In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Pure Barre franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Pure Barre franchise, based on Item 7 of the company’s 2021 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Pure Barre franchise, based on Items 5 and 6 of the company’s 2021 FDD
- Section IV – Number of franchised and company-owned Pure Barre outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD
- Section V – Presentation and analysis of Pure Barre’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:
- average gross sales for each calendar month from January 2020 to February 2021 for the Pure Barre studios that were: (i) owned and operated by Pure Barre franchisees over the entirety of the Measurement Period; and (ii) had been open and operating for 11 months or more as of the end of the calendar month at issue (“Disclosed Studios”)
- average gross sales for each calendar month from January 2020 to February 2021 for the applicable subset of Disclosed Studios with active in-studio operations
- average gross sales for each calendar month from January 2020 to February 2021 for the applicable subset of Disclosed Studios with interrupted in-studio operations
Section I – Background Information
18 Things You Need to Know About the Pure Barre Franchise
President Reveals How Company Retained Most of Its Members During Lockdown
1. At the beginning of 2021, Pure Barre revealed that it had retained most of its members during the pandemic and also increased its user base. The company reported that it retained 93% of its members, while also increasing memberships by 44% over the summer (2020) when studio locations began to reopen. According to Sarah Luna, then-president of Pure Barre (now president of parent company Xponential Fitness), the company’s success across its loyal fanbase can be largely attributed to doubling down on community-building and quickly experimenting with virtual programming when faced with government-mandated shutdowns.
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2. Luna said, “Pure Barre was always known, and continues to be known, for its community and for the members who are complete enthusiasts for the workout. When we moved to the virtual world in the middle of the pandemic and when all the shutdowns happened, it was incredibly important to us that we were true to our DNA and to the environment and experience that we provided our members.”
3. Luna added that Pure Barre strategically sought out ways to keep members engaged amid temporary studio closures. Some of those strategies were as subtle as advising owners to keep storefront lights on and to leave boutiques stocked so that even “if people were walking around or driving by the studio, it still felt like there was energy coming out of those four walls,” Luna said.
4. At the same time, Pure Barre quickly pivoted to virtual events, which the company began primarily with digital social gatherings – including happy hours, networking hours, and retail events – to keep customers connected, before adding streaming workouts for existing members. Depending on the studio and local guidance from political officials, the digital classes would involve instructors either broadcasting to users live while alone at a Pure Barre location or else from the safety of their own homes.
5. Luna added, “We wanted to ensure that the Pure Barre method could be easily translated to any environment, but more importantly, the virtual environment. We did see a rise in popularity in virtual, which was exciting to see that our customers still wanted to engage with us outside of the [physical] experience.”
6. The virtual flexibility ultimately paid off. When Pure Barre locations began to reopen in early summer, the company saw an influx of new members, an upward trend Luna said the company had been experiencing before the pandemic thanks to a recent refresh of studio spaces and company marketing.
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7. “Not only were our customers connected, but they were also inviting their friends and family to participate in classes and come and join the studio because our studios were ready to put the lights back on and get going again because they never stopped,” Luna said. “That allowed us to really drive membership levels up when we were ready to reopen our businesses.”
8. Luna believes that while virtual fitness and streaming has been a viable and even lucrative alternative during the pandemic, she doesn’t foresee it taking the place of in-person exercise. She added, “At the end of the day, I feel very strongly that we are communal people and like being out with other people. The virtual experience is one way to engage, but it doesn’t replace the in-person experience and workout. We’ve seen that when our studios are allowed to open there’s this excitement both from staff and members to get back into the studio.”
Parent Company Launches Apple Watch Integration
9. In mid-March 2021, Xponential Fitness announced it was launching an upgraded studio experience through the use of Apple Watch technology across all eight of its brands, including Pure Barre, Club Pilates, CycleBar, YogaSix, StretchLab, Row House, AKT, and STRIDE.
10. This fully-integrated experience allows Xponential members and guests who utilize Apple Watch to view upcoming classes, check in to class, participate in the “Earn Your Watch” challenge, and most notably, track real-time performance data among other features. Xponential Fitness is excited to bring the Apple Watch integration to its large member base, highlighting its continued leadership within the industry.
11. Each Xponential brand’s app will integrate directly with Apple Watch allowing users to receive notifications for upcoming classes, moving off a class waitlist, class reminders, and celebration alerts for milestones met. Users will also enjoy contactless check-in, very appropriate in a post-pandemic era. Members will also have the opportunity to earn back their Apple Watch value by participating in the “Earn Your Watch” challenge by taking classes in studio.
12. Each brand’s classes will allow consumers to track and share their personal performance data for classes taken within the studio through the Apple Health app, which can also contribute to their daily Activity Rings on Apple Watch. Performance data measured will include time active, calories burned, heart rate, and average BPM.
