In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Club Pilates franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Club Pilates 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 Club Pilates franchise, based on Items 5 and 6 of the company’s 2020 FDD
- Section IV – Number of franchised and company-owned Club Pilates 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 Club Pilates’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2019 average, median, highest, and lowest gross revenue for the 363 franchised Studios that were (a) open and operating for the period beginning January 1, 2019 and ending December 31, 2019 (the “Measurement Period”), and (b) operated by Club Pilates’ System franchisees utilizing at least 12 reformers as required by the current franchise offering and System (collectively, the “Representative Franchised Studios”)
Section I – Background Information
19 Things You Need to Know About the Club Pilates Franchise
Continues to Grow Despite Ongoing COVID-19 Pandemic
1. In mid-June 2020, Club Pilates announced that it was set to open 21 new locations by the end of that month. While some of these new studio openings were delayed due to the COVID-19 pandemic, a majority of the new locations were in the studio pipeline with owners eagerly pushing forward to take advantage of the increased interest in boutique fitness to be more health conscious, bolster immune systems, and deal with the psychological and emotional aspects of the pandemic.
2. Shaun Grove, president of Club Pilates, said, “As our communities come out of stay-at-home orders, we are seeing an increase in interest in our studios which have always had built-in physical distancing with more than six-feet between each personal workout station for class participants. It is due to the passion of our members and the commitment of our franchise owners that we are able to open new locations through the COVID-19 pandemic. These new studios will help us service the demand for Pilates which continues to grow across the country and around the world.”
3. The addition of these 21 studios elevates the brand to 615 studios across the country, along with studios in Canada, Japan, and South Korea. The new studios were opened in Colorado, Florida, Texas, Ohio, Michigan, Arizona, Arkansas, Louisiana, and British Columbia. There are five additional locations in New York, New Jersey, Virginia, North Carolina, and California that will open as soon as their corresponding counties reopen.
4. Depending on local government mandates, Club Pilates studios, following the mandated shut downs, will re-open with additional safety measures in place, which may include reduced class sizes, increased cleanliness standards, and adjusted contactless check-in procedures.
Signs Master Franchise Agreement for Singapore
5. In mid-February 2020, Club Pilates announced plans to expand into Southeast Asia, with the signing of a Master Franchise Agreement for Singapore. This gives the Master Franchisee the right to license at least 15 Club Pilates studios to potential franchisees in the country over the next several years.
6. The Singapore agreement is a collaboration between Xponential Fitness and Idea Link Pte. Ltd., which is owned and operated by Naoki Shimabukuro and Akira Onoue, the owners of Club Pilates Japan Co. Ltd. The Club Pilates expansion into Singapore was expected to begin with the opening of the first studio in the Fall of 2020.
7. John Kersh, chief international development officer for Xponential Fitness (parent company of Club Pilates), said, “With the rapid growth of the fitness market in Singapore, we believe that Club Pilates will be an excellent and strategic fit for our business. We continue to see international expansion as a growth opportunity and are excited to partner again with Naoki and Akira to introduce Xponential Fitness to another new market and to bring the Club Pilates brand to this burgeoning fitness community.”
8. Just prior to the Singapore announcement, Xponential Fitness announced the signing of a Master Franchise Agreement for Germany and Austria, a development expected to bring numerous Xponential Fitness studios to those countries over the next five years. Additionally, the company expects to have a new presence in the Middle East after signing a multi-brand Master Franchise Agreement for Saudi Arabia, to license studios to potential franchisees in the country over the next three years, including Club Pilates, Pure Barre, CycleBar, YogaSix, and AKT.
9. The company already has a presence in Canada and Japan and had studios slated to open in South Korea in February of 2020.
Parent Company Signs Exclusive Multi-Year Global Deal with ClassPass
10. In early September 2020, Xponential Fitness named ClassPass the exclusive aggregator for all eight of its brands worldwide. Xponential is the curator of leading brands across every vertical of the boutique fitness space, with a portfolio that includes Club Pilates, CycleBar, StretchLab, Row House, AKT, YogaSix, Pure Barre, and STRIDE. In addition to almost 1,600 studio locations in the US and Canada alone, Xponential has close to 4,000 franchise licenses sold across 10 countries.
11. With this partnership, any Xponential studio or franchisee who opts to market in-person or digital fitness classes through an aggregator will do so through ClassPass.
