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

• Section I – Background information on the barre3 franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a barre3 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 barre3 franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned barre3 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 barre3’s financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020 average, median, maximum, and minimum gross revenue for the 121 franchisee-owned barre3 outlets that were open and operating in the U.S. for at least all 12 months of the Reporting Period (January 1, 2020 to December 31, 2020), grouped by length of time open (12-36 months, 37-60 months, 61+ months, and all)

• 2020 non-recurring service revenue, recurring service revenue, and retail revenue (as a percentage of total annual gross revenue) for the 121 franchisee-owned barre3 outlets that were open and operating in the U.S. for at least all 12 months of the Reporting Period, grouped by length of time open (12-36 months, 37-60 months, 61+ months, and all)

• 2020 average, median, maximum, and minimum gross revenue for the 6 company-owned barre3 outlets that were open and operating in the U.S. for at least all 12 months of the Reporting Period, grouped by length of time open (37-60 months, 61+ months, and all)

• 2020 non-recurring service revenue, recurring service revenue, and retail revenue (as a percentage of total annual gross revenue) for the 6 company-owned barre3 outlets that were open and operating in the U.S. for at least all 12 months of the Reporting Period, grouped by length of time open (37-60 months, 61+ months, and all)

• 2020 attendance by class type (outdoor, livestream, in-studio) for the 121 franchisee-owned barre3 outlets that were open and operating in the U.S. for at least all 12 months of the Reporting Period, by calendar month

Section I – Background Information

11 Things You Need to Know About the barre3 Franchise

Announces Launch of B3 Cardio

1.  In late December 2021, the barre3 blog revealed that the brand would be launching b3 Cardio on January 3, 2022. B3 Cardio is the latest in the brand’s collection of workouts and classes designed to complement the barre3 Signature workout. Along with b3 Strength Training, b3 Flow, and b3 Stretch, b3 Cardio helps to support a balanced fitness practice.

2.  According to barre3, b3 Cardio is an exhilarating circuit-based workout designed to boost aerobic fitness – and it’s so much fun. Instructors will guide members through high-energy, functional moves, targeting multiple muscle groups and putting a special focus on core strength, alignment, and breath. As always, members have options to modify throughout to ensure that this efficient workout offers heart-revving, mood-boosting movement to suit all fitness levels.

3.  barre3 said that when members add b3 Cardio into their workout routine, they’re going to notice big benefits. In addition to boosting performance in their barre3 Signature workout, members experience greater stamina throughout the day, sustained energy levels, improved sleep at night, and so much more.

Launches New Circle Resistance Bands

4.  In early October, barre3 released a new prop: its Circle Resistance Bands. According to barre3, the Circle Resistance Bands aid in building strength in the upper body, glutes, and legs. They come as a set of three, with light, medium, and heavy resistance levels, making it easy to adjust to anybody’s needs and their specific fitness goals.

5.  Here’s a breakdown of why the Circle Resistance Bands are great:

• Easy to Use – These wide, fabric-based bands stay in place and deliver a consistent level of resistance, every time.

• Easy to Adjust to Any Workout – Choose between light, medium, and heavy resistance based on the posture and what your body needs. And because they require no tying and untying, you can easily switch to a different level during your workout.

• Low-Impact Strength Training – These bands help build strength with minimal impact on joints.

• Travel Friendly – Because these bands are so lightweight, they’re easy to toss into a suitcase for on-the-go barre3 workouts.

6.  When barre3 classes use Circle Resistance Bands in workouts, the instructor will give a recommendation for which level (light, medium, heavy) to use. In online workouts, the modifier might be demonstrating a lower resistance than the lead instructor. However, barre3 suggests that everyone choose which band level is right for them based on their specific fitness levels and goals.

Launches New App

7.  In mid-August 2021, barre3 released its new app on Apple, Amazon, and Roku. The barre3 app lets members take their practice anywhere with access to the brand’s entire video library. With the new app, members get:

• Unlimited access to hundreds of workouts ranging from 10 to 60 minutes;

• Ability to stream workouts directly from the app or download for offline streaming;

• The workout variety needed to build a healthy, holistic fitness practice, including barre3’s efficient, all-in-one barre3 Signature workout, plus cardio, strength, and mindfulness workouts;

• Access to barre3’s Collections, curated by barre3 Lead Instructors.

8.  Already-existing barre3 subscribers just need to log into the app with the same email and password they use for their current online account. New subscribers can join after downloading the app and have access to everything the barre3 app has to offer, plus unlimited access to barre3 online.

Company History

9.  barre3 was founded in 2008 by Sadie and Chris Lincoln in Portland, Oregon. Sadie Lincoln developed a fully-balanced workout combining strength conditioning, cardio, and mindfulness. The Lincolns wanted to create a fitness brand that broke the traditional mold. barre3 has always emphasized inner strength in addition to the physical training.

10.  Following the success of the first barre3 location, the Lincolns started franchising the concept. The brand has grown quickly and there are now barre3 locations all around the United States. Additionally, barre3 has a robust online-workout streaming service, which has subscribers from over 98 countries.

