Updated March 13, 2020.
Detailed Estimates of StretchLab Franchise Costs Based on Item 7 (Estimated Initial Investment) of StretchLab’s 2019 Franchise Disclosure Document
1. Initial Franchise Fee: $60,000
- The Initial Franchise Fee is non-refundable. The Initial Franchise Fee for a single Studio is $60,000. StretchLab does not provide financing for the Initial Franchise Fee.
2. Costs and Expenses Associated with Initial Training for Franchise Owner (or Operating Principal): $500 to $6,000
- This estimate is designed to cover the costs and expenses you might incur in connection with you (or if you are an entity, one of your operating principals you designate to be the Designated Operator for the Studio) attending and completing the required initial training.
- StretchLab will not charge you or your Designated Operator for this portion of the initial training that must completed on behalf of the franchisee/owner under your Franchise Agreement. You will be responsible for the costs and expenses associated with attending this training (e.g., transportation, meals, lodging, and other expenses).
- This range also includes the costs and expenses that StretchLab estimates you will need to cover in order for a sufficient number of individuals to attend and complete the FTP Training in order to become an Authorized Instructor.
- This estimate assumes that no individual will be required to attend training more than once due to their failure to complete their initially-attended training.
3. FTP Tuition Fees: $11,000 to $15,000
- This range is the estimated amounts that you will expend in FTP Tuition Fees for those individuals that you wish to engage to provide the Approved Services at your Studio. This estimate assumes that you will have up to 10 individuals attend and complete FTP prior to opening and over your initial ramp-up period of operations.
4. Real Estate/Lease (1 month security deposit, plus 3 months of rent): $5,100 to $18,200
- If you do not own adequate Studio space, you must lease suitable premises. These figures assume that the leased premises will be at least 1,000 square feet.
- In addition to base rent, the lease may require you to pay common area maintenance charges (“CAM Charges”), your pro rata share of the real estate taxes and insurance, and your pro rata share of HVAC and trash removal, all of which are all accounted for in this estimate.
- This estimate assumes your security deposit will amount to approximately 1 month of rent.
5. Leasehold Improvements: $17,500 to $50,000
- You must adapt StretchLab’s prototypical plans and specifications for the construction and finish-out of the Studio, including approved flooring, mirrors, and paint.
- The estimates presented herein are net of tenant improvement amounts incurred by the landlord. The low end of the range reflects modest improvements to a smaller location, and the high end reflects significant physical improvements to a larger Studio.
6. Signage: $8,000 to $13,000
- You will need to purchase appropriate signage for your Studio that StretchLab approves. Each landlord has different restrictions it places on interior and exterior signage that may affect your costs.
7. Insurance: $900 to $1,000
- This estimate is for 3 months of your minimum required insurance. The actual cost may be more than shown here.
8. Legal Fees in Connection with Review and Negotiation of Lease: $4,500
- As of the Issue Date, StretchLab has approximately 4 third-party law firms that have experience with its System criteria for potential Studio sites, and that have worked with the franchisee networks of StretchLab and certain of its affiliate franchisors to review leases for the potential Approved Location of your Studio and, if appropriate and authorized by you, to negotiate the terms of and close on that lease acquisition.
- This estimate is based on the assumption that you will engage such an Approved Supplier to review and negotiate the lease for your Premises.
9. Lease-Related Payments in Connection with Specialty and Other Exercise Equipment: $4,000 to $4,200
- StretchLab’s standard franchise offering assumes and expects that a new System franchisee will lease the required exercise equipment necessary to open and initially commence operations. As such, the range above is designated to capture and account for the typical deposit and lease payments you will make to a supplier StretchLabs approves (StretchLab has pre-approved several as of the Issue Date) for you to lease this equipment.
- The initial required amount of exercise equipment for a standard Studio is typically approximately 10 stretching benches and various related equipment/supplies for use in connection with the provision of the Approved Services, and certain other equipment used in connection with the Studio (e.g., foam rollers, ab mats, blocks, electric massage tools, pillows, straps, exercise balls, etc.), although StretchLab may raise or lower this requirement depending on the size of your Studio.
- If you determine not to follow StretchLab’s System-recommended practice of leasing this equipment associated with the standard franchise offering described above, the estimated cost to purchase this equipment outright will be substantially more (approximately $41,000 to $43,000) and will be paid to StretchLab or its designated supplier of such equipment.
10. Proprietary Inventory Kit: $12,000
- The typical for-sale items held in opening inventory are branded apparel, including t-shirts, towels, exercise clothing, and related accessories.
11. Utility Deposits: $0 to $1,000
- Typically, a utility deposit will be required only if you are a new customer of the utility company.
12. Licenses and Permits: $0 to $3,000
- The range of costs covers the expense to acquire the required local business permits. StretchLab’s estimated costs include building permits, fire inspection, sales tax permit, retail sales permits, and certain music licenses, which could increase depending on the selection of music played in the Studio. If an electrical permit is necessary, the costs may be more.
13. Furniture, Fixtures, and Related Supplies: $9,700 to $12,300
- This is a range of expenses that will be incurred when decorating and furnishing the Studio, including the Initial FF Package that you must purchase from StretchLab.
- Both the low end and the high end numbers represent a straight purchase of all furniture, fixtures, and related supplies (rather than leasing or making installment payments on these items).
- The “Initial FF Package” is comprised of the following categories: Furniture, Fixtures, and Related Supplies; Shipping; and Installation.
14. Computer System and Related Equipment: $1,700 to $2,500
- You must acquire a personal computer and a Point-of-Sale system (“POS”) for use in the operation of the Studio. Your computer system must be equipped with a high-speed connection to the Internet and must include a local area network with a dedicated server.
- StretchLab will make available to you a certain business management software program specific for the Studio to be loaded on to your system. You will pay the third-party vendor directly for all fees associated with the use of the software.
- You can expect initial cash outlays to be lower if the items can be leased rather than purchased.
- These costs are paid to suppliers, when incurred, before beginning business and are usually not refundable.
15. Sound and Camera Equipment: $500 to $800
- You are required to have at least 1 surveillance camera installed in the Studio. You may be required to purchase the camera(s) and related accessories from an Approved Supplier.
- The camera(s) must be web accessible. You will use the camera to monitor teacher performance, quality assurance, and safety. You are responsible for ensuring customer consent and for any failure to obtain such consent. You must indemnify StretchLab for any breaches of privacy from your use of any surveillance camera.
16. Shipping: $3,000 to $8,750
- StretchLab will arrange for the shipping of all of your equipment and furniture/fixtures. These amounts may vary based upon the location of your Studio.
17. Initial Marketing Spend: $15,000
- You are required to expend this “Initial Marketing Spend” in coordination with the pre-opening sales plan StretchLab approves or designates for your Studio as part of the opening support program that StretchLab’s approved supplier provides in connection with your Studio, as StretchLab determines appropriate in its discretion (the “Opening Support Program”).
- Typically, StretchLab expects your Opening Support Program to commence prior to the “soft opening” of your franchised Studio through your actual opening of the Studio. These funds must be expended on your Opening Support Program and any other pre-opening marketing and/or advertising activities StretchLab designates.
18. Additional Funds for 3 Months: $10,000 to $15,000
- This is an estimate of certain funds needed to cover your business (not personal) expenses during the first three months of operation of the Studio. These expenses include: initial employee wages; management compensation (but not any draw or salary for you); ongoing purchases of equipment and supplies; marketing expenses/fees and local advertising; ongoing utilities (other than initial deposits); and repairs and maintenance.
19. Total Estimated Initial Investment: $169,275 to $248,125