In this FDD Talk post, you’ll learn the following:
- Section I – Background information on The Barre Code franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for The Barre Code franchise, based on Item 7 of the company’s 2021 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for The Barre Code franchise, based on Items 5 and 6 of the company’s 2021 FDD
- Section IV – Number of franchised and company-owned The Barre Code 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 The Barre Code’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:
- fiscal year 2019 and fiscal year 2020 gross revenue, cost of gross revenue, certain operating expenses (manager compensation, contracted labor, payroll tax and service fees, rent, other studio expenses, office expense, insurance expense, other selling, general and administrative expenses), and net operating income for The Barre Code affiliate’s 4 fitness studios
- 2020 annual revenue for the 27 The Barre Code franchisees who were open and operating as of December 31, 2020
Section I – Background Information
14 Things You Need to Know About The Barre Code Franchise
Signs New Partnership with Franworth
1. In mid-November 2020, Franworth, a franchise-focused growth equity firm, announced that it had signed a partnership with The Barre Code, marking the continued expansion of the company’s beauty and wellness division. Founded in 2010 by entrepreneurial duo Ariana Chernin and Jillian Lorenz, The Barre Code is widely-known for its results-driven fitness offerings centered on cardio, strength, and restoration and focused on women empowerment, with 44 studio locations across 17 states (at the time of the announcement).
2. As a leader in accelerating growth for beauty and wellness concepts, Franworth will leverage the firm’s 450 years of combined franchise experience to fuel The Barre Code’s efforts to expand its footprint across the U.S.
3. Jillian Lorenz, co-founder of The Barre Code, said, “Becoming a Franworth partner gives us access to the unparalleled expertise of John Rotche and his team of franchising industry veterans, and we are thrilled for an opportunity to join the company’s portfolio and take The Barre Code to new heights. Over the past 10 years, we’ve grown the brand from a single unit in Chicago to a national fitness franchise concept, and we look forward to leveraging Franworth’s expansive resources to build on this momentum. The strength and viability of our business model has enabled The Barre Code to weather the COVID-19 pandemic and head into 2021 positioned for explosive franchise development growth in markets nationwide.”
4. The Barre Code’s founders selected Franworth in their milestone 10th year in business to gain the expertise of an experienced team with resources to accelerate value for their brand and independently owned and operated franchises. This partnership offers The Barre Code’s team the space to focus on their mission of creating programming to grow a best-in-class fitness program for everybody and every BODY, while promoting personal growth and self-acceptance.
5. Chernin and Lorenz designed The Barre Code around the unique mindset, “you have everything to gain and nothing to lose” as clients of all fitness levels access three core formats: Barre, Bootcamp, and Brawl (a high-energy kickboxing style class).
6. Dave Keil, president and COO of Franworth, added, “As fellow University of Michigan graduates with their first franchise location based in Ann Arbor, our founder and CEO John Rotche developed and maintained a great relationship based on shared values and culture with Jillian and Ariana several years ago. In the midst of the COVID-19 pandemic, the timing for The Barre Code team to join our portfolio allows this established brand the opportunity to collaborate with our team and our other innovative and women-led concepts with membership models on growing retail and athleisure and further expanding their On Demand fitness offering.”
7. Franworth offers The Barre Code and its partnership brands – new and emerging – access to resources and efficiencies for the franchisor through its broad menu of services including finance, franchise administration, real estate, construction, operations and on-boarding, marketing, franchise sales, fulfillment and distribution, and executive advisory. Franchisees also benefit from purchasing power of back-office services available through Franworth.
Franchise Hosts Unique Class to Raise Funds for Local Charity
8. In mid-July 2021, The Barre Code of Grand Rapids, Michigan hosted its fourth annual benefit outdoor fitness class on the Blue Bridge – accessible on either side of the river, at 100 Front St. NW or 55 Campau Ave. NW – in downtown Grand Rapids. The class, led by one of the studio’s instructors, blended three class styles. Tickets were $15, and $5 of each purchase was donated to The South East Market’s Pay-It-Forward program.
