FDD Talk: How Much Does a Club Pilates Franchise Make (Average Revenues and/or Profits)?

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Club Pilates franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Club Pilates 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 Club Pilates franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Club Pilates 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 Club Pilates’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• average monthly gross sales generated in each calendar month comprising the 2020 calendar year as well as the first two calendar months of 2021, by the franchised Club Pilates Studios that were open for at least 12 calendar months (“Disclosed Studios”)

• average monthly gross sales generated in each calendar month comprising the 2020 calendar year as well as the first two calendar months of 2021, by the Disclosed Studios that were actively providing the Approved Services within their respective Studios (the “Disclosed Studios with Active In-Studio Operations”)

• average monthly gross sales generated in each calendar month comprising the 2020 calendar year as well as the first two calendar months of 2021, by the remaining Disclosed Studios that were forced to cease in-Studio operations for 1 or more days within the applicable calendar month (the “Disclosed Studios with Interrupted In-Studio Operations”)

Section I – Background Information

17 Things You Need to Know About the Club Pilates Franchise

Unveils New Core Ambassador, Gold Medal Gymnast Aly Raisman

1.  At the end of December 2020, Club Pilates announced a multi-year partnership with gymnast and wellness advocate Aly Raisman. Raisman will serve as a Core Ambassador for the brand to raise awareness around Pilates’ benefits, including supporting a strong mind-body connection and overall wellbeing. A cornerstone of Pilates is strengthening the core, both physically and metaphorically. Considering the many challenges 2020 presented, Club Pilates and Raisman seek to remind people that the power to move and create change comes from within.

2.  Raisman said, “My goal in working out now is to feel better, both physically and mentally. I really enjoy Club Pilates workouts because they have a variety of classes and difficulties, which enables me to choose what feels right for my body at that time. When I am struggling with low energy or anxiety, Pilates helps me feel more calm and relaxed, and other times, I choose sessions that help me push myself. Everyone has different goals for their workouts, and it’s great that Club Pilates provides options for a variety of fitness purposes.”

3.  Raisman will support the “It Comes from the Core” campaign by sharing her personal experiences with Pilates and the benefits of movement, encouraging others to do the same. Caitlin Tvrdik, chief marketing officer for Club Pilates, said, “We are beyond excited to announce the collaboration between Club Pilates and Aly Raisman. As wellbeing concerns reach a fever pitch due to the global pandemic, we are grateful to have Aly as a partner to amplify the importance of movement and the role it plays in supporting mental and physical health.”

4.  With over 600 studios in the US, Club Pilates is the largest boutique Pilates brand and the first to create a proprietary 500-hour Teacher Training Program designed to thoroughly and safely teach group Reformer Pilates classes along with TRX and Triggerpoint. Its classes are geared toward all ages and fitness levels and aim to improve posture, strengthen the core, and correct muscle imbalances, enabling practitioners to feel better, move better, and “do life better” outside the studio.

5.  Amid COVID-19, Club Pilates’ franchises have made health and safety their top priority, with all studios spacing Reformer workout stations 6 feet apart or more, implementing pre-class health screening questionnaires, contactless check-in, and enhanced cleaning measures. Club Pilates has also been offering an array of virtual workouts so anyone can enjoy the benefits of Pilates no matter what their circumstances or comfort level.

6.  With Aly Raisman as an official multi-year Core Ambassador, Club Pilates will continue to educate the public on the variety of ways one can incorporate the mind and body elements of Pilates into each day, whether it’s at home or on a Reformer in a studio.

Secures One of Its Largest Multi-Unit Franchise Agreements in Company History

7.  In early October 2021, Club Pilates announced it has signed a large multi-unit, multi-regional franchise agreement with entrepreneur and existing franchise owner, David Schuck, which will expand the Pilates brand’s presence further in Houston, Dallas, and Central Florida. Through this agreement, Schuck has acquired 13 open Club Pilates studios, along with licenses to open 16 additional studios, marking one of the largest deals made by an individual franchisee in the brand’s history.

8.  Club Pilates is the founding and largest brand by number of studios within the portfolio of Xponential Fitness, Inc. This deal brings Schuck’s total number of open Club Pilates studios to 20, spanning Dallas, Houston, Central Florida, and Greensboro, NC. Targeted areas for additional 16 studios to be developed include Apollo Beach and Hunters Creek in Central Florida and Pearland, Greatwood, and Jersey Village in Texas.

9.  Schuck has a long-standing relationship with Xponential Fitness, having first signed a franchise agreement with Club Pilates in August 2016 followed by the opening of his first studio in March 2017. Prior to business ownership, Schuck played professional basketball in Spain and then explored teaching, coaching, and banking before entering the franchise space.

10.  Mike Gray, president of Club Pilates, said, “We are thrilled to execute this deal with David which will further expand the Club Pilates brand presence across multiple markets. Initially starting with just three licenses five years ago, Club Pilates has now developed a strong partnership with David – he has proven to be a strong operator and representative of the Club Pilates brand, and we look forward to partnering with him further as he continues to leverage our model to develop and open additional studios in the coming years.”