12. Anthony Geisler, CEO of Xponential Fitness, said, “Our brands have seen proven benefits from ClassPass’s transition from the Unlimited model to Credits and the release of its inventory management tools for studios. Given the positive impact ClassPass has had for our franchise partners, we are excited to enhance the partnership, especially as ClassPass continues to rapidly acquire new corporate and enterprise clients.”
13. Founded in 2013, ClassPass is the largest aggregator of fitness and wellness brands. ClassPass offers access to 30,000 studios, gyms, and wellness providers, as well as a growing catalog of on-demand and livestreamed digital fitness options.
14. In addition to building the largest B2C fitness marketplace in the world, ClassPass also entered the employee benefits space in 2019. ClassPass now partners with more than 2,000 corporate clients, equipping employers with flexible Corporate Wellness options for their teams. Individual subscribers and professionals on employee-sponsored plans will both have access to Xponential’s suite of high-energy, motivating workouts.
15. Fritz Lanman, CEO of ClassPass, added, “ClassPass curates the top fitness brands in the world, all through one membership. Xponential brands such as Club Pilates, Pure Barre, CycleBar and Row House are some of the most popular and sought after classes by our members, and we’re thrilled to add on-demand and livestream video content as part of this expanded partnership. This multi-year deal will provide our corporate clients with exclusive access to Xponential brands, something no other Corporate Wellness program offers.”
Company History
16. Club Pilates was founded in 2007 by Allison Beardsley in San Diego, California. Beardsley based her fitness program on Joseph Pilates’ original Reformer-based Contrology Method, but added a modernized twist with group practice and modern equipment. She also wanted make sure that her classes were more affordable than traditional Pilates lessons. The Club Pilates concept was very popular from the start and Beardsley began franchising in 2012.
17. Despite the success, Beardsley soon realized that she was not equipped to continue running the growing company. In 2015, Beardsley sold Club Pilates to LAG Fit (now Xponential Fitness), a franchise development firm that specializes in the acquisition and expansion of boutique wellness concepts, which was founded by Anthony Geisler. Beardsley has retained 25 percent ownership of Club Pilates.
18. Under Xponential Fitness, Club Pilates’ growth picked up even more and by 2019, the brand had grown to 500 locations. Today, there are Club Pilates gyms all across the United States as well as Canada, Japan, and South Korea.
Entrepreneur’s Franchise 500
19. Club Pilates ranked No. 69 on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Club Pilates 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 Club Pilates’ 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: 74
- Outlets at the End of the Year: 203
- Net Change: +129
2018
- Outlets at the Start of the Year: 203
- Outlets at the End of the Year: 379
- Net Change: +176
2019
- Outlets at the Start of the Year: 379
- Outlets at the End of the Year: 553
- Net Change: +174
Company-Owned
2017
- Outlets at the Start of the Year: 3
- Outlets at the End of the Year: 0
- Net Change: -3
2018
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 0
- Net Change: 0
2019
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 0
- Net Change: 0
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
- This Item 19 discloses the historical financial information regarding the 363 franchised Studios that were (a) open and operating for the period beginning January 1, 2019 and ending December 31, 2019 (the “Measurement Period”), and (b) operated by Club Pilates’ System franchisees utilizing at least 12 reformers as required by the current franchise offering and System (collectively, the “Representative Franchised Studios”).
- Of the franchised Studios operating as of December 31, 2019, Club Pilates excluded the information of (a) the 174 franchised Studios that did not open until some point in 2019 and were not open for the entire 2019 calendar year, (b) 3 franchised Studios that experienced a substantive interruption in Studio operations due to flooding or other condition that rendered the Studio inoperable for part of the 2019 calendar year, and (c) 13 other Studios on the grounds that they did not utilize at least 12 Pilates Reformer exercise machines in their operations as required under Club Pilates’ current System standards and specifications (and as part of Club Pilates’ standard franchise offered under the current Disclosure Document).
- This information was provided to Club Pilates by the respective owners of the Representative Studios (except for the company‐owned Studios). Club Pilates has not audited this information or independently verified this information.
- Some Studios have sold this amount. Your individual results may differ. There is no assurance that you’ll sell as much.
Average Gross Revenue Amongst Representative Franchised Studios Over the Measurement Period
Representative Franchised Studios
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