9. The South East Market, at 1220 Kalamazoo Ave. SE, sources food from Black, Indigenous, women farmers and has a mission to increase access to healthy, affordable, and culturally appropriate food for the community through a sustainable and equitable lens. Donations to the Pay-It-Forward program will help the market purchase local, sustainably-raised meat, poultry, and produce from local, Black farms.
10. Stacie Thomas, owner of The Barre Code Grand Rapids, said, “Our Blue Bridge class is something we look forward to every year, and we are so honored and excited to be partnering with The South East Market for this year’s event. It is always so special to see the community come together for an empowering and fun evening that benefits a meaningful cause.”
11. Participants received a complimentary treat from Kona Ice of West Grand Rapids and were treated to live music from DJ Adrian Butler.
12. The Barre Code was founded in 2010 by Jillian Lorenz and Ariana Chernin in the River North neighborhood of Chicago, Illinois. Lorenz and Chernin had met just the year before, but became quick friends as they bonded over their passion for women’s fitness. The two, who had been independently choreographing workout routines for years, joined forces to create Barre Bee Fit (The Barre Code’s original name), a complete fitness program specially engineered for women. After months of testing and perfecting the program, they opened the first Barre Code gym in 2010.
13. From the start, The Barre Code was incredibly popular and within a few months, the studio needed to add a second room to accommodate high demand. Lorenz and Chernin opened a few more locations before they started franchising in 2012. Today, there are The Barre Code gyms around the United States. Lorenz and Chernin still own and operate the company and serve as co-CEOs.
Entrepreneur’s Franchise 500
14. The Barre Code ranked No. 195 on Entrepreneur’s 2021 Franchise 500 list.
Section II – Estimated Costs
- Detailed estimates of The Barre Code franchise costs, based on Item 7 of the company’s 2021 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Detailed information on The Barre Code’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: 28
- Outlets at the End of the Year: 31
- Net Change: +3
- Outlets at the Start of the Year: 31
- Outlets at the End of the Year: 38
- Net Change: +7
- Outlets at the Start of the Year: 38
- Outlets at the End of the Year: 35
- Net Change: -3
- 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: 5
- Net Change: -1
- Outlets at the Start of the Year: 5
- Outlets at the End of the Year: 4
- Net Change: -1
Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis
Part 1 – Certain Revenue and Expense Information from The Barre Code’s Affiliate
- The following table provides certain revenue and expense information from The Barre Code’s affiliate, BB Fit, LLC. The information is reported as it has been provided to The Barre Code.
- The information is unaudited and represents 4 fitness studios. Each calendar year for 2019 and 2020 are shown and each is referred to as a “Measurement Period”.
Fiscal Year 2019
- Membership, Classes, and Other: $1,359,532
- Merchandise: $80,064
- Less: Returns and Discounts: ($1,019)
- Total Gross Revenue: $1,438,577
Cost of Gross Revenue
- Instructor Costs: $369,454
- Merchandise and Beverage Costs: $44,568
- Merchant Service Fees: $36,833
- Total Cost of Gross Revenue: $450,855
Gross Revenue Less Total Cost of Gross Revenue: $987,722
Estimated Royalty and Marketing: $115,086.15
Certain Operating Expenses
- Manager Compensation: $151,299
- Contract Labor: $63,935
- Payroll Tax and Service Fees: $22,360
- Rent Expense: $276,795
- Other Studio Expenses: $44,367
- Office Expense: $26,124
- Insurance Expense: $27,127
- Other SG&A Expenses: $67,215
- Total Certain Operating Expenses: $679,222
Total Gross Revenue Less Total Cost of Gross Revenue Less Total Certain Operating Expenses: $193,415
Fiscal Year 2020
- Membership, Classes, and Other: $896,480 (98.9%)
- Merchandise: $13,211 (1.5%)
- Less: Returns and Discounts: ($3,494) (0.4%)
- Total Gross Revenue: $906,196 (100.0%)
Cost of Gross Revenue
- Instructor Costs: $104,033 (11.5%)
- Merchandise and Beverage Costs: $12,295 (1.4%)
- Merchant Service Fees: $27,650 (3.1%)
- Total Cost of Gross Revenue: $143,977 (15.9%)
Gross Revenue Less Total Cost of Gross Revenue: $762,219 (84.1%)
Estimated Royalty and Marketing: $72,495.70 (8.0%)
Certain Operating Expenses
- Manager Compensation: $128,989 (14.2%)
- Contract Labor: $21,182 (2.3%)
- Payroll Tax and Service Fees: $50,742 (5.6%)
- Rent Expense: $257,672 (28.4%)
- Other Studio Expenses: $27,697 (3.1%)
- Office Expense: $15,499 (1.7%)
- Insurance Expense: $43,463 (4.8%)
- Other SG&A Expenses: $63,235 (7.0%)
- Total Certain Operating Expenses: $608,479 (67.1%)
Total Gross Revenue Less Total Cost of Gross Revenue Less Total Certain Operating Expenses: $81,245 (9.0%)
- “Gross Revenue” means all revenue derived from or through the business over the Measurement Period, including all revenue generated from the sale of products and services but does not include any sales tax or other amounts that were collected and remitted to a taxing authority.
