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

Section I – Estimated initial investment (franchise costs) for a Farrell’s eXtreme Bodyshaping franchise, based on Item 7 of the company’s 2022 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Farrell’s eXtreme Bodyshaping franchise, based on Items 5 and 6 of the company’s 2022 FDD

Section III – Number of franchised and company-owned Farrell’s eXtreme Bodyshaping 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 – News updates on the Farrell’s eXtreme Bodyshaping franchise opportunity

Section V – Presentation and analysis of Farrell’s eXtreme Bodyshaping’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:

• 2020 and 2021 average, median, highest, and lowest annual gross sales for the Farrell’s eXtreme Bodyshaping franchised 2.0 Studios, franchised 1.0 Studios, and affiliate location that were (i) open and operating as of the start of the calendar year at issue (no later than early January 2021); and (ii) open continuously through Farrell’s most recent fiscal year ended December 31, 2021

• 2020 and 2021 average, median, highest, and lowest monthly gross sales for the Farrell’s eXtreme Bodyshaping franchised 2.0 Studios, franchised 1.0 Studios, and affiliate location that were (i) open and operating as of the start of the calendar year at issue (no later than early January 2021); and (ii) open continuously through Farrell’s most recent fiscal year ended December 31, 2021

Section VI – Key ratios, comparables, computations, and analyses for the Farrell’s eXtreme Bodyshaping franchise opportunity (exclusive content for Platinum subscribers)

Section I – Farrell’s eXtreme Bodyshaping Franchise Costs

• Farrell’s eXtreme Bodyshaping franchise costs, based on Item 7 of the company’s 2022 FDD:

• Initial Franchise Fee:  $59,900
• Training-Related Costs and Expenses:  $0 to $4,000
• Initial Proprietary Marketing Spend:  $25,000
• Real Estate Cost and Security Deposit:  $3,000 to $17,500
• Construction and Leasehold Improvements:  $20,000 to $105,000
• Furniture, Fixtures, and Equipment:  $10,000 to $28,000
• Signage (interior and exterior):  $6,000 to $15,000
• Opening Inventory and Supplies:  $2,000 to $5,000
• Insurance:  $1,000 to $3,600
• Licenses, Permits, and Professional Fees:  $17,500 to $30,000
• Audio-Visual (AV) Package and Related Information Technology (IT):  $15,000 to $20,000
• Staffing:  $10,000 to $25,000
• Utilities:  $2,500 to $3,500
• Additional Funds for 3 Months:  $10,000 to $35,000
• Total Estimated Farrell’s eXtreme Bodyshaping Franchise Costs:  $181,900 to $376,500

Section II – Farrell’s eXtreme Bodyshaping’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Farrell’s eXtreme Bodyshaping’s initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:

• Initial Franchise Fee:  $59,900

• Royalty:  an amount of (a) 7.5% of Gross Sales provided you timely pay such amounts under the Franchise Agreement, or (b) Farrell’s then-current minimum royalty. If you fail to timely pay your Royalty Fees, then Farrell’s may, in addition to late fees and interest, increase your Royalty Fee by 1% (resulting in a Royalty Fee amounting to 8.5%) of the Gross Sales of your Franchised Business throughout the balance of your Franchise Agreement with Farrell’s.

• Brand Development Contribution:  currently, you must contribute to the fund in an amount equal up to 3% of the Gross Sales generated by your Franchised Business

• Local Advertising Requirement (“LAR”):  you must expend a minimum amount on the local advertising, marketing, and promotion of the Franchised Business within your Designated Territory. As of the Issue Date, your LAR amounts to 1% of the Gross Sales generated by your Franchised Business.

Section III – Number of Franchised and Company-Owned Farrell’s eXtreme Bodyshaping Outlets

Franchised

2019

• Outlets at the Start of the Year:  66
• Outlets at the End of the Year:  65
• Net Change:  -1

2020

• Outlets at the Start of the Year:  65
• Outlets at the End of the Year:  55
• Net Change:  -10

2021

• Outlets at the Start of the Year:  55
• Outlets at the End of the Year:  55
• Net Change:  0

Company-Owned

2019

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2020

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

2021

• Outlets at the Start of the Year:  1
• Outlets at the End of the Year:  1
• Net Change:  0

