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

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

• Section II – Estimated initial investment for an AKT franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an AKT franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned AKT 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 AKT’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 1 affiliate-owned and 3 franchised AKT Studios that opened before January 1, 2020 and reported the necessary information to AKT (“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 3 franchised AKT Studios that opened before January 1, 2020 and reported the necessary information to AKT

• 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

15 Things You Need to Know About the AKT Franchise

Parent Company Launches Apple Watch Integration to Offer Enhanced Member Experience

1.  In mid-March 2021, Xponential Fitness launched an upgraded studio experience through the use of Apple Watch technology across all eight of its brands, including AKT, Club Pilates, CycleBar, YogaSix, StretchLab, Row House, Pure Barre, and STRIDE. This fully-integrated experience allows Xponential members and guests who utilize Apple Watch to view upcoming classes, check in to class, participate in the “Earn Your Watch” challenge, and most notably, track real-time performance data among other features. Xponential Fitness is excited to bring the Apple Watch integration to its large member base, highlighting its continued leadership within the industry.

2.  Each Xponential brand’s app will integrate directly with Apple Watch allowing users to receive notifications for upcoming classes, moving off a class waitlist, class reminders, and celebration alerts for milestones met. Users will also enjoy contactless check-in, very appropriate in a post-pandemic era. Members will also have the opportunity to earn back their Apple Watch value by participating in the “Earn Your Watch” challenge by taking classes in studio.

3.  Particularly exciting for today’s metrics-focused consumer, each brand’s classes will allow consumers to track and share their personal performance data for classes taken within the studio through the Apple Health app which can also contribute to their daily Activity Rings on Apple Watch. Performance data measured will include time active, calories burned, heart rate, and average BPM.

4.  Sarah Luna, president of Xponential Fitness, said, “Providing a premium member experience remains our top priority across every Xponential Fitness brand. Launching this integration with Apple Watch is an exciting opportunity to offer an enhanced in-studio experience to our high iOS member base, utilizing the incredible technology Apple has built. As our users become increasingly data and goal-oriented, this technology will help us continue to curate the best of the best workout experiences across every vertical of boutique fitness.”

Parent Company Unveils New, Tech-Driven Production Studio to Elevate Streaming Platform GO

5.  In mid-September 2021, Xponential Fitness announced the debut of its upgraded production studio, XSTUDIO, further staking a claim in the world of digital fitness that has exploded in popularity since the pandemic began. Among Xponential’s brands are AKT, Pure Barre, CycleBar, StretchLab, Row House, YogaSix, Club Pilates, Rumble, and STRIDE, all of which have a unique GO platform accessible through each brand’s individual apps.

6.  The cornerstone of the refreshed production studio is a 70-by-14-foot LED wall that creates an augmented reality experience for GO users at home. The new technology enables the GO team to deliver immersive, studio-like experiences across nine brands, transforming the production stage from one fitness studio to the next 4 to 5 times per day in 25 minutes, on average.

7.  Garrett Marshall, president of fitness streaming for Xponential Fitness, said, “Xponential brands are coveted for their distinct sensory in-studio experiences and we’re endeavoring to reflect that in the home or on the go. This new technology – and the production capabilities it affords – allows us to deliver a digital experience representative of being in a studio to those without convenient access.”

8.  With many consumers integrating an at-home component into their fitness routines since the pandemic began, Xponential GO has been ramping up its presence and content to allow for Xponential brand studio members to complement their in-person workouts. Since officially launching GO in March 2020, Xponential has brought on more than 25 XPROs, or instructors, to lead its live and on-demand classes. The XPRO team comes from a variety of health and wellness backgrounds to give subscribers world-class knowledge, instruction, and motivation. The team has recorded thousands of pieces of content, with GO’s library totaling more than 2,500 online workout classes to date.

9.  Anthony Geisler, CEO of Xponential Fitness, said, “We’re very excited to unveil our new GO production studio as we enter into the next phase of Xponential’s evolution as a public company. Our mission at Xponential is to make boutique fitness and wellness accessible to everyone, whether in-studio, at home, or on the go, and this investment in our digital platform and production studio will allow consumers to experience all nine of our brands in the same elevated way no matter where they are.”

10.  Designed by the same team of passionate education and fitness experts who develop Xponential’s in-studio workouts, GO classes range from 10 to 90 minutes in length, and encompass all fitness levels, from beginner to advanced. Some classes require equipment, which can range from blocks or light weights for YogaSix GO to a rowing machine for Row House GO. New material is added every week along with a robust schedule of live classes.

11.  GO subscribers also have access to third-party content from Aaptiv and HyperIce thanks to several partnerships secured in 2020. Members of Go365, Zeamo, and Class Pass also have access to GO content through Xponential’s strategic partnerships with those brands.

Company History

12.  AKT (Anna Kaiser Technique) was founded in 2013 by Anna Kaiser in New York City. Kaiser, who was already a celebrity fitness trainer, based the AKT program on HIIT, circuit training, dance cardio, yoga, Pilates, strength, and toning. Using her reputation as a celebrity trainer, Kaiser quickly found success with AKT.

13.  To keep up with demand, Kaiser opened a few more AKT studios in New York City. A few years later, in 2018, Kaiser sold AKT to Xponential Fitness, a boutique fitness brand franchisor. Xponential Fitness immediately started franchising AKT, but growth has remained slow.

14.  In 2020, Kaiser and Xponential Fitness launched lawsuits against one another. Kaiser alleged that Xponential botched the franchise rollout of AKT, and said she wanted to take back ownership of the brand. At the time, Xponential had already sold 100 AKT franchise agreements and had 17 studios in operation. The lawsuits are still ongoing.

