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

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

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

• Section IV – Number of franchised and company-owned StretchLab 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 StretchLab’s 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 StretchLab 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 StretchLab Franchise

Surpasses 300 Signed Franchise Agreements

1.  At the end of January 2021, StretchLab stated that it is continuing its growth and domination in the industry after recently signing its 300th franchise agreement. The new agreements will bring the rapidly-growing boutique wellness brand into five new markets across the country, demonstrating its popularity and demand among consumers of all demographics, a particularly unique aspect to the franchise concept.

2.  StretchLab’s newest agreements will welcome the brand to the following cities: St. Louis, Missouri; Sacramento, California; Milwaukee, Wisconsin; Fairfield, Connecticut; and Toronto, Canada. The Toronto studio will mark StretchLab’s first international location.

3.  In light of the pandemic, there is a newfound need for assisted stretching, as evidenced by the 28 locations StretchLab has opened since March 2020, bringing its total number of current studios to nearly 100. The 100th studio was slated to open in February in Colleyville, Texas.

4.  Lou DeFrancisco, president of StretchLab, said, “With health and safety a top concern in our country and many Americans left working from home, people are looking for new ways to stay healthy and active. We are committed to helping people restore their muscle and joint mobility and reclaim their freedom of movement in an effort to improve their overall health, and simply make them feel better. We are thrilled to partner with several new entrepreneurs to introduce industry leading assisted stretching services into their communities and change lives.”

5.  Backed by Xponential Fitness, the largest curator of boutique fitness brands in the world, StretchLab has a widespread and devoted following across the country. At StretchLab, clients work one-on-one with highly trained Flexologists in an open, modern, and friendly environment to increase mobility and flexibility and achieve a deeper, more advanced stretch than one can get on their own.

6.  Studios utilize TRX MAPS technology, which tracks mobility, muscle activation, posture, and body symmetry, to create individually tailored and more holistic stretching programs for clients to achieve their wellness goals.

Opens 100th Studio in the United States

7.  In late April 2021, StretchLab reached a milestone with the opening of its 100th studio in the United States in Colleyville, Texas. As sedentary and less active lifestyles have become more prevalent during the COVID-19 pandemic, the demand for one-on-one assisted stretching studios is higher than ever, and StretchLab franchisee Terry Rackley is ready to meet that demand with the Colleyville studio, his third in the Dallas market after StretchLab Keller and Southlake. The 100th studio celebrated its grand opening in early May.

8.  StretchLab franchisee Terry Rackley said, “Building and opening my third studio during the COVID-19 pandemic has certainly brought on new challenges, but the one consistent bright spot has been the demand from customers. This location has received tremendous interest and our membership base continues to grow as our clients are prioritizing their health and wellness needs and realizing StretchLab is a great fit for them.”

9.  StretchLab has quickly grown in popularity over the past year despite challenges from the COVID-19 pandemic, signing its 300th franchise agreement to bring studios to five brand new markets in the U.S. The first StretchLab outside of the U.S. opened in Toronto, Canada in the first quarter of 2021, and the brand also expects to expand in Australia, having secured a Master Franchise Agreement that gives the Master Franchisee the right to bring at least 50 studios to Australia, with the first opening in Perth expected to be sometime mid-year.

10.  According to Lou DeFrancisco, president of StretchLab, “While stretching has always been an important part of staying healthy, the challenges brought on by the COVID-19 pandemic have led to even more of a demand for StretchLab as people find themselves with aches and pains from the long periods of time spent seated at home. We are very excited to reach this milestone of 100 studios across the U.S., and we are looking forward to spreading our reach even further with planned international expansion into Canada and Australia.”

Signs Master Franchise Agreement in Australia

11.  In early April 2021, StretchLab announced it had signed a Master Franchise Agreement in Australia, which gives the Master Franchisee the right to license at least 50 StretchLab studios to potential franchisees in the country over the next several years. The first studio is expected to open mid-year in Perth. StretchLab is one of nine brands owned by Xponential Fitness, a curator of leading boutique fitness brands with over 1,750 studios open worldwide.

12.  The Australia agreement is a collaboration between StretchLab and Stretch X Operations Pty Ltd., a privately-owned company started by entrepreneurs Matt, Bill, and Candice Gordin, a family team based in Perth, Western Australia. The Gordins have extensive experience with Xponential Fitness, having signed a Master Franchise Agreement with respect to CycleBar, another Xponential Fitness brand, last year and opening the first of up to 45 studios to follow.

13.  John Kersh, chief international development officer of Xponential Fitness, said, “Xponential Fitness is excited to collaborate with the Gordins once again to bring another Xponential Fitness brand to Australia. The Gordins have exceeded expectations with CycleBar, and I’m confident they will continue that trend with StretchLab, which will be a great complement to the diverse fitness scene in Australia.”

14.  New partners involved in the StretchLab deal include Tory Dickson and James Pattinson. Tory is a former Australian footballer who played for the Western Bulldogs in the Australian Football League (AFL) starting in 2012 and ended his AFL career in September of 2020. Making his debut in 2011, James is an Australian cricketer who plays for the Australian National Cricket Team as well as for the Victorian Cricket Team.

Company History

15.  StretchLab was founded by Saul C. Janson, Tim Trost, and Steve Sudell in 2015 in Venice, California. The business partners came up with the concept after realizing that stretching was often ignored in fitness, even though it was a very important step. StretchLab is the first boutique fitness brand that focuses on one-on-one assisted stretching services and is intended to supplement traditional workouts.