11.  Schuck added, “Xponential’s systems, integrated platforms, and support are seamless and have proven successful in helping me scale Club Pilates across multiple markets, so there was no question in my mind to keep growing with this incredible brand. The passion from Club Pilates employees, instructors, and members has made it easy to stay motivated in growing the business and changing people’s lives.”

12.  This deal with Schuck marks yet another milestone in Club Pilates’ growth after several recent accomplishments. Despite the pandemic, Club Pilates has opened more than 87 new studios since the beginning of 2020 (as of June 30, 2021) and now has almost 650 open studios globally. The brand has also expanded internationally to Australia, Saudi Arabia, Japan, South Korea, the Dominican Republic, and Spain, and has studios currently in development in Germany and Singapore.

Company History

13.  Club Pilates was founded in 2007 by Allison Beardsley in San Diego, California. Beardsley developed a fitness program based on Joseph Pilates’ original Reformer-based Contrology Method. To make the program unique, Beardsley offered group classes and added modern equipment. Beardsley also wanted her classes to be accessible to more people than traditional Pilates and made sure that her classes were affordable.

14.  Club Pilates was a success from the start and Beardsley spent the next few years growing the business. In 2012, Beardsley began franchising the Club Pilates concept. Over the next few years, Beardsley grew Club Pilates to a few dozen locations.

15.  In 2015, Club Pilates caught the eye of Anthony Geisler and his company LAG Fit (now Xponential Fitness). Beardsley felt that it was the right time to sell Club Pilates because she no longer had the resources to run a company of that size. She sold Club Pilates to Geisler and has retained 25 percent ownership of the company.

16.  Under Geisler’s leadership, Club Pilates grew rapidly over the next few years and there are now locations all across the United States as well as Canada, Japan, and South Korea.

Entrepreneur’s Franchise 500

17.  Club Pilates ranked No. 104 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of Club Pilates 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 Club Pilates’ 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

Franchised

2018

• Outlets at the Start of the Year:  203
• Outlets at the End of the Year:  379
• Net Change:  +176

2019

• Outlets at the Start of the Year:  379
• Outlets at the End of the Year:  553
• Net Change:  +174

2020

• Outlets at the Start of the Year:  553
• Outlets at the End of the Year:  601
• Net Change:  +48

Company-Owned

2018

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

2019

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

2020

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  5
• Net Change:  +5

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• In the charts below in this Item 19, Club Pilates discloses the average monthly Gross Sales generated in each calendar month comprising the 2020 calendar year and first 2 calendar months of 2021 (each, a “Calendar Month” and collectively, the “Measurement Period”) by the franchised Studios that were: (i) owned and operated by a System franchisee over the entirety of the Measurement Period; and (ii) had experienced their soft opening and at least 11 months of operation beyond that soft opening date as of the end of that Calendar Month (each, an “Applicable Subset” for a given Calendar Month).

• In addition to disclosing the monthly Gross Sales information amongst all Disclosed Studios, this Item contains charts that breakdown the average Gross Sales for each Calendar Month comprising 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 franchisee owner of the Disclosed Studios.

• The below charts in Item 19 exclude: (i) the System Studio(s) that were owned or operated by Club Pilates’ affiliate at any time during the Measurement Period; and (ii) with regards to a given Calendar Month comprising the Measurement Period, any Studio that had not experienced its soft opening and 11 months of operation beyond that soft opening date 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:  $47,479
• February 2020:  $46,924
• March 2020:  $30,193
• April 2020:  $8,152
• May 2020:  $11,265
• June 2020:  $20,499
• July 2020:  $22,180
• August 2020:  $23,972
• September 2020:  $27,651
• October 2020:  $30,241
• November 2020:  $31,538
• December 2020:  $28,649
• Total 2020:  $328,743

• January 2021:  $29,694
• February 2021:  $31,724

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:  $48,352
• February 2020:  $47,838
• March 2020:  $45,256
• April 2020:  $31,009
• May 2020:  $19,014
• June 2020:  $25,826
• July 2020:  $26,302
• August 2020:  $27,787
• September 2020:  $30,121
• October 2020:  $31,903
• November 2020:  $34,589
• December 2020:  $32,194
• Total 2020:  $400,191

• January 2021:  $32,685
• February 2021:  $34,713
• Total March 2020-February 2021:  $371,399

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:  $30,422
• April 2020:  $7,510
• May 2020:  $6,081
• June 2020:  $7,519
• July 2020:  $11,711
• August 2020:  $7,978
• September 2020:  $11,113
• October 2020:  $14,815
• November 2020:  $17,187
• December 2020:  $10,603
• Total 2020:  $124,939

• January 2021:  $10,582
• February 2021:  $11,743
• Total March 2020-February 2021:  $147,264

• 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.

• “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.

• When reviewing this Item 19 and evaluating the 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 did not incur 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, Club Pilates 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.

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