In this FDD Talk post, you’ll learn the following:
- Section I – Estimated initial investment (franchise costs) for a Premier Martial Arts franchise, based on Item 7 of the company’s 2022 FDD
- Section II – Initial franchise fee, royalty fee, and marketing fee for a Premier Martial Arts franchise, based on Items 5 and 6 of the company’s 2022 FDD
- Section III – Number of franchised and company-owned Premier Martial Arts outlets at the start of the year and the end of the year for 2019, 2020, and 2021, based on Item 20 of the company’s 2022 FDD
- Section IV – Background information on the Premier Martial Arts franchise opportunity, including relevant news updates
- Section V – Presentation and analysis of Premier Martial Arts’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:
- 2021 average gross sales, cost of goods sold, occupancy, advertising, payroll, other costs, and EBITDA for the top 15, bottom 15, and all 59 franchised Premier Martial Arts studios that were open and operating for the entire fiscal year 2021 and provided complete financial information for the fiscal year 2021
- 2020 and 2021 average number of presold studios, length of the presale period in weeks, number of presales per week in the presale period for reporting franchised Premier Martial Arts studios that had a grand opening in 2020 or 2021
- Section VI – Key ratios, comparables, computations, and analyses for the Premier Martial Arts franchise opportunity (exclusive content for Platinum subscribers)
Section I – Premier Martial Arts Franchise Costs
- Premier Martial Arts franchise costs, based on Item 7 of the company’s 2022 FDD:
- Initial Franchise Fee: $49,500
- Lease Payments (Deposits/Prepaids): $5,000 to $10,000
- Leasehold Improvements (before any TI): $42,000 to $150,000
- Licenses, Architectural, Engineering Fee, Bid Assistance: $15,500 to $16,500
- Construction Management Fees: $0 to $18,250
- Wages, Travel, and Living Expenses During Training: $575 to $7,000
- Furniture, Fixtures, and Equipment: $17,000 to $23,000
- Signs: $7,000 to $12,500
- Initial Inventory and Supplies: $800 to $25,000
- Start-Up Salaries (2 to 4 months): $9,900 to $36,000
- Insurance: $125 to $2,000
- Computer System & A/V Equipment: $5,300 to $14,800
- Software (Studio Pro, Franchise Resource Accounting): $700 to $1,000
- Legal and Accounting Fees: $2,000 to $14,000
- Optional Pre-Sale/Grand Opening Coordinator: $0 to $1,000
- Digital Footprint: $750
- Grand Opening Advertising: $20,000 to $25,000
- Additional Funds for 3 Months: $7,500 to $15,000
- Estimated Total Premier Martial Arts Franchise Costs: $183,650 to $421,800
Section II – Premier Martial Arts’ Initial Franchise Fee, Royalty Fee, and Marketing Fee
- Premier Martial Arts’ initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:
- Franchise Fee: $49,500
- Royalty Fees: 7% of monthly Gross Sales, subject to a minimum Royalty Fee of $600 per month starting the 13th month of the effective date of the Franchise Agreement
- National Advertising Fund Contribution: up to 5% of monthly Gross Sales, currently 0% of Gross Sales
- Local Marketing Expenditure: up to 6% of monthly Gross Sales, currently 6% of Gross Sales
- Advertising Cooperative (if established): amount determined by majority vote of cooperative members
Section III – Number of Franchised and Company-Owned Premier Martial Arts Outlets
- Outlets at the Start of the Year: 62
- Outlets at the End of the Year: 68
- Net Change: +6
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- Outlets at the Start of the Year: 68
- Outlets at the End of the Year: 94
- Net Change: +26
- Outlets at the Start of the Year: 94
- Outlets at the End of the Year: 166
- Net Change: +72
- Outlets at the Start of the Year: 5
- Outlets at the End of the Year: 4
- Net Change: -1
- Outlets at the Start of the Year: 4
- Outlets at the End of the Year: 5
- Net Change: +1
- Outlets at the Start of the Year: 5
- Outlets at the End of the Year: 9
- Net Change: +4
Section IV – Background Information on the Premier Martial Arts Franchise
14 Things You Need to Know About the Premier Martial Arts Franchise
Acquired by Unleashed Brands
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1. In early January 2022, Unleashed Brands, a fast-growing parent company of franchised brands that provide a safe, fun and enriching environment to help kids learn, play and grow, announced it has made a strategic investment in the acquisition of Premier Martial Arts, a prominent franchise company that specializes in teaching karate, krav maga and kickboxing for children and adults. Details of the transaction were not disclosed.
2. Michael Browning, president and CEO of Unleashed Brands, said, “The acquisition of Premier Martial Arts positions Unleashed Brands for further success with the focus on providing fun, engaging and inspiring experiences that help kids become who they are destined to be. The addition of Premier Martial Arts aligns perfectly with the company’s goal to create a global growth-focused platform that will serve to curate and expand the portfolio of brands that provides a safe, fun and enriching environment to help kids learn, play and grow.”
