barre3 Franchise Costs: Estimated Initial Investment (Item 7, 2021 FDD)
1. Initial Franchise Fee: $41,250 to $50,000
- The initial franchise fee for your first studio is $50,000.
- barre3 will discount its then-current initial franchise fee for any additional studios you purchase after your initial studio franchise. The discounted initial franchise fee is currently $41,250.
- The initial franchise fee is due when you sign the related Franchise Agreement and is nonrefundable once paid.
2. Financing Fees: $0 to $10,900
- Neither barre3 nor its affiliates offer any financing for your initial investment.
- Financing fees include amounts that may be payable for items like closing costs and SBA loans, financial broker fees, and contingency accounts required by the SBA and interim interest.
- The figures provided are just an estimate and the actual fees may vary depending on your creditworthiness and the financial markets generally.
3. Insurance: $1,275 to $3,500
- The range of insurance costs provided above assumes that you will purchase insurance between 9 and 12 months after signing your Franchise Agreement and that you will be making monthly payment installments from this time through the first 3 months of your studio operations.
- The cost for insurance will vary depending on where you are located, the type of property you lease, the number of employees you have, and other factors. The types of insurance included in the range of costs consist of property, general liability, workers’ compensation, cyber liability, and employment practices liability.
- You may wish to purchase insurance over the limits barre3 requires or additional types of coverage. The cost for higher limits and additional types of coverage are not included in the range provided in the table.
4. Travel and Room and Board While Attending the Operator Training Program and Instructor Training Program: $0 to $10,000
- Included in your initial franchise fee, barre3 provides (i) an operator training program for you (or your designated and approved owner) and your approved operations manager (if applicable) and (ii) an instructor training program for you (or your designated and approved owner) and up to 5 of your employees.
- Portions of these training programs are required to be attended in person unless offered virtually due to the COVID-19 pandemic. Unless offered virtually, in person training will take place in the Portland, Oregon area or at another location designated by barre3.
- You must pay for airfare, lodging, ground transportation, salaries and benefits, and any other personal expenses attendees might incur while taking the training programs in accordance with the laws in your jurisdiction.
5. Lease, Utility, and Security Deposit: $5,979 to $16,126
- If you do not own adequate space from which to operate your studio, you must lease space for your studio. The typical size of a studio is approximately 1,400 to 2,000 square feet.
- Most studios will be located in a retail shopping center or on a street with high visibility, moderate pedestrian traffic, and easy parking or public transportation.
- Generally, you will be required to pay first and last month’s rent, plus a security deposit, at the time you sign the lease.
6. Professional Services: $1,000 to $5,600
- This estimate includes the cost related to professional (i) legal services you will need for the review of the Disclosure Document and its Exhibits, as well as entity formation and lease negotiation, and (ii) bookkeeping and accounting services in the initial set up and planning of your business.
7. Site Selection: $5,000
- You must engage barre3’s required site selection service provider to assist you in the procurement of your franchised location. barre3’s service provider will introduce you to a commercial real estate broker with whom you must work to identify the site for your franchised location.
- barre3’s service provider will review the business terms of a letter of intent and/or lease for the franchised location space and provide you with guidance on the same. barre3’s service provider is not an attorney and will not provide you with any legal assistance in the review or negotiation of a letter of intent or lease.
- barre3 strongly encourages you to retain counsel with expertise in commercial real estate leasing to provide you with such assistance. You will pay barre3’s service provider a flat fee of $5,000 per location for which barre3’s service provider reviews a letter of intent and/or lease on your behalf.
- In most cases, the terms and conditions of all agreements relating to the lease and alteration of your franchised location will be negotiated solely by you; however, barre3 requires you and your landlord to sign its standard form lease rider which incorporates certain provisions into your lease.
8. Construction Management (Architects, Designers, Construction Managers): $31,000 to $35,000
- This estimate includes the cost for barre3’s construction management service provider which you are required to engage at the time you are presented with a letter of intent or lease for your studio space.
