FDD Talk: How Much Does an Exercise Coach Franchise Make (Average Revenues and/or Profits)?

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

• Section I – Background information on The Exercise Coach franchise opportunity, including relevant news updates

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

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

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

• 2020 average, median, high, and low adjusted gross revenues for the 29 franchised Exercise Coach personal training studios and 3 franchised Exercise Coach personal training suites that were open for at least 2 years as of December 31, 2020

• 2020 average, median, high, and low adjusted gross revenues for the 16 franchised Exercise Coach personal training studios and 15 franchised Exercise Coach personal training suites that were open for at least 1 year, but less than 2 years, as of December 31, 2020

• 2020 average rent; marketing and promotion; utilities, phones, ISP; payroll; and total for the 30 franchised Exercise Coach personal training studios and 11 franchised Exercise Coach personal training suites that were open for at least 1 year as of December 31, 2020 and provided The Exercise Coach with the required annual expense data

Section I – Background Information

18 Things You Need to Know About The Exercise Coach Franchise

Opens New Locations

1.  The Exercise Coach has continued its domestic growth with the opening of locations in new markets. At the end of September 2021, The Exercise Coach opened its first gym in Fort Worth, Texas. The Exercise Coach is run by Fort Worth native Luis Rodriguez, Jr., a 1992 TCU graduate and former commissioned armored cavalry officer in the U.S. Army. He also currently works as senior director at ReShape LifeSciences, which he plans to continue while opening Exercise Coach locations (another location in uptown New Orleans is in the works for 2022).

2.  Rodriguez, 52, says he endured orthopedic and other health related issues as a result of his military service, prompting him to pursue franchising The Exercise Coach. He said, “I really appreciate the evidence-based approach of The Exercise Coach. The emphasis on strength training is in line with the education I received from more than a decade of working in obesity. My decision to launch an Exercise Coach had to do with helping others achieve lifestyle changes and longevity via strength. I wish I had discovered The Exercise Coach earlier in life, and I wish my late dad had as well. Strength is truly life changing.”

3.  In late November 2021, The Exercise Coach announced that a new location would be opening in Littleton, Colorado in January 2022. Littleton studio franchise owner Kyle Gardiner said, “What we specialize in is these short, 20-minute workouts. What we pride ourselves in is the ability to give you a good workout in that short amount of time.”

4.  Gardiner said The Exercise Coach is efficient, effective, and safe, and uses a technology dubbed Exerbotics. Instead of using traditional free-weight machines, The Exercise Coach offers resistance machines that test strength and build an exercise regimen through an algorithm. “We can meet anyone where they’re at,” Gardiner explained. Members can track their progress with strength tests. “We see the results.”

5.  Membership packages include one-on-one workouts with a personal trainer, partner training, or scheduled small group sessions in the private studio. The Exercise Coach caters to all types of skill levels from athletes to people who have not been to the gym in years. “What we offer is just a short, easy, easy-to-stick-to model of just getting stronger and enjoying your life again.”

6.  Potential members can check out The Exercise Coach with two free sessions of the science-based program. “The benefits of strength training are endless,” Gardiner said. Benefits include weight loss and an increase in muscle and bone strength.

7.  Gardiner added, “Folks that could barely get off a chair, or go up the stairs, or couldn’t pick up their grandkids, we’re seeing rapid changes in their strength. We’re coming back to the reality of everything, which is most folks just want to feel better.” The Exercise Coach also offers The Metabolic Comeback program that includes sample menu plans and recipes for weight loss and overall wellness.

8.  Gardiner previously worked in the craft beer industry for a decade. “Now I want to focus on trying to help folks. I had fun in that beer job, and now I want to help,” Gardiner said. The Exercise Coach that was set to open in Littleton in January 2022 is Gardiner’s first franchise location, but plans are to open additional studios in the future.

Offers Customized, 20-Minute Workouts

9.  The Exercise Coach’s biggest draw is that its workout program lasts for only 20 minutes. The brand claims that a few 20-minute sessions a week are all anyone needs to reach their fitness goals. To achieve this claim, The Exercise Coach uses Exerbotics to offer individually optimized workouts.

10.  Exercise Coach guided workouts utilize a unique Exerbotics testing process to analyze the baseline muscle condition of every customer. Then, the Exerbotics Intelligence Platform generates ideal personal strength recommendations for the coach and client to follow. These intelligent recommendations, plus real-time feedback, instantly enable the application of effective effort. This means that customers start getting stronger and healthier as a result of their first couple minutes of exercise.

11.  Most of Exercise Coach’s visitors are amazed on day one just how effective yet enjoyable the experience is. Over the course of an individual’s experience at The Exercise Coach, the team makes adjustments based on individual data to make sure to stimulate ongoing progress and achieve maximal results.