3. Premier Martial Arts’ mission is to provide the skills needed to help its students succeed in life, such as confidence, focus, self-esteem and physical well-being. The brand’s studios have certified, professional instructors that are trained in modern teaching techniques and martial arts skills.
4. In 2004, Barry Van Over founded the Premier Martial Arts organization that grew to over 70 locations in the United States, Canada and the United Kingdom. In 2018, he franchised Premier Martial Arts and the franchise has quickly grown to 564 franchises sold to 228 owners, making Premier Martial Arts one of the largest and fastest-growing franchises in the world.
5. According to Barry Van Over, founder and CEO of Premier Martial Arts, “Unleashed Brands has a proven recipe and track record for success with other portfolio brands that align perfectly with our goals for growth, and our brand mission to help students build skills required to excel in life. Premier Martial Arts looks forward to benefiting from the growth acceleration Unleashed Brands affords, as well as the additional tools, resources and minds included, as we remain focused on our unparalleled franchisee support and customer experience that our students expect.”
Parent Company Appoints New COO and EVP of Strategy
6. In early April 2022, Unleashed Brands, a franchise growth-focused platform company that includes portfolio brands Urban Air, Snapology, The Little Gym and Premier Martial Arts, announced the hiring of Joe Luongo, who joins the company as chief operating officer and executive vice president of strategy.
7. Luongo has a 30+ year career that spans both franchising and brand management, most recently serving as chairman of WellBiz Brands, Inc., a platform of health and lifestyle brands including Amazing Lash Studio, Drybar, Radiant Waxing, Elements Massage and Fitness Together, overseeing that platform’s most robust season of growth. Lunogo also served in several high-level leadership roles with Massage Envy, FedEx Kinkos, Starbucks, Pizza Hut, Circuit City, Peter Piper Pizza and Stone Eagle Advisors.
8. He joins Unleashed Brands at a time where growth within each brand is exceptional, and brings decades of business management and development experience to deliver key contributions to strategic direction. Luongo will work closely with each brand president and provide high-level mentorship and leadership. Luongo will also ensure consistent and successful operations of all brands using the Unleashed platform.
9. Michael O. Browning Jr., founder and CEO of Unleashed Brands, said, “Joe has been a mentor of mine for years now, and he’s always been someone I look up to throughout my career, so it is an honor and privilege to have him join the team. Joe’s background speaks for itself, and his skill set will be instrumental in evaluating new brands we may want to bring into the Unleashed Family, as well as strong support for strategic decision making for the company.”
10. Unleashed Brands is a parent company of growth-oriented brands geared at furthering child and adolescent development in three core areas – Learning (Science, Technology, Engineering, Arts and Mathematics), Playing (Celebrating, Escaping and Connecting) and Growing (Music & Arts, Martial Arts, Swimming, Sports). Backed by a management team with over 50 years of combined consumer industry experience, Unleashed Brands was born out of the proven expertise and existing infrastructure of Urban Air, a family entertainment industry leader.
11. The company acquired Snapology, the premier franchise brand offering STEAM programs for kids, and The Little Gym, the world’s premier enrichment and physical development center for children, last year, and recently acquired Premier Marital Arts, a prominent franchise company that specializes in teaching karate, krav maga and kickboxing for children and adults, in January 2022.
12. Premier Martial Arts was founded in 2004 by Barry Van Over in Knoxville, Tennessee. Van Over, who had been involved in martial arts since he was nine years old, wanted to use his vast knowledge to start a school. Before starting Premier Martial Arts, Van Over ran a consulting enterprise to help independent martial arts studio owners grow their businesses. The first Premier Martial Arts was a success and Van Over opened additional locations in the area to meet demand.
13. Van Over felt that the business model of Premier Martial Arts could be replicated in other markets and he began franchising in 2019. Today, there are Premier Martial Arts locations around the United States as well as a few locations in Canada and the United Kingdom. In 2022, Premier Martial Arts was acquired by Unleashed Brands.
Entrepreneur’s Franchise 500
14. Premier Martial Arts did not rank on Entrepreneur’s 2022 Franchise 500 list.
Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Premier Martial Arts Franchise (Item 19, 2022 FDD)
Part 1 – Gross Sales of Premier Martial Arts Franchised Units for the 2021 Fiscal Year
- Parts 1 and 2 contain data from 59 franchised PMA Studios that were open and operating for the entire fiscal year 2021.
- Parts 1 and 2 exclude 9 company-owned Studios, 4 PMA Studios operating under license agreements (as opposed to franchise agreements), 72 franchised PMA Studios not open and operating for the entire fiscal year 2021, and 30 franchised PMA Studios that provided incomplete financial information for the fiscal year 2021.