- barre3’s vendor provides architectural, design, basic engineering, and construction management services for the development of your franchised location including plans, drawings, design specifications, permits, and zoning approvals, as well as oversight of your general contractor during the construction phase.
9. Additional Engineers: $0 to $5,500
- This estimate includes the cost for structural, acoustical, and other specialized engineering services that are outside of the scope of those included in the services provided by barre3’s construction management service provider.
- These services may or may not be needed depending on the location and characteristics of your franchised location.
10. Leasehold Improvements: $180,960 to $356,120
- You will need to alter the interior space to meet barre3’s then-current specifications before you open your studio.
- This figure includes estimates related to demolition, concrete repair, insulation, doors and hardware, partition walls, acoustical ceilings, flooring, painting, installation of fixtures, cabinets, plumbing, HVAC, electrical, fire alarm, security system, decorating, signage, and similar costs for a facility up to 2,000 square feet.
- The cost to alter your interior space will vary depending on the size of your studio and whether you elect to do a simplified or premium build out.
- The estimated cost range for these leasehold improvements is $180,960 to $356,120. These figures do not include any amounts to purchase a barre3 business as a going concern.
11. Equipment: $12,582 to $24,650
- This figure includes all the equipment necessary to begin operations of the studio as specified in barre3’s confidential manual like the cost of all office equipment, computer systems, related supplies, a sound system, furniture, and fixtures.
- You are required to purchase a telephone system, copier/printer/fax/scan machine, computer systems, headsets, amplifier, mixer, speakers, and wireless microphone system, as specified in the confidential manual.
12. Software: $750
- barre3 has the right to specify 1 or more approved computer systems vendors, including software vendors, for the management operations of your studio.
- You must also obtain high-speed access to the internet. You must provide barre3 with electronic access to all information in the software system in real time.
13. Opening Inventory, including the Opening Prop and Retail Package: $5,000 to $16,000
- The Opening Prop and Retail Package is standard for all new franchisees. Larger and busier studios will deplete the inventory supplied through the Opening Prop and Retail Package faster than smaller or less busy studios.
- The Opening Prop and Retail Package will include Props for use in classes taught at your studio, as well as barre3-branded and non-branded inventory products such as fitness apparel, accessories, towels, books, mats, and other products for sale at your studio.
- The Opening Prop and Retail Package will be delivered by drop shipment from barre3 and/or its approved suppliers.
- barre3 does not currently, but reserves the right to replenish Props quarterly and retail inventory items monthly, after you begin operations of your studio.
14. Grand Opening Advertising: $15,000 to $20,000
- You must spend a minimum of $15,000 on your grand opening. You must pay $5,000 of this amount to barre3 when you sign your Franchise Agreement. barre3 will use this $5,000 to pay for promotion of your studio, which may include digital advertising such as a social media ad campaign prior to and shortly after you open.
- The balance of $10,000 will be paid to third-party vendors directly.
15. Optional Pre-Opening Services: $0 to $5,000
- You may elect to begin operations by offering barre3 classes outdoors or in third-party spaces after you become a certified barre3 instructor and before your studio opens. If you choose to do this, you must pay barre3 for access to studio management software, a music licensing fee, and a royalty fee of 6% of Gross Revenues. You may also incur operational expenses such as instructor payroll and space rental fees.
- The amount disclosed above assumes that you may begin operations 3 months before your studio opens. If you begin operations before or after this time, you may incur additional or lesser pre-opening operation fees.
16. Additional Funds for First 3 Months of Your Studio Operations: $7,000 to $33,000
- Additional funds include additional operating expenses during the first 3 months of operations. This amount includes estimated operating expenses during this time, including payroll costs (but not a draw or salary for the managing owner or for other owners of the franchisee), less any revenue generated by your studio.
- barre3 recommends that you have at least an additional 3 months of additional funds.
17. Total Estimated Initial Investment: $306,796 to $597,146
- All figures in Item 7 are estimates only and are based on barre3’s affiliate’s experiences and barre3’s experience opening and franchising studios. barre3 cannot guarantee that you will not have additional expenses or other categories of expenses to start the studio.