12.  The brand says that its clients enjoy results that include maximized strength and stamina, improved metabolism and weight loss, more energy, improved blood pressure, improved lipid profiles, stronger bones, and an overall sense of vitality and wellness. For many of Exercise Coach’s customers, this is the first time they have experienced the powerful results exercise can produce due to safe, effective, and enjoyable strength training properly applied.

13.  The number one reason people claim for not sticking with exercise is the time it takes. The Exercise Coach says that its experience has shown that just one 90-second set of strength training is enough to deliver all the stimulus a certain muscle group needs. This means that the brand can effectively deliver a workout that touches all of the major muscle groups and has a whole-body health effect in just 20 minutes.

14.  Furthermore, the body has to recover and respond to this type of work for the results to materialize. This process requires a minimum of 48-96 hours between workouts so it can run its course. This means that clients can achieve the results that matter most to them with just one or two 20-minute workouts per week.

Company History

15.  The Exercise Coach was founded in 2000 by Brian Cygan and his wife Gerianne in Illinois. Brian Cygan had always been into health and fitness and he earned a kinesiology degree from Northern Illinois University in 1997. Cygan went on to become a NSCA-Certified Personal Trainer, Certified Strength and Conditioning Specialist, and ACSM Fitness Instructor. Building on this knowledge, Cygan and his wife wanted to develop a fitness program that was more effective than other programs available at the time.

16.  The Cygans opened two fitness studios and operated them until 2009. At that time, the Cygans established an exclusive sales distribution partnership with Exerbotics, which was an R&D company working on a line of robotic strength training machines. Brian Cygan began advising Exerbotics while developing a franchising system for The Exercise Coach. Two years later, in 2011, the Cygans started franchising The Exercise Coach concept.

17.  In 2015, Brian Cygan put together a group of investors to acquire Exerbotics. Since then, Cygan has served as the CEO of The Exercise Coach and chief innovator/CEO of Exerbotics. Today, there are The Exercise Coach locations in a few states and international locations in Japan.

Entrepreneur’s Franchise 500

18.  The Exercise Coach ranked No. 204 on Entrepreneur’s 2022 Franchise 500 list.

Section II – Estimated Costs

• Detailed estimates of The Exercise Coach 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 The Exercise Coach’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:  39
• Outlets at the End of the Year:  38
• Net Change:  -1

2019

• Outlets at the Start of the Year:  38
• Outlets at the End of the Year:  68
• Net Change:  +30

2020

• Outlets at the Start of the Year:  68
• Outlets at the End of the Year:  93
• Net Change:  +25

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:  2
• Net Change:  0

2020

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

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

• Parts 1-4 include Adjusted Gross Revenues data for franchised outlets only.

• The data is broken down between personal training studios and personal training suites and includes: (i) 2020 data for outlets open at least 2 years as of December 31, 2020 (referred to as “Mature Outlets”); and (ii) 2020 data for outlets open at least 1 year, but less than 2 years, as of December 31, 2020 (referred to as “Young Outlets”).

• The 2020 Adjusted Gross Revenues data in Parts 1-4 is limited to data from Young Outlets and Mature Outlets open all of 2020 (other than temporary closures relating to COVID-19). These tables exclude data from any outlet that: (i) opened during 2020; (ii) was terminated, closed, or reacquired at any point during 2020; (iii) was owned by The Exercise Coach’s officer, Mr. Bundy; or (iv) was owned by The Exercise Coach’s affiliate.

Part 1 – 2020 Adjusted Gross Revenues for Personal Training Studios (Mature Outlets)

2020 Annual Adjusted Gross Revenues

• Number of Outlets:  29
• Low:  $77,632
• High:  $461,445
• Average:  $197,705
• Number and Percentage Attaining Average:  12 of 29 (41%)
• Median:  $172,588
• Number and Percentage Attaining Median:  15 of 29 (52%)

Part 2 – 2020 Adjusted Gross Revenues for Personal Training Suites (Mature Outlets)

2020 Annual Adjusted Gross Revenues

• Number of Outlets:  3
• Low:  $236,733
• High:  $261,976
• Average:  $248,155
• Number and Percentage Attaining Average:  1 of 3 (33%)
• Median:  $245,755
• Number and Percentage Attaining Median:  2 of 3 (67%)

Part 3 – 2020 Adjusted Gross Revenues for Personal Training Studios (Young Outlets)

2020 Annual Adjusted Gross Revenues

• Number of Outlets:  16
• Low:  $5,802
• High:  $30,922
• Average:  $15,400
• Number and Percentage Attaining Average:  9 of 16 (56%)
• Median:  $15,557
• Number and Percentage Attaining Median:  8 of 16 (50%)

