In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the barre3 franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a barre3 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 barre3 franchise, based on Items 5 and 6 of the company’s 2020 FDD
- Section IV – Number of franchised and company-owned barre3 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 barre3’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- 2019 average, median, maximum, and minimum gross revenue for the 112 franchisee-owned barre3 outlets that were open and operating in the U.S. for at least all 12 months of the Reporting Period (January 1, 2019 to December 31, 2019), grouped by length of time open (12-36 months, 37-60 months, 61+ months, and all)
- 2019 average, median, maximum, and minimum gross revenue for the 6 company-owned barre3 outlets that were open and operating in the U.S. for at least all 12 months of the Reporting Period (January 1, 2019 to December 31, 2019), grouped by length of time open (37-60 months, 61+ months, and all)
Section I – Background Information
12 Things You Need to Know About the barre3 Franchise
Debuts Signature Leggings
1. In mid-April 2020, barre3 announced the launch of its signature leggings. According to Elena Rotondi, vice president of retail for barre3, “When we decided to make our own legging, we knew it had to deliver on every level. To us, that means fit and performance, of course, but also affordability, ethical factory standards, and a thoughtful approach to the environment – plus extended sizes to provide for our clients and customers.”
2. According to barre3, its retail team worked hard to create a legging that feels good on and makes it something that clients can feel good about. The leggings took two years of research, development, and testing to create and it was added to the B3 shop on April 22.
3. According to barre3, the following factors make its leggings stand out:
- A Factory Partnership barre3 Is Proud Of – barre3’s retail team searched the world – quite literally – when deciding where to produce the barre3 Signature Legging. The final choice: a family-owned garment factory in Colombia. Eighty percent of the employees are single working mothers or heads of households, providing much-needed income for women supporting their family. All employees earn at least the minimum wage, and 70% of the employees earn above that. The factory provides important wellness initiatives for the employees, including on-site medical services and routine stretching exercises throughout each day.
- Eco-Forward Efforts – barre3 said that it was careful to choose a fabric mill with state-of-the-art water treatment and recycling systems, reducing waste by more than 80%. barre3 also went a step further in its waste-reduction efforts: the barre3 Signature Scrunchie is made from fabric remnants of the signature legging, saving the scraps from being discarded in a landfill. Additionally, sourcing the legging (and scrunchie) from the Western Hemisphere helps reduce carbon emissions.
- Fit, Performance, and Price Point – When barre3 set out to create these leggings, the brand knew they had to fit flawlessly, feel luxurious, and perform around the clock – and the brand needed to deliver all of that at a price point it could feel good about. barre3 is happy to say that it has hit every mark. The barre3 Signature Legging is made of four-way-stretch fabric, which means it moves with the wearer and keeps its shape, no matter how many thousands of Sumo Squats or Runner’s Lunges someone puts it through. The high-waisted fit is both comfortable and flattering, and the ⅞ length means the legging works for all seasons. And because barre3 wants everyone to be able to enjoy the barre3 Signature Legging, it’s available in sizes XS through XXXL, and it costs far less than other leggings in its category.
4. In the same blog post, barre3 mentioned that it has three more signature items to be released at a later date.
Co-Founders Pledge Commitment to Change and Be More Inclusive
5. Back in early June 2020, as the Black Lives Matter (BLM) movement gripped the United States, the co-founders of barre3, Sadie and Chris Lincoln, published a blog post pledging their commitment to implement changes to promote inclusivity. The Lincolns began the letter by stating, “Our first step is to be honest, transparent, and accountable about how we have participated in systemic racism. It starts with us, the co-founders of barre3. We are both white leaders with privilege, and we are actively learning how our implicit white bias has led to our organization’s makeup being predominantly white. This needs to change.”
6. The Lincolns added, “A mantra you may have heard us say in class is guiding us right now: ‘Whatever it is you practice, you become.’ We recognize that we have practiced white bias, which has led to inequality within our organization. Instead, we will practice challenging our own white bias every day. We will practice confronting the cycle of systemic racism in our own company. We will practice building a community that better reflects racial equality at barre3. A practice is not a performance; it is a lifetime commitment to education, listening, learning from mistakes, being self-aware, and continually taking steps for real change.”
7. Some of the actions that the Lincolns took during the BLM movement included:
- Hosting open conversations with barre3’s team about their participation in systemic racism and their commitment to change.
- Increased their investment in Equity, Diversity, and Inclusion (EDI) and identified their top three candidates for EDI advisors. The Lincolns said they would make their final selection by the end of the month.
- Compiled a guide of anti-racism resources and distributed it across barre3’s corporate and studio teams to begin the ongoing process of educating themselves as individuals and as a company.
- Donated 100% of proceeds from June 3rd’s sales in the B3 Shop to Black Lives Matter, for a total donation of $14,587.
- On Saturday, June 6, proceeds from all classes held in barre3’s corporate-run studios in Portland and New York were donated to Word is Bond and the NAACP.
- Started a barre3 anti-racism book club, where they will read and discuss a different book focused on race and racial injustice each month. The book for June was So You Want to Talk About Race by Ijeoma Oluo.
8. Moving forward, here are the long-term commitments that the Lincolns and barre3 are making to create sustainable change from the inside out:
- Investing in EDI training for system-wide change at barre3.