Top 15 Studios
- Average: $548,345
- Median: $508,180
- Minimum: $380,494
- Maximum: $889,730
- Number and Percentage Attaining or Surpassing Average: 3/33.3%
- Average: $315,850
- Median: $286,336
- Minimum: $36,516
- Maximum: $889,730
- Number and Percentage Attaining or Surpassing Average: 26/44.1%
Bottom 15 Studios
- Average: $151,484
- Median: $157,695
- Minimum: $36,516
- Maximum: $210,265
- Number and Percentage Attaining or Surpassing Average: 7/46.7%
- “Gross Sales” means the dollar aggregate of: (1) the sales price of all products, services, memberships, merchandise, and other items sold, and the charges for all services the franchisee performed, whether made for cash, on credit or otherwise, without reserve or deduction for inability or failure to collect.
Part 2 – Expenses and EBITDA of Premier Martial Arts Franchised Units for the 2021 Fiscal Year
Top 15 Studios (Average)
- Cost of Goods Sold: $70,894
- Occupancy: $61,273
- Advertising: $27,679
- Payroll: $127,809
- Other Costs: $64,187
- EBITDA: $196,504 (35.1%)
- Of the top 15 reporting studios open the entire 2021 fiscal year, 4 (or 26.7%) had an actual EBITDA equal to or exceeding the average EBITDA.
All Studios (Average)
- Cost of Goods Sold: $42,803 (13.6%)
- Occupancy: $50,760 (16.1%)
- Advertising: $23,841 (7.5%)
- Payroll: $86,969 (27.5%)
- Other Costs: $35,617 (11.3%)
- EBITDA: $75,950 (24.0%)
- Of the 63 reporting studios open the entire 2021 fiscal year, 28 (or 47.5%) had an actual EBITDA equal to or exceeding the average EBITDA.
Bottom 15 Studios (Average)
- Cost of Goods Sold: $23,194
- Occupancy: $45,220
- Advertising: $21,013
- Payroll: $61,347
- Other Costs: $16,505
- EBITDA: $(15,795) (-10.4%)
- Of the bottom 15 reporting studios open the entire 2021 fiscal year, 7 (or 46.7%) had an actual EBITDA equal to or exceeding the average EBITDA.
- “Costs of Goods Sold” includes the total cost of all merchandise and other costs related to products and services sold by PMA Studios, including merchant fees.
- “Occupancy” includes rent (including both minimum rents and percentage rents), utilities (e.g., electricity, gas, water, cable, internet, telephone), and any sales or other taxes imposed thereon and any pass-through expenses from the landlord.
- “Advertising” includes advertising, promotional, and marketing expenses for the PMA Studios in the Protected Area to satisfy the Local Marketing Expenditure requirement.
- “Payroll” includes personnel wages, management salaries, benefits, and payroll taxes but excludes bonuses, paid time off, severance payments, and fringe benefits. In addition, payroll excludes any disbursements made to the owners of the franchisees.
- “Other Costs” includes Royalty Fees, system development fees, office expenses (e.g., office and cleaning supplies), insurance, and payroll processing fees.
- “EBITDA” means earnings before interest, taxes, depreciation, and amortization. As is customary, it excludes expenses related to debt services costs, whether principal or interest.
Part 3 – Presales Prior to Grand Opening
- This table reflects presales data for franchised PMA studios for the fiscal years 2020 and 2021.
- Number of Franchised Reporting Studios Providing Presales: 24
- Average Number of Presold Students: 99
- Average Length of the Presale Period in Weeks: 12.4
- Average Number of Presales Per Week in the Presale Period: 8
- Number of Franchised Reporting Studios Providing Presales: 70
- Average Number of Presold Students: 91
- Average Length of the Presale Period in Weeks: 11
- Average Number of Presales Per Week in the Presale Period: 8.3
- “Presales” indicate the number of membership sales prior to a PMA Studio’s grand opening, i.e., before the PMA Studio opened its doors to the public for business. Presales are conducted as part of a PMA Studio’s grand opening advertising and collected through online sales.
- “Reporting Studios” means the number of reporting franchised PMA Studios that had a grand opening in 2021 or 2020.
- “Presold Students” indicates the number of students who purchased classes prior to the franchised PMA Studio’s grand opening.
- “Presale Period” indicates the period that the PMA Studio offered Presales prior to its grand opening.
- During 2020, PMA Studios were impacted by the COVID-19 pandemic. Some of the PMA Studios were required to close for periods of time. Some of the PMA Studios were required to operate with limited capacity. In response to the pandemic, Premier Martial Arts modified the franchise model to include significantly more online content available to members.
- Premier Martial Arts prepared this financial performance representation based on information submitted to it by franchisees in accordance with regular reporting requirements pursuant to the applicable Premier Martial Arts franchise agreements. Premier Martial Arts cannot verify the accuracy or completeness of the data supplied by the franchisees.
- This financial performance representation was prepared without an audit.
- Some PMA Studios have earned this amount. Your individual results may differ. There is no assurance that you will earn as much.