Part 4 – 2020 Adjusted Gross Revenues for Personal Training Suites (Young Outlets)

2020 Annual Adjusted Gross Revenues

• Number of Outlets:  15
• Low:  $8,628
• High:  $23,870
• Average:  $13,572
• Number and Percentage Attaining Average:  7 of 15 (47%)
• Median:  $13,125
• Number and Percentage Attaining Median:  8 of 15 (53%)

• For purposes of the tables above, the term “Adjusted Gross Revenues” means all gross sums collected from all goods and services sold by the outlet (including all membership, class package, and supplement revenue) plus all other sums collected by the outlet from the operation of the franchised business, including the proceeds of any business interruption insurance. “Adjusted Gross Revenues” does not include sales or use taxes.

• In making the above financial performance representation, The Exercise Coach has relied upon revenue figures generated by the point-of-sale systems utilized by its affiliates and franchisees. Neither The Exercise Coach nor any independent certified public accountant has independently audited or verified the information.

• At the time the data was collected, the prices charged by The Exercise Coach studios and suites for personal training across the system was $299 to $399 (2 sessions per week) and $179 to $249 (2 sessions per week small group, “coach share”).

• The highest revenue personal training suite is located in a multi-tenant office building, holds the entire Exerbotics suite, and is 1,400 square feet.

Part 5 – 2020 Expense Information for Personal Training Studios and Suites (Mature and Young Outlets)

• Part 5 presents the operating expenses for 2020 as reported by 41 franchised outlets (30 personal training studios and 11 personal training suites). The Exercise Coach has not included expense data for any outlet that failed to provide it with the required annual expense data.

Studio Model

• Rent:  $38,808
• Marketing and Promotion:  $30,317
• Utilities, Phones, ISP:  $3,756
• Payroll:  $88,200
• Total:  $161,081

Suite Model

• Rent:  $31,296
• Marketing and Promotion:  $32,412
• Utilities, Phones, ISP:  $1,170
• Payroll:  $62,040
• Total:  $126,918

• Expense assumptions have been rounded to $10.

• The average rent reported in the 2020 survey was $2,608 per month (for personal training suites) and $3,234 per month (for personal training studios), inclusive of triple-net pass through expenses.

• The average local marketing expenditure reported in the 2020 survey was $2,701 per month (for personal training suites) and $2,526 (for personal training studios). Some of these franchisees operated under Franchise Agreements that imposed a different minimum local marketing expenditure requirement than what The Exercise Coach currently requires.

• The current minimum local marketing expenditure that The Exercise Coach requires ranges from $2,000 per month to $2,500 per month depending on the total number of qualified households within the franchisee’s territory. In some cases, The Exercise Coach may recommend (but not require) that a franchisee spend more than the minimum required expenditure based on market conditions and other business factors.

• The average amount of utilities (including phone, electric, water, gas, and internet service) reported in the 2020 survey was $98 per month (for personal training suites) and $313 per month (for personal training studios). In 2020, 5 personal training suite outlets reported a full service lease that includes all utilities.

• The average monthly payroll expense reported in the 2020 survey was $5,170 per month (for personal training suites) and $7,350 per month (for personal training studios). The payroll expense category is inclusive of payroll taxes and processing fees but does not include owner’s wages.

• It is important to note that this figure does not include (a) every single item that could be considered an operating cost or (b) all the costs of goods you will incur relating to the operation of a new franchised personal training studio or suite. Specifically, among those operating costs/expenses that are not included under “Certain Operating Expenses” are those related to:

• salary, draw, or other compensation for the owner of each studio or suite;
• meals and expenses incurred by the owner while promoting the studio or suite;
• automobile/vehicle expenses;
• certain taxes, including state-specific payroll and property taxes;
• fees that might be charged by a third-party provider for payroll processing;
• bank service fees;
• fees for your water filtration lease, which The Exercise Coach estimates to be $720 per year based on the national rate it negotiated with its required vendor;
• general supplies, such as cleaning supplies and office consumables;
• professional fees;
• costs for repairs and maintenance;
• miscellaneous costs such as travel expenses and/or uniform expenses;
• royalty and credit card fees, both of which are based on gross revenue;
• insurance premiums, which are estimated to be approximately $3,500 per year if you purchase only The Exercise Coach’s minimum required insurance policies; or
• software fees, which are estimated to be approximately $6,344 per year for fees paid to third-party licensors and $4,430 per year for fees paid to The Exercise Coach’s affiliate for the Exerbotics technology fee.

• Some Exercise Coach businesses have earned this amount. Your individual results may differ. There is no assurance that you will earn as much.

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