- Continue to be honest and transparent about their work in this area.
- Hold themselves accountable and not rely on members of the BIPOC community to be responsible for their anti-racist education.
9. The Lincolns ended the letter by stating, “We will continue to provide updates and transparency as we learn and grow together. We invite you to bookmark this page and return to it regularly to check in on our progress.”
10. barre3 was founded in 2008 by Sadie and Chris Lincoln in Portland, Oregon. The fitness program developed by Sadie Lincoln is a fully-balanced workout combining strength conditioning, cardio, and mindfulness. The Lincolns set out to create a fitness model that was “refreshingly different from the traditional fitness world.” According to the brand’s website, instead of striving to reach an external ideal, at barre3 people exercise to feel present and alive in their bodies just as they are in this moment.
11. Not long after opening the first studio, the Lincolns began franchising barre3 and over the past decade, the brand has opened locations all around the United States. barre3 has also developed an online workout platform with subscribers in 98+ countries.
Entrepreneur’s Franchise 500
12. barre3 did not rank on Entrepreneur’s 2021 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of barre3 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 barre3’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: 83
- Outlets at the End of the Year: 103
- Net Change: +20
- Outlets at the Start of the Year: 103
- Outlets at the End of the Year: 113
- Net Change: +10
- Outlets at the Start of the Year: 113
- Outlets at the End of the Year: 125
- Net Change: +12
- Outlets at the Start of the Year: 6
- Outlets at the End of the Year: 6
- Net Change: 0
- Outlets at the Start of the Year: 6
- Outlets at the End of the Year: 8
- Net Change: +2
- Outlets at the Start of the Year: 8
- Outlets at the End of the Year: 9
- Net Change: +1
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
- Provided in this Item 19 is Gross Revenue (defined below) data from franchisee-owned outlets (Part 1) and company-owned outlets (Part 2) operating in the U.S. from January 1, 2019 to December 31, 2019 (the “Reporting Period”).
- The data used for the calculations presented in this Item 19 was collected from the point of sale software system barre3 requires franchisees to use and uses itself. barre3 has not audited the figures reported to its point of sale system by franchisees, or otherwise conducted any investigation as to the accuracy of the data collected or presented.
- There were 127 franchisee-owned outlets open in the U.S. during some or all of the Reporting Period.
- Part 1 includes data on the 112 franchisee-owned outlets that were open at least all 12 months of the Reporting Period, and excludes 15 franchisee-owned outlets that were operational for less than 12 months in 2019 either due to the fact that these outlets opened or closed during the year.
- Data on these 15 outlets has been excluded either because Gross Revenue fluctuations typical of a business in its first year of operations is not representative of the Gross Revenue generated by outlets that have completed this initial opening phase and have achieved more operational stability; or in the case of a closure, because they only generated operational data for part of the year.
- The data reported also excludes 5 outlets operating in the Philippines operating under a license agreement, and 3 franchisee-owned outlets operating in Canada.
- There were 6 company-owned outlets open and operating in the U.S. during the 2019 Reporting Period. Part 2 includes data on these 6 company-owned outlets.
- All franchisee-owned outlets and company-owned outlets for which data is presented in this Item 19 are called “Reporting Units.”
- Gross Revenue means the total of all receipts derived from all sales of products or services at or through a Reporting Unit; insurance claims for lost profits to the extent a claim is paid by the insurer; and all other products and services sold or provided by or through the Reporting Unit, whether the receipts are evidenced by cash, credit, checks, gift certificates, scrip, payment coupons, services, property, or other means of exchange.
- Gross Revenue does not include: the amount of any tax imposed by any governmental authority directly on sales collected from customers, provided that the amount of any such tax is shown separately and in fact paid by the Reporting Unit to the appropriate governmental authority.
- Gross Revenues are deemed received by a Reporting Unit at the time the services or products were derived, delivered, or rendered or at the time the relevant sale takes place, whichever occurs first, regardless of whether final payment (e.g., collection on a customer’s personal check) actually has been received by the Reporting Unit.
- To calculate the information provided in the charts below, the Reporting Units were divided into three groups: (1) those open for 12-36 months prior to January 1, 2020; (2) those open for 37-60 months prior to January 1, 2020; and, (3) those open for 61 months or more prior to January 1, 2020. The number of Reporting Units in each of the above-described groups was then added together.
- Gross Revenue data used for purposes of the calculations presented in this Item 19 was obtained for each Reporting Unit from barre3’s required point of sale software system. However, assumptions were made for franchisees who own more than one outlet, because barre’s required point of sale software system aggregates revenue generated from online sales across all outlets under common ownership.
- To attribute Gross Revenue for a Reporting Unit owned by a franchisee who owns multiple Reporting Units, the combined revenue attributed to service (not product) revenue for all Reporting Units under such common ownership was multiplied by the percentage of customers attending classes at the particular Reporting Unit relative to the total number of customers attending classes at all commonly owned Reporting Units during the Reporting Period; the product of that equation was then attributed to the Reporting Unit.
Part 1 – Franchisee-Owned Reporting Units
Length of Time Open (as of December 31, 2019): 12-36 Months