13. Sarah Luna, president of Xponential Fitness, said, “Providing a premium member experience remains our top priority across every Xponential Fitness brand. Launching this integration with Apple Watch is an exciting opportunity to offer an enhanced in-studio experience to our high iOS member base, utilizing the incredible technology Apple has built. As our users become increasingly data and goal-oriented, this technology will help us continue to curate the best of the best workout experiences across every vertical of boutique fitness.”
14. This announcement marks yet another milestone in a breakthrough year for Xponential. Last spring, Xponential launched its proprietary streaming platform GO across all eight of its brands and kicked off partnerships with fitness giants like ClassPass and most recently, national healthcare provider UnitedHealthCare. When it comes to physical locations, Xponential is the largest player in the boutique fitness industry with over 1,700 studios across all brands worldwide.
15. Pure Barre was founded in 2001 by Carrie Rezabek Dorr in Birmingham, Michigan. Dorr, who is a choreographer, developed a fitness program that combined dance, ballet techniques, and group exercise. The classes started out in a tiny studio that only had space for about three or four people. However, Dorr’s classes became very popular through word of mouth, and demand for Pure Barre grew. Although Dorr did not have intentions to start a franchise, people would not stop asking her how they could bring Pure Barre to their cities.
16. Dorr began licensing the Pure Barre concept over the next few years and officially started franchising in 2009. The first few franchises opened around the West Coast as Dorr had moved to California. After growing Pure Barre for over a decade, Dorr decided to step down from day-to-day operations in 2015.
17. In 2017, Dorr returned to a more active role in the company as its “Chief Barre Officer,” which entails building out the company’s world-class training team and introducing a range of innovative techniques. The following year, Pure Barre was acquired by Xponential Fitness, which is also the parent company of Club Pilates, CycleBar, StretchLab, Row House, AKT, YogaSix, and STRIDE.
Entrepreneur’s Franchise 500
18. Pure Barre ranked No. 119 on Entrepreneur’s 2021 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Pure Barre franchise costs, based on Item 7 of the company’s 2021 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Pure Barre’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 459
- Outlets at the End of the Year: 491
- Net Change: +32
- Outlets at the Start of the Year: 491
- Outlets at the End of the Year: 540
- Net Change: +49
- Outlets at the Start of the Year: 540
- Outlets at the End of the Year: 571
- Net Change: +31
- Outlets at the Start of the Year: 13
- Outlets at the End of the Year: 14
- Net Change: +1
- Outlets at the Start of the Year: 14
- Outlets at the End of the Year: 2
- Net Change: -12
- Outlets at the Start of the Year: 2
- Outlets at the End of the Year: 5
- Net Change: +3
Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis
- In Part 1 of this Item 19, Pure Barre discloses the average monthly Gross Sales generated in each calendar month comprising the 2020 calendar year and the first 2 calendar months of 2021 (each, a “Calendar Month” and collectively, the “Measurement Period”), by those System Studios that were: (i) owned and operated by System franchisees over the entirety of the Measurement Period; and (ii) had been open and operating for 11 months or more as of the end of the Calendar Month at issue (for each Calendar Month, this subset of franchised Studios shall be referred to as the “Disclosed Studios”).
- In Parts 2 and 3, respectively, of this Item 19, Pure Barre discloses the average Gross Sales for each Calendar Month comprising the 2020 calendar year, as well as the first two months of 2021 (the “Measurement Period”) amongst: (i) the Disclosed Studios that were actively providing the Approved Services within their respective Studios throughout a given Calendar Month (the “Disclosed Studios with Active In-Studio Operations”); and (ii) the remaining Disclosed Studios in that same Calendar Month’s Applicable Subset that were forced to cease in-Studio operations for 1 or more days within that Calendar Month (the “Disclosed Studios with Interrupted In-Studio Operations”).
- The financial performance representations contained in this Item 19 are historical representations based on past performance of the Disclosed Studios. The following representations are based on monthly profit and loss reports provided by the owner of the Disclosed Studios.
- The below Charts in Item 19 exclude: (i) any System Studio that was reacquired or otherwise owned by Pure Barre’s affiliates at any time during the Measurement Period; and (ii) with regards to a given Calendar Month, any franchised Studio that did not have its soft opening and 11 months of operations after that soft opening as of the end of that Calendar Month.
- The Disclosed Studios sold these amounts. Your individual results may differ. There is no assurance that you’ll sell as much.