Entrepreneur’s Franchise 500

11.  barre3 did not rank on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of barre3 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 barre3’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:  103
• Outlets at the End of the Year:  113
• Net Change:  +10

2019

• Outlets at the Start of the Year:  113
• Outlets at the End of the Year:  125
• Net Change:  +12

2020

• Outlets at the Start of the Year:  125
• Outlets at the End of the Year:  132
• Net Change:  +7

Company-Owned

2018

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  6
• Net Change:  0

2019

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  6
• Net Change:  0

2020

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  6
• Net Change:

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

• Provided in this Item 19 is Gross Revenue data from franchisee-owned outlets and company-owned outlets operating in the U.S. from January 1, 2020 to December 31, 2020 (the “2020 Reporting Period”). Also provided in this Item 19 is data on attendance by class type at franchisee-owned outlets in the 2020 Reporting Period.

• The data used for the calculations presented in this Item 19 was collected from the point of sale software system barre3 requires franchisees to use and uses itself. barre3 has not audited the figures reported to its point of sale system by franchisees, or otherwise conducted any investigation as to the accuracy of the data collected or presented.

• There were 136 franchisee-owned outlets open in the U.S. during some or all of the 2020 Reporting Period. Parts 1, 2, and 5 include data on the 121 franchisee-owned outlets that were open at least all 12 months of the 2020 Reporting Period, and excludes 15 franchisee-owned outlets that were operational for less than 12 months in 2020 either due to the fact that these outlets opened or closed during the year. The data reported also excludes 6 outlets in the Philippines operating under a license agreement, and 4 franchisee-owned outlets operating in Canada.

• There were 6 company-owned outlets operating in the U.S. during the 2020 Reporting Period. One outlet located in New York City was closed for in-studio classes between March 2020 and the end of the 2020 Reporting Period; the remaining 5 studios located in the Portland, Oregon area were closed and reopened for in-studio classes at various times from March 2020 through the end of the 2020 Reporting Period. Parts 3 and 4 include data on these 6 company-owned outlets.

• All franchisee-owned outlets and company-owned outlets for which data is presented in this Item 19 are called “Reporting Units.”

Part 1 – Annual Gross Revenue for Franchisee-Owned Reporting Units in the 2020 Reporting Period

Length of Time Open (as of December 31, 2020): 12-36 Months

• Number of Franchisee-Owned Reporting Units:  23
• Average Gross Revenue:  $175,171
• Median Gross Revenue:  $175,436
• Minimum Gross Revenue:  $77,352
• Maximum Gross Revenue:  $288,830
• Number and Percent That Achieved Average:  5 (22%)

Length of Time Open (as of December 31, 2020): 37-60 Months

• Number of Franchisee-Owned Reporting Units:  37
• Average Gross Revenue:  $269,375
• Median Gross Revenue:  $264,097
• Minimum Gross Revenue:  $91,277
• Maximum Gross Revenue:  $494,012
• Number and Percent That Achieved Average:  21 (57%)

Length of Time Open (as of December 31, 2020): 61+ Months

• Number of Franchisee-Owned Reporting Units:  61
• Average Gross Revenue:  $258,847
• Median Gross Revenue:  $224,144
• Minimum Gross Revenue:  $71,212
• Maximum Gross Revenue:  $612,602
• Number and Percent That Achieved Average:  27 (44%)

All Reporting Units

• Number of Franchisee-Owned Reporting Units:  121
• Average Gross Revenue:  $246,161
• Median Gross Revenue:  $224,480
• Minimum Gross Revenue:  $71,212
• Maximum Gross Revenue:  $612,602
• Number and Percent That Achieved Average:  53 (44%)

Part 2 – Gross Revenue Category as Percentage of Total Annual Gross Revenue for Franchisee-Owned Reporting Units in the 2020 Reporting Period

Length of Time Open (as of December 31, 2020): 12-36 Months

• Number of Franchisee-Owned Reporting Units:  23
• Non-Recurring Service Revenue:  32%
• Recurring Service Revenue:  58%
• Retail Revenue:  10%
• Total:  100%

Length of Time Open (as of December 31, 2020): 37-60 Months

• Number of Franchisee-Owned Reporting Units:  37
• Non-Recurring Service Revenue:  33%
• Recurring Service Revenue:  59%
• Retail Revenue:  8%
• Total:  100%

Length of Time Open (as of December 31, 2020): 61+ Months

• Number of Franchisee-Owned Reporting Units:  61
• Non-Recurring Service Revenue:  31%
• Recurring Service Revenue:  61%
• Retail Revenue:  8%
• Total:  100%

All Reporting Units

• Number of Franchisee-Owned Reporting Units:  121
• Non-Recurring Service Revenue:  32%
• Recurring Service Revenue:  60%
• Retail Revenue:  8%
• Total:  100%

Part 3 – Annual Gross Revenue for Company-Owned Reporting Units in the 2020 Reporting Period

Length of Time Open (as of December 31, 2020): 12-36 Months

• Number of Franchisee-Owned Reporting Units:  0
• Average Gross Revenue:  N/A
• Median Gross Revenue:  N/A
• Minimum Gross Revenue:  N/A
• Maximum Gross Revenue:  N/A
• Number and Percent That Achieved Average:  N/A

