FDD Talk 2020: SPENGA 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 SPENGA franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a SPENGA 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 SPENGA franchise, based on Items 5 and 6 of the company’s 2020 FDD

• Section IV – Number of franchised and company-owned SPENGA 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 SPENGA’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• average revenue and number of members for the franchised SPENGA studios through their first 30 days of operation

• total net cash-in (NCI); payroll and payroll-related costs; cost of goods sold; estimated royalty; advertising; rent and occupancy costs, utilities, and other certain operating expenses; and total NCI less total of disclosed costs and expenses for the one affiliate-owned SPENGA studio, which opened in 2015, throughout the 2017, 2018, and 2019 calendar years (each a “Measurement Period”)

• average, median, highest reported, and lowest reported total revenue generated by the franchised SPENGA studios with presales and the franchised SPENGA studios without presales during their first calendar year

Section I – Background Information

12 Things You Need to Know About the SPENGA Franchise

Newest Locations

1.  SPENGA started off 2020 by celebrating the opening of several new locations in Arlington Heights, Illinois; West Chester, Ohio; and Pasadena, California. Each studio has experienced instructors that guide members through a 60-minute workout unlike anything else.

2.  While most studios focus on one type of workout, SPENGA combines spin, HIIT strength training, and yoga. This one-hour workout boosts endurance, strengthens muscles, and restores the body for the most efficient workout possible. SPENGA is ideal for anyone who wants to get a well-rounded and convenient workout all at one studio.

3.  Rick Szkorla and Jeff Bergen, SPENGA Arlington Heights franchisees, said, “As fitness and wellness enthusiasts, we could not be more excited to bring a fresh fitness concept to Arlington Heights. We were excited to share SPENGA’s culture of wellness with an active community, seeking positive ways to connect with one another. We feel fortunate for the opportunity to be a part of the Arlington Heights Community, and are committed to being a positive contribution and providing what is simply known as the Best. Workout. Ever!”

4.  David Wildner, SPENGA West Chester franchisee, said, “West Chester’s vibrant community is the perfect location for us to introduce SPENGA to Cincinnati. The initial response has been incredible, and we can’t wait to get you started on the Best. Workout. Ever.”

5.  According to Jessica Thumati, SPENGA Pasadena franchisee, “Pasadena is a great location for the first SPENGA in California. I’m very excited to introduce this great workout and to continue building the community of SPENGA members who have already joined us on the journey. Our team of incredible instructors and member experience staff are excited for you to experience the SPENGA workout while being surrounded by a like-minded and supportive community. SPENGA Pasadena is committed to creating an amazing experience every time you walk through the doors.”

Offers a Unique Fitness Experience

6.  Although the fitness industry is crowded and highly competitive, SPENGA stands out by offering a unique fitness experience that combines three different types of workouts. Each 60-minute SPENGA session includes 20 minutes of heart-pumping spin, 20 minutes of high-intensity interval training (HIIT), and 20 minutes of yoga.

7.  According to SPENGA, first-time participants need to know the following:

• Plan to arrive 15 minutes early to check in with a SPENGA staff member.
• Claim a space in the yoga studio.
• Set-up your spin bike (if you need help, just ask a staff member) and start warming up.
• To avoid distractions and ensure a safe and fun workout for everyone, please do not bring cell phones into the studio.

8.  Each SPENGA studio offers plenty of amenities, including:

• Endless supply of filtered water for refillable bottles. Participants are encouraged to bring their own bottle or purchase a SPENGA bottle;
• Yoga mats (members can also bring or purchase their own);
• Self-locking day lockers;
• Restrooms and changing rooms with complimentary toiletries (showers available at select studios).

9.  For the best experience, SPENGA recommends that members bring the following items to class:

• Water bottle (SPENGA bottles available for purchase);
• Personal sweat towel;
• Yoga mat (if members prefer to use their own);
• Gym shoes or spin shoes for the spin section;
• Gym shoes for the HIIT section;
• Socks or barefeet for the yoga section.

Company History

10.  SPENGA was founded in 2015 by Amy Nielsen and Heather Ruff, with help from Roger McGreal, in Mokena, Illinois. The company’s name combines spin, strength training, and yoga, which make up the company’s fitness program. SPENGA classes are structured to include 20 minutes of spin, 20 minutes of strength training, and 20 minutes of yoga to improve endurance, strength, and flexibility. Nielsen and Ruff started SPENGA because they felt there was a void in the marketplace for combining cardiovascular, strength, and flexibility training in one gym.

11.  Nielsen and Ruff started franchising SPENGA not long after opening the first location. Within a few years, SPENGA grew to over 40 locations in the Eastern part of the United States. The company said that its goal was to sign 100 franchise agreements by the end of 2019.

Entrepreneur’s Franchise 500

12.  SPENGA did not rank on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of SPENGA 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 SPENGA’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

Franchised

2017

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  5
• Net Change:  +4

2018

• Outlets at the Start of the Year:  5
• Outlets at the End of the Year:  9
• Net Change:  +4

2019

• Outlets at the Start of the Year:  9
• Outlets at the End of the Year:  22
• Net Change:  +13

Company-Owned

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

2019

• 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, 2020 FDD) and Analysis

• This Item sets forth certain historical income and expense information for one affiliate-owned Studio that opened in 2015 (the “Affiliate Studio”), as well as 22 franchised Studios (the “Franchised Studios”).

• Part 1 of this Item discloses: (i) the average number of Members for the Franchised Studios through their first 30 days of operation; and (ii) the average revenue for the Franchised Studios through their first 30 days of operation.

• Part 1 excludes (i) 9 Franchised Studios that opened prior to the 2019 calendar year, and (ii) the Affiliate Studio.

• Part 2 of this Item discloses the total Net Cash-In (“NCI”) generated, as well as certain costs and operating expenses incurred, by the Affiliate Studio throughout the 2017, 2018, and 2019 calendar years (each a “Measurement Period”).

• SPENGA excluded the Franchised Studios from Part 2 because it did not receive operating costs and expense data from its franchise owners for the Measurement Periods in the required form and format.

• Part 3 of this Item discloses the median revenue generated by the Franchised Studios during their first calendar year. Part 3 excludes (i) 11 Franchised Studios that opened in 2019 and have not operated for an entire calendar year, and (ii) 1 Franchised Studio that has not met the minimum requirement for households.

• SPENGA has not independently audited or verified the data below that was reported by the owners of the Affiliate Studio and Franchised Studios.

• Some outlets have sold or earned this amount. Your individual results may differ. There is no assurance you will sell or earn as much.

Part 1 – Average Members and Revenue for Franchised Studios During Their First 30 Days of Operation

Franchised Studios