- “Total Cost of Gross Revenue” means the total amount incurred over the Measurement Period related to the sale of approved products and services, including the cost of instructor wages, merchandise and beverages, and merchant services. This figure excludes non-instructor wage expense.
- “Estimated Royalty and Marketing” has been calculated by The Barre Code based on the amount of the royalty fees and marketing fund contribution the Studios would have paid to The Barre Code over the Measurement Period if the Studios were operated as a franchised location.
- These Studios did not actually pay any royalty fee or marketing fund contribution to The Barre Code over the Measurement Period. The Estimated Royalty and Marketing calculation is included in the chart so that you are able to take this fee into account when you evaluate your franchise location.
- “Total Certain Operating Expenses” is the sum of all of the operating expenses listed in the chart, but the chart is not intended to include all of the expenses you will incur in the establishment and operation of a Studio such as taxes, other professional fees, and other administrative expenses. In addition, expense items such as interest, depreciation, and amortization have not been included in this chart.
Part 2 – 2020 Annual Revenue by Franchisee
- The following table represents the annual revenue for each franchisee who was open and operating as of December 31, 2020. All studios owned by the same entity were consolidated for the purposes of this representation. No studios were excluded.
- Franchisee 1 (1 studio): $120,087
- Franchisee 2 (2 studios): $223,975
- Franchisee 3 (1 studio): $76,669
- Franchisee 4 (4 studios): $723,112
- Franchisee 5 (2 studios): $309,728
- Franchisee 6 (2 studios): $132,928
- Franchisee 7 (1 studio): $130,238
- Franchisee 8 (1 studio): $67,039
- Franchisee 9 (1 studio): $220,909
- Franchisee 10 (1 studio): $111,615
- Franchisee 11 (1 studio): $118,799
- Franchisee 12 (1 studio): $92,392
- Franchisee 13 (2 studios): $225,618
- Franchisee 14 (1 studio): $133,193
- Franchisee 15 (1 studio): $134,191
- Franchisee 16 (1 studio): $148,288
- Franchisee 17 (1 studio): $171,218
- Franchisee 18 (1 studio): $147,445
- Franchisee 19 (1 studio): $15,930
- Franchisee 20 (1 studio): $158,091
- Franchisee 21 (1 studio): $195,598
- Franchisee 22 (1 studio): $244,681
- Franchisee 23 (2 studios): $221,695
- Franchisee 24 (1 studio): $107,516
- Franchisee 25 (1 studio): $57,813
- Franchisee 26 (1 studio): $34,445
- Franchisee 27 (1 studio) (opened September 2020): $8,001
- Average Annual Revenue Per Franchisee for All 27 Franchisees: $160,415
- Average Annual Revenue Per Franchisee for Franchisees 1 to 26 (i.e. those that opened before January 1, 2020): $166,277
- Average Annual Revenue Per Studio for All 27 Franchisees: $123,749
- Average Annual Revenue Per Studio for Franchisees 1 to 26 (i.e. those that opened before January 1, 2020): $127,153