FDD Talk 2018: Farrell’s eXtreme Bodyshaping Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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

• Section I – Background information on the Farrell’s eXtreme Bodyshaping franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Farrell’s eXtreme Bodyshaping franchise, based on Item 7 of the company’s 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Farrell’s eXtreme Bodyshaping franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned Farrell’s eXtreme Bodyshaping outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD

• Section V – Presentation and analysis of Farrell’s eXtreme Bodyshaping’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017 average and median service gross sales for the top third, middle third, bottom third, and all 58 Farrell’s Center franchises that offered and ran 4 full 10-week Course sessions during the 2017 calendar year

• 2017 average and median first-time student enrollment in initial 10-week Courses for the top third, middle third, bottom third, and all 58 Farrell’s Center franchises that offered and ran 4 full 10-week Course sessions during the 2017 calendar year

• 2017 average and median conversion rate of first-time students to ongoing Course enrollment for the top third, middle third, bottom third, and all 58 Farrell’s Center franchises that offered and ran 4 full 10-week Course sessions during the 2017 calendar year

• 2017 actual salaries and wages, advertising expenses, facility expenses, administrative expenses, total operating expenses, depreciation and amortization, and total expenses for the company-owned Farrell’s Center in Urbandale, Iowa

Section I – Background Information

13 Things You Need to Know About the Farrell’s eXtreme Bodyshaping Franchise

New Location

1.  Farrell’s eXtreme Bodyshaping continues to grow steadily across the United States and one of the brand’s newest locations opened at the end of April 2018 in Hudson, Wisconsin. This location is owned by husband and wife team Jim and Christine Barnes, who have been a part of Farrell’s for the past few years. Both Jim and Christine started out as members of another Farrell’s location in their area, with Jim eventually becoming a coach and Christine an instructor.

2.  Both Jim and Christine felt that owing their own Farrell’s eXtreme Bodyshaping gym was the natural next step. The Barnes said that although there are other nice gym franchises in their area, there is something special about Farrell’s. Christine added that she hopes to develop their gym into a community, a safe place where people can help each other, and stay in shape.

Program Based on Three Essential Elements

3.  The main fitness program at Farrell’s eXtreme Bodyshaping consists of three essential elements: fitness kickboxing, strength training, and nutrition. These three elements, along with motivating instructors and personal coaches and a strong community, have helped the brand’s members achieve long-lasting results.

4.  Farrell’s kickboxing classes, which are derived directly from martial arts (mostly Taekwondo because of founder Lance Farrell’s experience in the sport), are high-intensity cardio workouts that burn fat and build endurance while offering variety and fun. The fitness kickboxing combines rhythmic martial arts moves, including dynamic kicking and punching, and bag training to push bodies to their cardiovascular limits.

5.  Farrell’s believes that strength training is essential to building lean muscle and burning fat and calories – in motion and at rest. Using resistance bands provides the benefits of building core strength in a safe environment. The use of resistance bands also helps members target “problem areas” through exercises specifically designed to sculpt, tone, and shape the entire body.

6.  To round out the two physical components of Farrell’s workout program, the brand offers nutrition coaching. Farrell’s provides resources and information to fuel members’ bodies for peak performance on and off the mats. By eating six times per day, participants stay satisfied and in “burn mode” all day long. Farrell’s offers an easy meal planning strategy that incorporates common sense, sound nutrition, and foods that can be purchased at any grocery store.

Fitness Doesn’t Stop After Main 10-Week Program

7.  The main program at Farrell’s eXtreme Bodyshaping is its 10-week challenge, which guarantees that members will see results by the end of the program. To ensure that its members continue to maintain lifelong health, Farrell’s encourages 10-week members to join the Farrell’s Infinite Transformation (FIT) program.

8.  FIT consists of continual training and challenges and offers members a chance to win the brand’s annual National Contest. Since 2012, Farrell’s has organized the National Contest, which now awards $10,000 each to one male and one female with the biggest transformation, as a little extra motivation to continue living a healthy lifestyle.

9.  Beyond the FIT program, Farrell’s offers its members a chance to become franchisees, which is the case for most of the brand’s current franchise owners – nearly all of them were members at other Farrell’s gyms and fell in love with the brand.

Company History

10.  The first Farrell’s eXtreme Bodyshaping gym was opened in 2001 by Lance Farrell in Des Moines, Iowa with 40 members. Farrell, who has been actively involved with Taekwondo since he was 18 years old, has always been passionate about fitness and living an active lifestyle. He started his first business in 1989 when he opened Farrell’s U.S. Martial Arts in Des Moines.

11.  In addition to martial arts, Farrell was interested in body builders and their techniques. This mix of interests led Farrell to develop Farrell’s eXtreme Bodyshaping program, which now combines fitness kickboxing, strength training, and nutrition coaching to help its members reach their fitness goals within 10 weeks.

12.  Farrell’s eXtreme Bodyshaping has been franchising since 2007 and Farrell, who is an industry-leading expert on fitness and regularly speaks on a variety of topics, continues to serve as the company’s CEO. Today, there are Farrell’s eXtreme Bodyshaping locations across 10 states.

Entrepreneur’s Franchise 500

13.  Farrell’s eXtreme Bodyshaping did not rank on Entrepreneur’s 2018 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Farrell’s eXtreme Bodyshaping franchise costs, based on Item 7 of the company’s 2018 FDD.

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

• Please click here for detailed information on Farrell’s eXtreme Bodyshaping’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2015

• Outlets at the Start of the Year:  53
• Outlets at the End of the Year:  63
• Net Change:  +10

2016

• Outlets at the Start of the Year:  63
• Outlets at the End of the Year:  61
• Net Change:  -2

2017

• Outlets at the Start of the Year:  61
• Outlets at the End of the Year:  60
• Net Change:  -1

Company-Owned

2015

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  1
• Net Change:  -2

2016

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2017

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

• As of December 31, 2017, there were 61 Farrell’s Centers in operation, 58 of which were franchised, and 3 of which were owned and operated by Farrell’s or its affiliates and which offered a different mix of products and services than franchised Farrell’s Centers, including martial arts classes and other experimental courses that were not offered by franchised Farrell’s Centers.

• Of the 58 franchised Farrell’s Centers that were open and operating as of December 31, 2017, all 58 offered 4 full 10-week Course sessions during the 2017 calendar year.

Part 1 – Service Gross Sales for 58 Franchised Centers for Fiscal Year Ended December 31, 2017

• The following chart reflects information about the “Service Gross Sales” achieved by the 58 franchised Centers that offered 4 full 10-week Course sessions during calendar year 2017.

• Farrell’s did not include “Merchandise Gross Sales” for these Centers, because revenues derived from equipment and apparel sales typically comprise 18% or less of total revenue and because those revenues tend to vary among Farrell’s Centers depending on a particular Center’s retail space and emphasis on merchandising.

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