Length of Time Open (as of December 31, 2020): 37-60 Months

• Number of Franchisee-Owned Reporting Units:  1
• Average Gross Revenue:  $364,212
• Median Gross Revenue:  $364,212
• Minimum Gross Revenue:  $364,212
• Maximum Gross Revenue:  $364,212
• Number and Percent That Achieved Average:  1 (100%)

Length of Time Open (as of December 31, 2020): 61+ Months

• Number of Franchisee-Owned Reporting Units:  5
• Average Gross Revenue:  $337,163
• Median Gross Revenue:  $362,450
• Minimum Gross Revenue:  $252,427
• Maximum Gross Revenue:  $396,128
• Number and Percent That Achieved Average:  3 (60%)

All Reporting Units

• Number of Franchisee-Owned Reporting Units:  6
• Average Gross Revenue:  $341,671
• Median Gross Revenue:  $363,331
• Minimum Gross Revenue:  $252,427
• Maximum Gross Revenue:  $396,128
• Number and Percent That Achieved Average:  4 (66%)

Part 4 – Gross Revenue Category as Percentage of Total Annual Gross Revenue for Company-Owned Reporting Units in the 2020 Reporting Period

Length of Time Open (as of December 31, 2020): 12-36 Months

• Number of Franchisee-Owned Reporting Units:  0
• Non-Recurring Service Revenue:  N/A
• Recurring Service Revenue:  N/A
• Retail Revenue:  N/A
• Total:  N/A

Length of Time Open (as of December 31, 2020): 37-60 Months

• Number of Franchisee-Owned Reporting Units:  1
• Non-Recurring Service Revenue:  22%
• Recurring Service Revenue:  69%
• Retail Revenue:  9%
• Total:  100%

Length of Time Open (as of December 31, 2020): 61+ Months

• Number of Franchisee-Owned Reporting Units:  5
• Non-Recurring Service Revenue:  31%
• Recurring Service Revenue:  61%
• Retail Revenue:  8%
• Total:  100%

All Reporting Units

• Number of Franchisee-Owned Reporting Units:  6
• Non-Recurring Service Revenue:  29%
• Recurring Service Revenue:  62%
• Retail Revenue:  8%
• Total:  100%

Part 5 – Attendance by Class Type for Franchisee-Owned Reporting Units in the 2020 Reporting Period

January

• Outdoor:  58
• Livestream:  0
• In Studio:  317,561

February

• Outdoor:  32
• Livestream:  0
• In Studio:  266,974

March

• Outdoor:  73
• Livestream:  32,986
• In Studio:  121,322

April

• Outdoor:  0
• Livestream:  132,523
• In Studio:  2,598

May

• Outdoor:  308
• Livestream:  132,085
• In Studio:  8,743

June

• Outdoor:  7,007
• Livestream:  94,231
• In Studio:  40,221

July

• Outdoor:  16,348
• Livestream:  82,355
• In Studio:  44,920

August

• Outdoor:  23,030
• Livestream:  74,113
• In Studio:  45,009

September

• Outdoor:  21,276
• Livestream:  65,971
• In Studio:  52,491

October

• Outdoor:  17,730
• Livestream:  62,246
• In Studio:  63,230

November

• Outdoor:  10,863
• Livestream:  64,386
• In Studio:  58,130

December

• Outdoor:  6,030
• Livestream:  69,957
• In Studio:  43,523

Full Year 2020

• Outdoor:  102,755 (5.2%)
• Livestream:  810,853 (41.0%)
• In Studio:  1,064,722 (53.8%)
• Total:  1,978,330 (100.0%)

• Due to restrictions imposed by local jurisdictions as a result of the COVID-19 pandemic during the 2020 Reporting Period, some units were forced to close or limit operations for a period of time. As a result, some Reporting Units experienced atypically low revenue and high expense for part or all of the 2020 Reporting Period.

• In response to the pandemic, barre3 adjusted royalty fee payments due and provided additional services to franchisees in the 2020 Reporting Period. Between the months of April 2020 and December 2020, barre3 waived the minimum royalty requirement of $850; and from September through November 2020 royalty fees were reduced by 25% for studios that experienced a 20% or greater reduction in EBITDA between the first and second quarters of 2020. “EBITDA” in the preceding sentence means earnings before deducting interest, tax, depreciation, and amortization expenses.

• Additional support services included:

• barre3 permitted franchisees to host barre3 classes outside of the studio via virtual livestream platforms and outdoor venues, and provided marketing support for these activities.

• barre3 permitted franchisees to sell subscriptions to B3 Online and retain a portion of such sales.

• To accommodate travel restrictions, barre3 conducted pre-opening training programs and workshops virtually instead of in-person.

• barre3 provided guidance on COVID-19 related safety and operational procedures as well as resources available to business owners via email communications.

• barre3 hosted various phone calls to share information related to pandemic operations, safety protocols, resources, and other relevant information.

• barre3 drafted an addendum to the Operations Manual related to COVID-19 safety and operations procedures.

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