FDD Talk: The Exercise Coach 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 Exercise Coach franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for The Exercise Coach franchise, based on Item 7 of the company’s 2020 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for The Exercise Coach franchise, based on Items 5 and 6 of the company’s 2020 FDD

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

• 2019 average, median, highest, and lowest adjusted gross revenues for the 29 franchised Exercise Coach personal training studios and 3 franchised Exercise Coach personal training suites that were open and in operation for the entire 2019 calendar year and were also open and in operation as of September 30, 2020 (“Qualifying Outlets”)

• 2019 average rent; marketing and promotion; utilities, phone, and ISP; payroll; and total operating expenses for the 17 franchised Exercise Coach personal training studios and 2 franchised Exercise Coach personal training suites that were Qualifying Outlets and also completed surveys sent out by the franchisor prior to the issuance of its 2020 Franchise Disclosure Document

Section I – Background Information

12 Things You Need to Know About The Exercise Coach Franchise

‘Smart Fitness Studio’ Concept Wise Choice for COVID-19 Era Workouts

1.  At the end of May 2020, The Exercise Coach, known as the “Smart Fitness Studio” franchise due to its bio-adaptive, robotic exercise equipment providing a customized, efficient workout, is now considered a wise choice regarding the coronavirus. “We are different from big box gyms as our appointment-based fitness studios have always been small, private and super clean,” said Brian Cygan, co-founder and CEO of The Exercise Coach. “Additionally, we have adapted our already hygienic studio environment policy to further mitigate contagion.”

2.  The Exercise Coach is a much safer fitness option. Each location meets or exceeds its local, state, and federal COVID-19 safety guidelines. Systemwide:

• The Exercise Coach is a proud user of E.P.A. registered MicroShield 360 antiviral spray;
• One-on-one private or semi-private sessions with no more than four clients per trainer;
• Workouts are scheduled by appointment only – no walk-ins;
• Employees undergo temperature checks before beginning shifts, and wear masks;
• Clients are required to use hand sanitizer (provided in all fitness studios) before workouts;
• Coaches disinfect all equipment touch points before and after every session;
• Workouts are 20 minutes, minimizing client time outside their homes.

3.  Outfitted with high-tech computerized machines, The Exercise Coach’s personalized programs are optimized for efficiency, resulting in two 20-minute workouts per week that are unmatched in effectiveness with even seven days a week of traditional exercise. The Exercise Coach’s technology is combined with the guidance of certified coaches to provide a perfect fit for any fitness level. Sessions blend strength and interval cardio training.

4.  The Exercise Coach captures the more reluctant exercise consumer – people who are either too busy to spend several hours or days per week at a gym, dislike the gym scene, or fear injuring themselves. Rather than competing with gyms to court the most athletic people, The Exercise Coach offers privacy, convenience, and guidance to change the quality of life for people who are less familiar with fitness successes.

Reaches 100 U.S. Locations

5.  At the beginning of March 2021, The Exercise Coach reached a major milestone of having 100 locations open across the United States, as well as 35 locations in Japan. The Exercise Coach is the only network of fitness studios authorized to use the bio-adaptive, AI-enabled Exerbotics technology.

6.  Its appointment-only, private studio-based personal training lent itself particularly well to safety concerns during the COVID-19 pandemic. The Exercise Coach outpaced the average Franchise 500 footprint by growing 15% during a very challenging year, while the average growth rate of others on the esteemed list was 3%.

7.  According to Brian Cygan, co-founder and CEO of The Exercise Coach, “Our private, boutique personal training business model lends itself to increasing consumer confidence during this pandemic. With fewer than 10 clients, trainers and staff in any Exercise Coach studio at a time, for example, clients are able to socially distance and trainers are able to sanitize each piece of equipment before every use. Our focus at The Exercise Coach has always been on employing scientific strength training to help people resist and reverse the typical aging process. Now, more than ever, people over age 50 are motivated to get in shape and address the very comorbidities that could also complicate a COVID-19 infection.”

8.  Cygan’s goal for the franchise is to see 250 U.S. locations and 100 Japanese locations open by the end of 2023. He hopes to open in additional international markets by that time as well.

Company History

9.  The Exercise Coach was founded in 2000 by Brian Cygan and his wife Gerianne in Illinois. Brian Cygan had years of experience in the fitness industry as a personal trainer and strength and conditioning coach. Cygan, who has a degree in Kinesiology, has extensively studied health and nutrition information. The Cygans wanted to create a better and more effective workout program than what was available at the time. They opened two Exercise Coach studios and ran them for the next decade.

10.  In 2009, the Cygans established an exclusive sales distribution partnership with Exerbotics. At the time, Exerbotics was an R&D company with a near-market-ready line of robotic strength training machines. Under the new partnership, the Cygans began to develop a franchise business model for The Exercise Coach. Franchising launched in 2011 and The Exercise Coach quickly garnered attention from several news publications.

11.  In 2015, Cygan assembled a group of investors to acquire Exerbotics. Brian Cygan now serves as the CEO of The Exercise Coach and Exerbotics. Gerianne Cygan works as the Administrative Director of The Exercise Coach. Today, there are Exercise Coach locations across the U.S. and in Japan.

Entrepreneur’s Franchise 500

12.  The Exercise Coach ranked No. 161 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of The Exercise Coach 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 The Exercise Coach’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:  37
• Outlets at the End of the Year:  39
• Net Change:  +2

2018

• Outlets at the Start of the Year:  39
• Outlets at the End of the Year:  38
• Net Change:  -1

2019

• Outlets at the Start of the Year:  38
• Outlets at the End of the Year:  68
• Net Change:  +30

Company-Owned

2017

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

2018

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

2019

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

• An Exercise Coach franchised business can either be: (1) a personal training studio, which is a retail location ranging from 1,400 to 2,000 square feet that is designed to have publicly-visible signage and fit into the retail landscape of a local market; or (2) a personal training suite, which is an office location ranging from 800 to 1,200 square feet.

• Both the studio and suite models are designed to reach into the local community and are publicly-accessible training locations. The suite model was designed to lower the franchisee’s total initial and ongoing operating expenses, although the business operated under each model is substantially similar.

• The Exercise Coach has provided financial performance data only for franchised outlets. It has excluded data from its 2 affiliate-owned outlets.

• The Exercise Coach has also excluded data from the 3 franchised outlets owned and operated by its Chief Operating Officer, Brad Bundy. Mr. Bundy’s outlets are not “affiliates” of The Exercise Coach. However, his outlets are experimental outlets that implement new and untested products, services, and marketing strategies to determine whether such products, services, or strategies should be implemented throughout the system. These variations have a material effect on the Adjusted Gross Revenues generated by his outlets that would not be typical for any other franchised outlet. For that reason, the results of Mr. Bundy’s outlets have been excluded from the financial performance representations.

Part 1 – Adjusted Gross Revenues

• The financial performance representations in Part 1 include data from all outlets that are Qualifying Outlets. A “Qualifying Outlet” is defined as an Exercise Coach personal training studio or personal training suite that meets both of the following criteria:

• (i) The outlet was open and in operation for the entire 2019 calendar year and was also open and in operation as of September 30, 2020 (this includes outlets that temporarily closed in 2020 due to the COVID-19 pandemic but subsequently reopened); and

• (ii) The outlet was not owned and operated by The Exercise Coach, any of its affiliates, or any of its officers.

• As of September 30, 2020, there were 96 Exercise Coach outlets open and operating (46 personal training studios and 50 personal training suites), and 32 of these outlets are Qualifying Outlets (29 personal training studios and 3 personal training suites).

Personal Training Studios (2019 Annual)