Considering a Barre3 Franchise? Don’t Overlook These 30 Important Franchise Fees

If you are considering a Barre3 franchise, don’t get blindsided by these 30 important franchise fees (from the initial franchise fee, to the royalty fee, to 28 other fees found in Items 5 and 6 of Barre3’s 2020 FDD).

1.  Initial Franchise Fee:  $41,250 to $50,000

• You must pay Barre3 a lump sum of $50,000 by wire transfer for your studio franchise at the time you sign the Franchise Agreement as an initial franchise fee.

• If you or an entity you control choose to develop more than one territory, you must enter into a separate Franchise Agreement and pay Barre3 a separate discounted initial franchise fee for each such additional territory. The discounted initial franchise fee as of the issuance date of the current disclosure document is $41,250.

2.  Opening Prop and Retail Package Fee:  $7,500

• You will pay a lump sum Opening Prop and Retail Package fee for certain devices and equipment, including but not limited to exercise balls, mats, bands, straps, and sliders (“Props”) used by your students in classes, and for certain branded and non-branded studio products and supplies, as well as other retail products (“Retail Package”).

• The standard fee for the Opening Prop and Retail Package is $7,500, plus taxes and delivery charges.

3.  Grand Opening Fee:  $5,000

• You must pay Barre3 a fee of $5,000 when you sign your Franchise Agreement for your minimum grand opening marketing obligation. Barre3 will use this $5,000 to pay for a social media marketing campaign prior to and shortly after you open.

4.  Royalty Fee:  the greater of 6% of Gross Revenues or $850 per month

• Due Date:  Monthly on the 10th day of the month, or another period as Barre3 may determine, via electronic funds transfer.

5.  Marketing Fund Fee:  2% of Gross Revenues

• Due Date:  Monthly on the 10th day of the month, or another period as Barre3 may determine, via electronic funds transfer.

6.  Advertising Cooperative Contributions:  established by advertising cooperative members

• Due Date:  Established by advertising cooperative members.

7.  Late Fees and Interest:  $100 plus interest on late amounts at 18%, not to exceed the maximum rate of interest allowable under law

• Due Date:  As incurred.

• Late fees and interest begin to accrue the day after payment becomes past due.

8.  Renewal Fee:  25% of the then-current initial franchise fee

• Due Date:  Upon submission of request to renew.

9.  Audit Fee:  cost of audit. Cost may range from $1,000 to $5,000.

• Due Date:  As incurred.

• Payable to Barre3 only if you understate your Gross Revenues by 2% or more.

10.  Indemnification:  amount of claim or judgment

• Due Date:  As incurred.

• You must reimburse Barre3 for and defend it against claims brought against and taxes imposed on it due to your operations.

11.  Relocation Fee:  $10,000

• Due Date:  Upon approval of relocation request.

• Payable to Barre3 only if it approves your request to relocate your franchised location or authorized territory during the term or any renewal terms of the Franchise Agreement.

12.  Transfer Application Fee and Transfer Fee:  the transfer application fee is $1,500 and the transfer fee is 50% of the then-current initial franchise fee; plus if Barre3 is involved in helping you sell your studio, a sales commission equal to 25% of the then-current initial franchise fee in states where it is permitted

• Due Date:  The transfer application fee is due upon submission of the application to transfer your studio to a third party. The transfer fee is due upon approval of the transfer.

• The transfer application fee is nonrefundable.

• You may only transfer subject to the satisfaction of certain conditions and with Barre3’s prior written consent.

13.  Refreshment Program Fee:  $450 to $650, as determined by Barre3

• Due Date:  Barre3 does not currently implement the Prop Refreshment Program, but reserves the right to do so in the future.

• Delivery of new Props and equipment to replenish your inventory of Props and other equipment and supplies for the teaching of classes at your studio.

14.  B3 Direct Fee:  $300 to $2,750, as determined by Barre3

• Due Date:  Barre3 does not currently implement B3 Direct, but reserves the right to do so in the future.

• Delivery via drop shipment of branded and non-branded retail products for sale in your studio.

15.  Product or Supplier Review Fee:  $200 for inspection and evaluation or testing, for each new product or supplier, plus actual costs of tests

• Due Date:  At time of request.

• Payable only if you request that Barre3 review a new supplier or product for use or sale in your studio.

16.  Cost of Enforcement or Defense:  all mystery shopping costs, audit and accounting fees, Barre3’s employees’ travel costs, court costs, and attorneys’ fees

• Due Date:  Upon settlement or conclusion of claim or action.

• You must reimburse Barre3 if it incurs any expenses in enforcing its rights against you under the Franchise Agreement.

17.  Special Visit Fee:  $300 to $750 per day, plus travel and living expenses. The estimated range of travel and living expenses are $1,000 to $6,000.

• Due Date:  As incurred.

• Barre3 provides ongoing assistance as it deems reasonable regarding the operations and marketing of your studio. Additional on-site assistance is available at your expense upon your request.

