FDD Talk 2019: 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 2019 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 2019 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 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Farrell’s eXtreme Bodyshaping’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average and median service gross sales for the top third, middle third, bottom third, and all 59 Farrell’s Center franchises that offered and ran four full 10-week Course sessions during the 2018 calendar year

Section I – Background Information

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

Celebrates 5th Annual Farrell’s by the Sea Trip

1.  In April 2019, Farrell’s eXtreme Bodyshaping celebrated its 5th annual Farrell’s by the Sea trip in Cabo San Lucas, Mexico. Farrell’s by the Sea was founded in 2015 with one goal in mind: to bring local Farrell’s communities together and have fun. For this year’s event, over 100 attendees from 22 Farrell’s eXtreme Bodyshaping gyms joined the trip. Since 2015, over 1,000 Farrell’s members (and their families) have met at Farrell’s by the Sea and enjoyed fellowship together.

2.  During the 2019 Cabo trip, Farrell’s members enjoyed shopping and enjoying dinners downtown, boating and snorkeling at the famous Cabo arches, riding ATVs through the natural terrain, and many more fun events. Farrell’s eXtreme Bodyshaping shared pictures of the trip on its website.

3.  Next year, 2020, Farrell’s eXtreme Bodyshaping will not be hosting the Farrell’s by the Sea trip as the brand is getting ready for 2021, which will be the company’s 20th anniversary. Farrell’s eXtreme Bodyshaping said that Farrell’s by the Sea 2021 will be bigger than previous trips to celebrate the brand’s milestone anniversary.

Using Heart-Rate Tracking to Maximize Members’ Results

4.  All Farrell’s eXtreme Bodyshaping locations offer the industry-leading MYZONE system. This technology provides real-time tracking of exercise effort on displays in Farrell’s gyms and on members’ smartphones. Members can purchase the MZ-3 activity belt at their location and see their level of effort during class.

5.  According to Farrell’s eXtreme Bodyshaping, MYZONE, unlike wrist trackers, is 99.4% accurate and inclusive of all exercise activity – so members get credit for all of the burpees, planks, and sit-ups they’re doing in classes – not just the steps they’re taking.

6.  Based on MYZONE Effort Points (MEPs), members are able to see their effort during class ensuring they hit their level 10 and get the results they want. This system is also valuable to Farrell’s instructors and coaches. Additionally, MYZONE allows members to connect with other members and participate in fun MYZONE-specific challenges.

Giving Away $1,000 to Members with Biggest Transformation

7.  Farrell’s eXtreme Bodyshaping promises that no matter what a person’s fitness goals are, the brand’s initial 10-week program is designed to provide results. As an extra incentive to reach those goals, every Farrell’s location gives away $1,000 after every 10-week session to the member(s) with the biggest transformation. The Farrell’s eXtreme Bodyshaping website has a gallery full of recent $1,000 winners to show potential members the results that are possible.

8.  In addition to the regular 10-week $1,000 prizes, Farrell’s eXtreme Bodyshaping holds a national contest each year. The National Challenge prize is $10,000 and since 2016, Farrell’s eXtreme Bodyshaping has been giving $10,000 each to a male and female member with the biggest overall transformation.

Company History

9.  Farrell’s eXtreme Bodyshaping was founded in 2001 by Lance Farrell in Des Moines, Iowa. Farrell has always had a passion for health and fitness and opened his first business, Farrell’s U.S. Martial Arts, in 1989. Using his background in martial arts and interest in body building training concepts, Farrell developed the eXtreme Bodyshaping program.

10.  In 2001, Farrell opened the first Farrell’s eXtreme Bodyshaping gym with 40 members. Franchising began in 2007 and the company has grown steadily since then. Today, there are Farrell’s eXtreme Bodyshaping locations in over 11 U.S. states with more than 150,000 members.

Entrepreneur’s Franchise 500

11.  Farrell’s eXtreme Bodyshaping did not rank on Entrepreneur’s 2019 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 2019 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 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

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

2018

• Outlets at the Start of the Year:  60
• Outlets at the End of the Year:  66
• Net Change:  +6

Company-Owned

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

2018

• 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, 2019 FDD) and Analysis

• As of December 31, 2018, there were 67 Farrell’s Centers in operation, 64 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 64 franchised Farrell’s Centers that were open and operating as of December 31, 2018, 59 offered four full 10-week Course sessions during the 2018 calendar year.

Part 1 – Service Gross Sales for 59 Franchised Centers for Fiscal Year Ended December 31, 2018

• The following chart reflects information about the “Service Gross Sales” achieved by the 59 franchised Centers that offered four full 10-week Course sessions during calendar year 2018.

• Farrell’s did not include “Merchandise Gross Sales” for these Centers, because revenues derived from equipment and apparel sales typically comprise 10% 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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