Part 1 – Average Gross Sales Amongst the Applicable Subset of All Disclosed Studios for Each Calendar Month Comprising the Measurement Period
- January 2020 (501 Studios): $30,899
- February 2020 (502 Studios): $31,874
- March 2020 (502 Studios): $23,813
- April 2020 (507 Studios): $16,528
- May 2020 (513 Studios): $15,435
- June 2020 (514 Studios): $16,492
- July 2020 (519 Studios): $16,576
- August 2020 (525 Studios): $16,598
- September 2020 (529 Studios): $17,768
- October 2020 (529 Studios): $18,923
- November 2020 (534 Studios): $20,063
- December 2020 (539 Studios): $17,786
- January 2021 (541 Studios): $17,530
- February 2021 (542 Studios): $18,152
- Total Annual Gross Sales (January 2020 to December 2020): $242,755
- Average Monthly Gross Sales (January 2020 to December 2020): $20,230
- Average Monthly Gross Sales (2020, excluding March, April, and May): $20,776
- Average Monthly Gross Sales (January 2020 to February 2021): $19,888
Part 2 – Average Gross Sales Reported by the Applicable Subset of Disclosed Studios with Active In-Studio Operations for Each Calendar Month Comprising the Measurement Period
- January 2020 (73 Studios): $34,776
- February 2020 (58 Studios): $38,535
- March 2020: N/A
- April 2020: N/A
- May 2020: N/A
- June 2020 (1 Studio): $53,024
- July 2020 (4 Studios): $27,019
- August 2020 (12 Studios): $27,441
- September 2020 (18 Studios): $24,763
- October 2020 (23 Studios): $23,185
- November 2020 (15 Studios): $27,828
- December 2020 (10 Studios): $22,800
- January 2021 (31 Studios): $24,767
- February 2021 (11 Studios): $31,377
- Total Annual Gross Sales (January 2020 to December 2020): $279,371
- Average Monthly Gross Sales (January 2020 to December 2020): $23,281
- Average Monthly Gross Sales (2020, excluding March, April, and May): $31,041
- Average Monthly Gross Sales (January 2020 to February 2021): $23,965
Part 3 – Average Gross Sales Reported by the Applicable Subset of Disclosed Studios with Interrupted In-Studio Operations for Each Calendar Month Comprising the Measurement Period
- January 2020: N/A
- February 2020: N/A
- March 2020 (1 Studio): $12,814
- April 2020: N/A
- May 2020: N/A
- June 2020: N/A
- July 2020: N/A
- August 2020: N/A
- September 2020: N/A
- October 2020: N/A
- November 2020: N/A
- December 2020: N/A
- January 2021: N/A
- February 2021: N/A
- The term “Gross Revenue” means the total revenue generated by a given Disclosed Studio over the Measurement Period, including all revenue generated from the sale and provision of any and all Approved Services at, from, or otherwise through, that Studio.
- The term “Gross Revenue” (i) excludes sales tax (that Studio owner must pay directly to the appropriate taxing authority), and (ii) does not account for revenue the Disclosed Studios may have generated by providing the Teacher Training Program.
- The “Average Gross Revenue” figure was calculated by taking the sum of all the Gross Revenue generated by the Disclosed Studios and dividing that amount by the number of Disclosed Studios in the appropriate subset at issue.
- When reviewing this Item 19 and evaluating Pure Barre’s franchise offering generally, it is particularly important to note the following characteristics of Existing Studios described in this Item 19 (as compared to a new Franchised Business):
- a. Each of the Disclosed Studios utilizes the Marks and System in a manner similar to how you will be required to use such intellectual property in the operation of the Franchised Business that is being offered under the Disclosure Document;
- b. Certain of the more mature Disclosed Studios incurred the various other pre-opening costs and expenses over the Measurement Period that you are likely to incur in connection with the development of a new Franchised Business because such Disclosed Studios were all open and operating for some time as of the date the Measurement Period commenced; and
- c. Some aspects of certain Disclosed Studios are primarily managed on a day-to-day basis by a single individual that manages such matters for both locations. While this engagement would be similar to you engaging a “Designated Manager” or other third party to assist in managing certain aspects of your Franchised Business, Pure Barre does not expect that you will be engaging such a third party at the outset of operating your new Franchised Business (unless you are a multi-unit owner).
- This Item 19 does not disclose or discuss any of the operating costs and expenses that will be incurred in connection with the establishment and ongoing operation of a Franchised Business, nor does it account for amortization, depreciation, tax liabilities, and/or costs associated with debt services (if and as applicable).
- The revenues and expenses of your business will be directly affected by many factors, such as: (a) your Designated Territory’s geographic location and population demographics; (b) advertising effectiveness based on market saturation; (c) whether you operate the business personally or hire a third party to serve as your Designated Manager; (d) your product and service pricing; (e) vendor prices on materials, supplies, and inventory; (f) personnel salaries and benefits (life and health insurance, etc.); (g) insurance costs; (h) weather conditions; (i) ability to generate customers; (j) customer loyalty; (k) employment conditions in the market; and (l) the efforts you and your personnel put into your Franchised Business.