In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Pure Barre franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Pure Barre franchise, based on Item 7 of the company’s 2020 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Pure Barre franchise, based on Items 5 and 6 of the company’s 2020 FDD
- Section IV – Number of franchised and company-owned Pure Barre outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
- Section V – Presentation and analysis of Pure Barre’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2018 and 2019 average, median, highest, and lowest gross sales; average EFT draft revenue; average number of new members; and average monthly gross sales for the franchised Pure Barre studios that were open and actively operating for at least 12 full months as of the end of the applicable calendar year
- Q4 2018 and Q4 2019 average, median, highest, and lowest gross sales over quarter; average EFT draft revenue over quarter; average number of new members over quarter; and average monthly gross sales over quarter for the franchised Pure Barre studios that were open for 12+ months as of September 30, 2018 over the fourth calendar quarter of 2018, and the Pure Barre studios that were open for 12+ months as of September 30, 2019 over the fourth calendar quarter of 2019
- 2018 and 2019 average, median, highest, and lowest gross sales; average EFT draft revenue; average number of new members; and average monthly gross sales for the franchised Pure Barre studios that were open and actively operating for a period of at least 12 full months as of the end of the applicable calendar year, and offered a minimum of 28 classes per week with a capacity of 22 to 25 attendees consistent with the system standards for operations and procedures for all new franchised studios (Part 2 studios)
- Q4 2018 and Q4 2019 average, median, highest, and lowest gross sales over quarter; average EFT draft revenue over quarter; average number of new members over quarter; and average monthly gross sales over quarter for the Part 2 studios that were open for 12+ months as of September 30, 2018 over the fourth calendar quarter of 2018, and the Pure Barre studios that were open for 12+ months as of September 30, 2019 over the fourth calendar quarter of 2019
- average, median, highest, and lowest gross sales for month 1, month 2, and month 3 for the 9 franchised Pure Barre studios that (a) opened and commenced operations at some point in the fourth calendar quarter of 2019, (b) opened utilizing Pure Barre’s prescribed pre-opening sales materials and campaigns in connection with Pure Barre’s approved supplier for such services and materials, (c) commenced operating using Pure Barre’s current system standards and specifications, and (d) had operated for at least 3 full calendar months as of March 31, 2020
Section I – Background Information
16 Things You Need to Know About the Pure Barre Franchise
Announces Partnership with Palladin Consumer Retail Partners to Rapidly Expand Within New York’s Tri-State Area
1. In late June 2019, Pure Barre announced that it had partner with Palladin Consumer Retail Partners, a Boston-based private investment firm, to acquire 28 Pure Barre studios in New York’s tri-state region. In addition to taking over Pure Barre’s 13 existing studios in the region, the partnership will lead to the development and opening of 15 new studios in the area over the next three years.
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2. Sarah Luna, president of Pure Barre, said, “As the first partnership of this kind outside of multi-unit franchisees, this new effort with Palladin is an important step for Pure Barre. As Pure Barre expands, the partnership solidifies our position in the tri-state market as the barre category’s leading franchise. It will bring more career opportunities to the region, create an even larger footprint of the Pure Barre brand experience for consumers, as well as pave the way for future partnerships of this nature and scale.”
3. Since acquiring the Pure Barre brand in October 2018, Xponential Fitness has been making great strides to reach operational excellence. The partnership with Palladin will allow for greater resources to ensure continued operational excellence.
4. Under the newly-created management team, PB Metro, LLC, the Pure Barre studios acquired by Palladin will continue to be managed by the former franchisees Kaitlin Vandura, Chelsea Costello, Tiffany Simpkins, and Lauren Singer. With more than 18 years combined management experience of Pure Barre studios, the team will ensure members can expect the same best-in-class in-studio experience.
Enters New International Markets
5. Near the end of November 2019, Xponential Fitness, parent company of Pure Barre and several other fitness brands, announced the signing of a master franchise agreement for Germany and Austria – a development expected to bring more than 150 Xponential Fitness studios to those countries over the next five years.
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6. Initial brands included in the agreement are Pure Barre and Club Pilates, both category-leading pioneers in boutique fitness. Additional brands are expected to be launched in the future.
7. The Germany and Austria development is a collaboration with the LifeFit Group, a leading fitness and health platform in Germany uniting fitness brands from the boutique, high-value-low-price, and premium segments. The diverse portfolio of the LifeFit Group includes Fitness First, elbgym, and Barry’s Bootcamp brands, among others. The Xponential Fitness expansion is expected to begin with the first studios opening in Germany in Q2 2020.
8. John Kersh, chief international development officer of Xponential Fitness, said, “As we expand into Germany and Austria we are excited to partner with the LifeFit Group who are the leading national premium fitness provider in the market. We see significant whitespace in Austria and Germany, the largest fitness market in Europe, and look forward to introducing Xponential Fitness and our brands to future members.”