16.  As such a novel fitness concept, the first StretchLab was a success. Janson, Trost, and Sudell opened a few more locations before StretchLab was acquired by Xponential Fitness in 2018. After the acquisition, Xponential Fitness began franchising StretchLab and there are now locations all across the United States and a few in Canada.

Entrepreneur’s Franchise 500

17.  StretchLab did not rank on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of StretchLab 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 StretchLab’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

Franchised

2018

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

2019

• Outlets at the Start of the Year:  5
• Outlets at the End of the Year:  64
• Net Change:  +59

2020

• Outlets at the Start of the Year:  64
• Outlets at the End of the Year:  99
• Net Change:  +35

Company-Owned

2018

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  4
• Net Change:  +1

2019

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  0
• Net Change:  -4

2020

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

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

• In the initial chart presented in this Item 19, StretchLab discloses the average monthly Gross Sales generated over each calendar month comprising the 2020 calendar year (each, a “Calendar Month”), as well as the first two Calendar Months of 2021 (the “Measurement Period”), by the applicable subset of franchised Studios disclosed for each such Calendar Month, namely those franchised Studios that were open and operating for a period of 12 months as of the start of that Calendar Month (each, an “Applicable Subset”).

• For purposes of this Item 19, StretchLab refers to the franchised Studios disclosed for a given Calendar Month in Part 1 of this Item as the “Disclosed Studios” for that Applicable Month.

• In addition to disclosing the monthly Gross Sales information amongst the Applicable Subset of all Disclosed Studios for each Calendar Month, this Item discloses the same Gross Sales information for each Calendar Month amongst:

• (i) the Applicable Subset of Disclosed Studios that actively provided the Approved Services via in-Studio operations throughout the Calendar Month at issue without interruption (the “Studios with Active In-Studio Operations”) in the second chart; and

• (ii) the remaining Disclosed Studios in that same Calendar Month’s Applicable Subset that were forced to cease or suspend in-Studio operations for one or more days during that Calendar Month (the “Studios with Interrupted In-Studio Operations”) in the third chart.

• With regards to a given Calendar Month disclosed in the charts below in this Item, the only Studio results that are excluded from that Calendar Month’s Applicable Subset are those Studios that were not open for 12 or more calendar months at the start 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 Monthly Gross Sales Generated Amongst the Applicable Subset of Disclosed Studios for Each Calendar Month Comprising the Measurement Period

• January 2020 (16 studios):  $42,653
• February 2020 (18 studios):  $48,263
• March 2020 (21 studios):  $30,495
• April 2020 (28 studios):  $5,858
• May 2020 (32 studios):  $6,253
• June 2020 (36 studios):  $14,782
• July 2020 (41 studios):  $22,686
• August 2020 (42 studios):  $26,351
• September 2020 (46 studios):  $31,986
• October 2020 (56 studios):  $32,009
• November 2020 (64 studios):  $32,698
• December 2020 (64 studios):  $28,329
• Total 2020:  $322,363

• January 2021 (71 studios):  $27,604
• February 2021 (72 studios):  $32,033
• Total March 2020-February 2021:  $291,084

Part 2 – Average Monthly Gross Sales Generated Amongst the Applicable Subset of Disclosed Studios with Active In-Studio Operations for Each Calendar Month Comprising the Measurement Period

• January 2020 (16 studios):  $42,653
• February 2020 (18 studios):  $48,263
• March 2020 (N/A):  N/A
• April 2020 (N/A):  N/A
• May 2020 (12 studios):  $13,716
• June 2020 (34 studios):  $15,645
• July 2020 (37 studios):  $24,244
• August 2020 (40 studios):  $27,691
• September 2020 (46 studios):  $31,986
• October 2020 (55 studios):  $32,572
• November 2020 (64 studios):  $32,698
• December 2020 (58 studios):  $30,321
• Total 2020:  $299,789

• January 2021 (63 studios):  $31,006
• February 2021 (64 studios):  $34,129
• Total March 2020-February 2021:  $274,008

Part 3 – Average Monthly Gross Sales Generated Amongst the Applicable Subset of Disclosed Studios with Interrupted In-Studio Operations for Each Calendar Month Comprising the Measurement Period

• January 2020 (N/A):  N/A
• February 2020 (N/A):  N/A
• March 2020 (21 studios):  $30,495
• April 2020 (28 studios):  $5,858
• May 2020 (20 studios):  $1,775
• June 2020 (2 studios):  $110
• July 2020 (4 studios):  $8,275
• August 2020 (2 studios):  ($457)
• September 2020 (N/A):  N/A
• October 2020 (1 studio):  $1,057
• November 2020 (N/A):  N/A
• December 2020 (6 studios):  $9,080
• Total 2020:  $56,193

• January 2021 (8 studios):  $815
• February 2021 (8 studios):  $15,263
• Total March 2020-February 2021:  $72,271

• The term “Gross Sales” means the total revenue generated by that location over the applicable Measurement Period noted in the chart(s) above, including all revenue generated from the sale and provision of any and all Approved Services at, from, or otherwise through, that Studio location (subject to the following sentence).

• The term “Gross Sales” (a) excludes sales tax, and (b) does not include any amount of revenue the Studios may have generated by providing the Flexologist Training Program.

• This Item does not contain any information related to the operating costs and expenses that are incurred in connection with the establishment and/or operation of a Franchised Business. Operating costs and expenses vary from business to business and will include, among other things, the royalty and other fees you are required to pay to StretchLab and/or its Approved Supplier(s) in connection with your Franchised Business.

• The figures provided in this Item do not account for amortization, depreciation, interest on debt services, and/or any tax liability.

• 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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