In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Club Pilates franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Club Pilates 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 Club Pilates franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of Club Pilates’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 average Gross Revenue for the 16 franchisee-owned and 2 company-owned Club Pilates Studios that were open and operating for the entire 2016 calendar year, utilizing at least 12 reformers, and operating utilizing the designated software provider for the POS System as required by the current franchise offering and System for the entire Measurement Period
- 2016 average Teacher Training Revenue, Traditional Revenue, Total Revenue, Estimated Royalty (on In-Studio Revenue Only), Estimated Fees Paid in Connection with Teacher Training Revenue, Marketing Fund, Rent, Merchandise Costs, Advertising/Promotion, Merchant Account Services, Cleaning, Insurance, Water, Total of Certain Operating Expenses (excluding Payroll), and Total Revenue Less Certain Operating Expenses (excluding Payroll) for the 2 company-owned Club Pilates Studios that were open and operating for the entire 2016 calendar year, utilizing at least 12 reformers, and operating utilizing the designated software provider for the POS System as required by the current franchise offering and System for the entire Measurement Period
Section I – Background Information
12 Things You Need to Know About the Club Pilates Franchise
Growth Fueled by New Investment From Private Equity Fund
1. In early May, TPG Growth, a private equity fund that has backed companies such as Uber Technologies Inc. and Airbnb Inc., announced that it took a stake in Club Pilates due to an increased desire to invest in more health and wellness businesses.
2. Club Pilates CEO Anthony Geisler said that Club Pilates will use the capital from TPG Growth to continue its nationwide expansion plans, with the goal of having 350 studios open by the end of 2017. He also said that he will stay on as CEO and continue to hold a stake in the company.
3. TPG’s Mark Grabowski led the deal with Club Pilates and noted how the brand is able to offer a premium fitness service at relatively affordable prices. He said, “[Club Pilates] democratized access to a premium brand, which is rare in fitness.”
Re-developed Concept and Re-branding Are Keys to Brand’s Recent Growth
4. Since Club Pilates was acquired by Anthony Geisler in 2015, the brand has rapidly expanded, growing from 30 clubs to nearly 300 in under two years. In May of 2017, the brand celebrated its recent growth with the signing of its 500th franchise agreement. At the time, the company said that it was on pace to have 700 to 750 locations sold by the end of 2017.
5. Shaun Grove, president of Club Pilates, said that the brand’s 2018 goal is to sell out the U.S. market and target international expansion. He added that he believes that Club Pilates’s recent success is due to the brand’s re-developed concept and re-branding. The changes have made Pilates more accessible to everyone while offering state-of-the-art equipment and modern facilities to members at an affordable price.
6. Grove said, “Traditionally, Pilates has been relegated to the more elite, because classes weren’t available, or if they were available, they were way too expensive. So, we’ve redeveloped this whole concept to provide many more classes throughout the day, in a much larger facility, with much more equipment and more qualified instructors.”
Growing in Phoenix Area
7. In July, Club Pilates celebrated its continued expansion in Phoenix and the surrounding Valley with the grand opening of a new location in Scottsdale. This location is the second Club Pilates in the Phoenix area for franchise owners Keith Jacobs and his wife Yvette. The couple announced that they had plans to open more locations in Arcadia, Paradise Valley, or Oldtown Scottsdale by the fall of 2018. Keith Jacobs said that his franchises are among the fastest growing in the system, bringing in hundreds of new members in the short time the locations have been open.
8. The Scottsdale grand opening celebration was held over two days and featured free demonstration classes, discounted membership pricing, retail apparel discounts, raffle drawings, and free chair massages. Customers who signed up for certain membership packages also received a $250 American Express Travel Credit.
9. In addition to the two locations owned by the Jacobs, there are eight other Club Pilates locations in the greater Phoenix area.
10. Club Pilates was founded in 2007 by Allison Beardsley in San Diego, California. Beardsley based the Club Pilates program on Joseph Pilates’s original Reformer-based Contrology Method, but added her own twist with group practice and state-of-the-art equipment. Over the next few years, Beardsley opened a few more Club Pilates locations and began franchising the concept in 2012.
11. By 2015, the company had grown to 30 locations and over $2.9 million in sales. Beardsley knew that managing a business of this size was not in her skill set and decided to sell Club Pilates to Anthony Geisler. Geisler had previously helped grow the LA Boxing franchise before it was sold to UFC Gym in 2013. After he acquired Club Pilates, Geisler helped the company grow rapidly, and today, there are 280 locations open in the U.S. and two other countries.
Entrepreneur’s Franchise 500
12. Club Pilates appeared for the first time on Entrepreneur’s annual Franchise 500 list in 2017 at No. 361. It also ranked No. 17 on Entrepreneur’s 2017 Top New Franchises list.
Section II – Estimated Costs
- Please click here for detailed estimates of Club Pilates 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 Club Pilates’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
- This Item 19 discloses the historical financial information regarding the 18 Studios that were (a) open and operating for the entire 2016 calendar year (the “Measurement Period”), (b) operating utilizing at least 12 reformers as required by the current franchise offering and System, and (c) operating utilizing the designated software provider for the POS System as required by the current franchise offering and System for the entire Measurement Period (collectively, the “Representative Studios”).
- Sixteen of the Representative Studios were owned and operated by System franchisees over the Measurement Period (which includes two Representative Studios that were previously operated by the franchisor and sold to a franchisee), with the remaining 2 Representative Studios owned and operated by the franchisor.
- Of the 77 Studios operating as of December 31, 2016, the franchisor excluded the information of (a) 38 Studios from this Item on the grounds that they were not open and operating throughout the entire Measurement Period (either because they opened or closed at some point in 2016), (b) 13 additional Studios from this Item on the grounds that they did not utilize at least 12 reformers in their operations as required under the current System standards and specifications, and (c) 8 additional Studios from this Item on the grounds that they did not utilize the designated software provider for the POS System as required by the current franchise offering and System for the entire Measurement Period.