9. Xponential Fitness is a thriving franchise organization offering diversified fitness concepts in eight verticals with over 1,325 studio locations open and operating, for a total of 3,082 licenses sold. Xponential’s portfolio of brands includes Club Pilates, CycleBar, StretchLab, Row House, AKT, YogaSix, Pure Barre, and Stride, covering key industry verticals and focused on accelerating growth domestically and internationally.
10. Around the time of the announcement, Xponential Fitness signed a large scale, multi-band master franchise agreement in Saudi Arabia to bring more than 50 studios, including Club Pilates, Pure Barre, CycleBar, YogaSix, and AKT, to the country over the next three years. The company also has presence in Canada and has studios slated to open in Japan and South Korea.
11. Martin Seibold, CEO of the LifeFit Group, added, “Club Pilates and Pure Barre are very different boutique fitness brands from our existing portfolio, which increases our appeal. This collaboration with Xponential Fitness allows us to expand and strengthen our portfolio to better meet customer needs for healthier, more active lifestyles in a customized and convenient setting. We are also looking for great talent joining us in our expansion.”
12. Pure Barre was founded in 2001 by Carrie Rezabek Dorr in Birmingham, Michigan. Dorr was a choreographer/dancer and was passionate about fitness. So, she combined dance, group fitness, and ballet barre techniques to develop the Pure Barre program.
13. Initially, Dorr taught a very small class out of a tiny studio, but the class quickly grew through word of mouth. Dorr says that she never set out to make Pure Barre into a franchise, but she eventually gave in as people kept asking her how they could bring the Pure Barre program to their city.
14. Dorr licensed out about a dozen Pure Barre studios before developing a franchising program in 2009. Around this time, Dorr also moved to California and the first franchises opened up around the West Coast. Dorr continued to grow the company around the U.S. over the next few years, but decided to take a back seat around 2015. She returned two years later to a more active role as the company’s “chief barre officer,” which entails building out the company’s world-class training team and introducing a range of innovative techniques.
15. After a few more years of growth, Pure Barre was acquired by Xponential Fitness in 2018. Xponential Fitness is also the parent company of Club Pilates, CycleBar, StretchLab, Row House, AKT, and Yoga Six.
Entrepreneur’s Franchise 500
16. Pure Barre ranked No. 300 on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Pure Barre franchise costs, based on Item 7 of the company’s 2020 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Pure Barre’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 420
- Outlets at the End of the Year: 459
- Net Change: +39
- Outlets at the Start of the Year: 459
- Outlets at the End of the Year: 491
- Net Change: +30
- Outlets at the Start of the Year: 491
- Outlets at the End of the Year: 540
- Net Change: +49
- Outlets at the Start of the Year: 14
- Outlets at the End of the Year: 13
- Net Change: -1
- Outlets at the Start of the Year: 13
- Outlets at the End of the Year: 14
- Net Change: +1
- Outlets at the Start of the Year: 14
- Outlets at the End of the Year: 2
- Net Change: -12
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
- The term “Gross Sales” means the total revenue generated by each Disclosed Studio over the Measurement Period, including all revenue generated from classes, memberships, and/or retail sales.
- Gross Sales may not include certain income that each Disclosed Studio may have generated from third-party vendors such as Groupon by virtue of promotions ran by the Disclosed Studios through those third-party vendors because these vendors were not able to provide Pure Barre with the full reports detailing the income at issue as of the Issue Date of the 2020 Disclosure Document.
- The “Average Gross Sales” amongst the Disclosed Studios over a given measurement period in the chart(s) below is calculated by (a) taking the sum of all Gross Sales generated by the applicable Disclosed Studios comprising the subset at issue, and (b) dividing that by the total number of Studios in that subset.
- The “Median Gross Sales” amongst the Disclosed Studios for a given measurement period in the chart(s) below is determined by taking the middle value reported amongst the subset at issue after the reported Gross Sales values are sorted from smallest to largest.
- The term “Average EFT Draft Revenue” means the total revenue that is collected via electronic funds transfer (or EFT), which Pure Barre currently requires and prescribes as per its System methods and practices as the primary method of membership revenue collection.
Part 1 – Annual Gross Sales and EFT-Related Performance Metrics Amongst the Appropriate Subsets of Part 1 Studios in 2018 and 2019 (and 4th Calendar Quarter of Each Year)
- Part 1 of this Item 19 first discloses and compares the historical financial information generated by the (a) 471 franchised Studios over the 2018 calendar year, and (b) 506 franchised Studios over the 2019 calendar year, with the applicable subset of Studios for each measurement period being the subset of Studios that was open and actively operating for a period of at least 12 full calendar months as of the end of that calendar year.
- In addition to disclosing the average, median, high, and low Gross Sales reported amongst each of these two subsets of Studios, the first chart in Part 1 discloses the difference between the 2018 subset and the 2019 subset values in the part entitled “Delta.”
- In addition to Gross Sales generally, both Part 1 and Part 2 of this Item disclose (a) the average number of new members generated amongst each subset of Studios disclosed, and (b) the average revenue that is drafted and collected via electronic funds transfer from a given Studio’s members.
- Both Part 1 and 2 exclude the information of those Studios that were not open for at least 12+ months as of the specific date set forth for each chart.