Entrepreneur’s Franchise 500

15.  AKT did not rank on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of AKT 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 AKT’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:  0
• Net Change:  0

2019

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  3
• Net Change:  +3

2020

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  16
• Net Change:  +13

Company-Owned

2018

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  2
• Net Change:  0

2019

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  3
• Net Change:  +1

2020

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  1
• Net Change:  -2

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

• In the chart below, AKT discloses the average monthly “Gross Revenue” generated in each calendar month comprising the 2020 calendar year (each, a “Calendar Month”) by the 3 franchised Studios and 1 affiliate-owned Studio that: (i) had a grand opening and commenced providing the Approved Services under the Proprietary Marks and System to the public prior to the start of the Measurement Period; and (ii) reported the Gross Sales information for each month comprising the Measurement Period as necessary to include that information in this Item 19 (each, a “Disclosed Studio” and collectively, the “Disclosed Studios”).

• This Item 19 excludes: (i) any franchised Studio that did not have its grand opening and commence providing Approved Services to the public prior to the start of the Measurement Period; and (ii) 2 franchised Studios that were operating at the start of the Measurement Period but failed to provide AKT with monthly reports for at least 3 calendar months comprising the Measurement Period.

• This Item also excludes any disclosures related to the 2 pop-up “studios” that the brand founders have operated from time-to-time on a temporary basis utilizing the Proprietary Marks in the past because these Studios are not operated in a substantially similar manner to the Franchised Business (in terms of hours of operation or Studio environment) and, as such, are not the kind of traditional Studio accounted for in the Disclosure Document.

• AKT provides the information above amongst all 4 Disclosed Studios (Part 1), as well as amongst the 3 Franchised Disclosed Studios only (Part 2).

• For purposes of this Item 19, AKT will refer to the 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 all the Disclosed Studios for each Calendar Month, this Item discloses the same Gross Sales information for each Calendar Month amongst:

• (i) the 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”); and

• (ii) the remaining Disclosed Studios in that same Calendar Month that were forced to cease or suspend in-Studio operations for 1 or more days during that Calendar Month (the “Studios with Interrupted In-Studio Operations”).

• The financial performance representations contained in this Item 19 are historical representations based on past performance of Disclosed Studios. The following representations are based on monthly revenue reports provided by the owners of the Disclosed Studios.

• 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 Amongst All Disclosed Studios for Each Calendar Month

• January 2020 (4 studios):  $29,308
• February 2020 (4 studios):  $30,573
• March 2020 (4 studios):  $19,281
• April 2020 (4 studios):  $6,869
• May 2020 (4 studios):  $5,307
• June 2020 (4 studios):  $11,627
• July 2020 (4 studios):  $12,341
• August 2020 (4 studios):  $17,332
• September 2020 (4 studios):  $18,813
• October 2020 (4 studios):  $22,021
• November 2020 (4 studios):  $20,172
• December 2020 (4 studios):  $23,829
• Total 2020:  $217,473

• January 2021 (4 studios):  $19,257
• February 2021 (4 studios):  $20,370
• Total March 2020-February 2021:  $39,627

Part 2 – Average Monthly Gross Sales Amongst the Applicable Subset of All Franchised Disclosed Studios for Each Calendar Month

• January 2020 (3 studios):  $30,969
• February 2020 (3 studios):  $31,605
• March 2020 (3 studios):  $18,943
• April 2020 (3 studios):  $4,938
• May 2020 (3 studios):  $4,643
• June 2020 (3 studios):  $10,618
• July 2020 (3 studios):  $12,466
• August 2020 (3 studios):  $16,373
• September 2020 (3 studios):  $17,438
• October 2020 (3 studios):  $20,114
• November 2020 (3 studios):  $18,758
• December 2020 (3 studios):  $21,116
• Total 2020:  $207,981

• January 2021 (3 studios):  $17,436
• February 2021 (3 studios):  $18,596
• Total March 2020-February 2021:  $36,032

Part 3 – Average Monthly Gross Sales Reported by Disclosed Studios with Active In-Studio Operations for Each Calendar Month

• January 2020 (4 studios):  $29,308
• February 2020 (4 studios):  $30,573
• March 2020 (N/A):  N/A
• April 2020 (N/A):  N/A
• May 2020 (1 studio):  $3,391
• June 2020 (2 studios):  $17,931
• July 2020 (1 studio):  $14,422
• August 2020 (2 studios):  $14,040
• September 2020 (4 studios):  $18,813
• October 2020 (4 studios):  $22,021
• November 2020 (1 studio):  $14,233
• December 2020 (1 studio):  $13,098
• Total 2020:  $177,830

• January 2021 (1 studio):  $14,597
• February 2021 (1 studio):  $16,334
• Total March 2020-February 2021:  $30,931

Part 4 – Average Monthly Gross Sales Reported by Disclosed Studios with Interrupted In-Studio Operations for Each Calendar Month

• January 2020 (N/A):  N/A
• February 2020 (N/A):  N/A
• March 2020 (4 studios):  $19,281
• April 2020 (4 studios):  $6,869
• May 2020 (3 studios):  $5,946
• June 2020 (2 studios):  $5,324
• July 2020 (3 studios):  $11,648
• August 2020 (2 studios):  $20,624
• September 2020 (N/A):  N/A
• October 2020 (N/A):  N/A
• November 2020 (3 studios):  $22,151
• December 2020 (3 studios):  $27,406
• Total 2020:  $119,249

• January 2021 (3 studios):  $20,811
• February 2021 (3 studios):  $21,715
• Total March 2020-February 2021:  $42,526

• 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.

• Please note that the term “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.

• 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 AKT 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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