, CycleBar’s Chief Cycle Officer, and James Wilde, CycleBar’s Executive Vice President, Field Support, co-own the Royal Oak Studio and also own a minority interest in the franchisor. That Studio opened in April 2010 under the “Go Cycle” name and changed branding to the CycleBar name in December 2014. It operates in the Detroit DMA from a free-standing location with 1,730 square feet and about 26 bikes.

• The Hyde Park Studio opened on October 5, 2014 and is owned by the franchisor’s affiliate. The Hyde Park Studio is the franchisor’s prototype Studio and was the first to incorporate all elements of the System and brand. It operates in the Cincinnati DMA from a strip location with 3,125 square feet and 55 bikes.

• The Carmel Studio opened on December 21, 2015 and is owned by a franchisee. The Carmel Studio operates in the Indianapolis DMA from a strip location with 3,206 square feet and 43 bikes.

Part 1 – Gross Revenue During Fiscal Years 2014 to 2016

• Table 1 presents the Gross Revenue reported by the Covered Studios in the fiscal years that ended on December 31, 2014, December 31, 2015, and December 31, 2016.

Wellesley Studio