18.  Additional, Repeat, or New Instructor Training and Instructor Mentor Training Fee:  $400 to $600 per person. You are responsible for all travel and living expenses while taking training. The estimated range of travel and living expenses are $1,000 to $3,000 per person.

• Due Date:  The new instructor training and/or instructor mentor training fee is due 15 days before the training program begins and will be auto withdrawn from your account.

• Payable to Barre3 and third parties.

• New instructor training for up to 6 people, including your instructor mentor and 5 other qualified trainees (which may include you or your designated owner), is included in the initial franchise fee.

• Any instructor who attends the new instructor training program may be required to attend additional training or retraining at Barre3’s discretion, if such person did not complete the new instructor training program to Barre3’s satisfaction, or its operational standards or requirements are not being met.

• You must also pay this fee for the new instructor training program for each new instructor and each new instructor mentor that either you or Barre3 requires to take the new instructor training program.

19.  Additional or Repeat Operator Training Fee:  $4,000 per person. You are responsible for all travel and living expenses while taking training. The estimated range of travel and living expenses are $1,000 to $3,000 per person.

• Due Date:  Due 15 days before the operator training program begins and will be auto withdrawn from your account.

• The operating training program for one or two persons is required and included in your initial franchise fee. Your designated and approved owner must always be trained and on staff.

• You will pay Barre3 this operator training fee any time you have a new designated and approved owner, or Barre3 requires any person from your studio to retake the operator training program.

20.  Mandatory Meetings, Conventions, or Programs:  you must pay registration fees of between $500 to $1,500. You must also pay your travel expenses as well as the expenses that your employees incur in attending these events. The cost for travel ranges from $1,000 to $3,000 per person. If you or anyone required to attend does not attend a mandatory meeting, convention, or any other required event, you must pay Barre3 a nonattendance fee of $1,000 per person, regardless of cause for non-attendance.

• Due Date:  As incurred.

• Barre3 does not at this time have mandatory meetings, but it has a required annual Summit convention, and may in the future conduct other periodic meetings that you must attend.

21.  Return Check Fee:  $100 per returned check

• Due Date:  At the time the check is returned.

• Barre3 may require you to pay all subsequent orders by certified funds or electronic funds transfer.

22.  Insurance Costs:  will vary based on number of employees, location, and circumstances

• Due Date:  As incurred.

• Paid to the insurance provider.

23.  Studio Upgrades:  up to $50,000

• Due Date:  As incurred.

• Barre3 may require you to upgrade, update, or replace fixtures, equipment, or other tangible property of the studio to comply with Barre3’s standards.

24.  Music License Fee:  prorated portion of negotiated system-wide bill for music license services. Fees are currently $622, but are subject to increase.

• Due Date:  Annually.

• Fees are paid to Barre3 which then pays the vendors.

25.  Music License Administration Fee:  will vary based on a percentage of your monthly bill

• Due Date:  Barre3 does not currently charge a Music License Administration Fee, but reserves the right to do so in the future.

• Barre3 negotiates and administers music licensing agreements with two of the music licensing agencies you are required to use in the operation of your studio. Barre3 may charge a fee for this administration.

26.  Printing Fee:  will vary based on products and quantities printed. The range of estimated fees is $1,000 to $3,000 per year.

• Due Date:  As incurred.

• You must order printed materials for your studio from Barre3’s supplier. You pay Barre3’s supplier directly for these printed products.

27.  Software License Fee:  the range of estimated fees is $250 to $400 per month

• Due Date:  As incurred.

• Fees are paid to Barre3 which then pays the vendor; fees may be payable directly to a vendor in the future.

28.  Cost to De-Identify the Studio:  costs and expenses associated with ceasing operations or changing the business to a dissimilar and noncompeting business, and de-identifying the studio and yourself with Barre3’s business system

• Due Date:  Upon expiration or termination of the Franchise Agreement.

• Upon termination, expiration, non-renewal, or transfer of the Franchise Agreement for any reason, you must pay your own costs and expenses associated with ceasing operations and de-identifying your franchised location and yourself with the studio and Barre3’s business system.

29.  Management Fee:  the then-current fee Barre3 publishes in its confidential manual, which currently is $500 per day. Additionally, you must reimburse Barre3 for reasonable and actual overhead expenses.

• Due Date:  Payable at the same time as the royalty fee.

• Payable only if Barre3 elects to manage the studio after a death, permanent incapacity that results in a change in control, or during a cure period after a default of the Franchise Agreement.

30.  Optional Mentor Training (when available):  mentor training may be made available for owners and instructor mentors for $400 to $600 per person. You are responsible for all travel and living expenses. The estimated range of travel and living expenses are $1,000 to $6,000, unless this is offered online.

• Due Date:  Upon completion of mentor training, the training fees will be included on your monthly Royalties & National Marketing invoice and will be auto withdrawn from your account on the 10th day of the month following training.

• Additional mentor training may be available at Barre3’s option and your option, subject to Barre3’s availability, or Barre3 may require it in its discretion.

• Barre3 may discontinue mentor training, or change the fees for mentor training, at any time.