Section IV – News Updates on the Farrell’s eXtreme Bodyshaping Franchise

• Here’s Why Fitness Franchises Win

• Farrell’s eXtreme Bodyshaping Did Not Rank on Entrepreneur’s 2022 Franchise 500 List

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Farrell’s eXtreme Bodyshaping Franchise (Item 19, 2022 FDD)

• This Item 19 presents the average, median, and certain other historical Gross Sales performance information reported to Farrell’s amongst certain franchised Studios over each of the 2020 and 2021 calendar years (each, a “Measurement Period”), that were (i) open and operating as of the start of the Measurement Period at issue (no later than early January 2021); and (ii) open continuously through Farrell’s most recent fiscal year end, namely December 31, 2021.

• Farrell’s refers to the franchised Studios that meet the criteria above for a given Measurement Period as the “Disclosed Franchised Studios” for that calendar year in Part 1 of this Item 19. Part 1 also discloses the Gross Sales information described above for the single Studio that was owned and operated by Farrell’s affiliate throughout the 2020 calendar year (the “Affiliate Location”).

• Specifically, the chart(s) disclosed below in this Item disclose historical Gross Sales data, as reported to Farrell’s by the Studio owners, generated amongst the following:

• (i) those Disclosed Franchised Studios that were operated over each Measurement Period utilizing Farrell’s current System standards and specifications for (a) equipment, (b) marketing and sales programs designed to generate memberships and all required ongoing marketing activities once the franchised Center has commenced operations, and (c) the provision of the Approved Services via the membership and other models with which a new System franchisee will be required to comply (each, a “2.0 Studio”);

• (ii) the remaining Franchised Disclosed Studios that operated over each Measurement Period in a manner that did not meet (or that deviated from) the criteria for a 2.0 Studio – and instead operated using certain older or “legacy” System standards and/or specifications (each, a “1.0 Model”); and

• (iii) the Affiliate Location.

• Part 1 of this Item displays the annual Gross Sales information reported amongst the 2.0 Studios and 1.0 Studios, respectively, as well as by the Affiliate Location, over each Measurement Period.

• Part 2 details the monthly Gross Sales information reported amongst the 2.0 Studios and 1.0 Studios, respectively, as well as by the Affiliate Location, over each Measurement Period.

• Parts 1 and 2 of this Item exclude the following: (i) any franchised Studios that were not open and operating as of December 31, 2021 even if they were open and operating at some point during a given Measurement Period (1 Studio with regards to the 2021 Measurement Period, and 13 Studios excluded for the 2020 Measurement Period); (ii) for each Measurement Period, those franchised Studios that had not opened and commenced active operations as of the start of that Measurement Period (1 Studio for 2021 Measurement Period, 3 Studios for 2020 Measurement Period); (iii) and for the 1 affiliate studio that was not open the full 2021 year due to opening a new location in new market.

• Farrell’s did not exclude any other franchised Studios that were open and operating as of December 31, 2021.

• Some outlets have sold this amount. Your individual results may differ. There is no assurance that you’ll sell as much.

Part 1 – Average, Median, and Other Annual Gross Sales Reported for the 2020 and 2021 Calendar Years: (i) Amongst the 2.0 Studios (Franchised) and (ii) 1.0 Studios (Franchised), Respectively; and (iii) the Affiliate Location

Table 1A – 2.0 Studios (Franchised)

2020

• Average Annual Gross Sales:  $287,898
• Studios in Applicable Subset:  10
• High Annual Gross Sales:  $354,436
• Median Annual Gross Sales:  $300,088
• Low Annual Gross Sales:  $178,074
• Number of Studios That Met or Exceeded the Average:  6 (or 60%)

2021

• Average Annual Gross Sales:  $379,944
• Studios in Applicable Subset:  13
• High Annual Gross Sales:  $538,361
• Median Annual Gross Sales:  $345,489
• Low Annual Gross Sales:  $303,360
• Number of Studios That Met or Exceeded the Average:  5 (or 38%)

Table 1B – 1.0 Studios (Franchised)

2020

• Average Annual Gross Sales:  $194,108
• Studios in Applicable Subset:  43
• High Annual Gross Sales:  $423,743
• Median Annual Gross Sales:  $179,007
• Low Annual Gross Sales:  $60,634
• Number of Studios That Met or Exceeded the Average:  19 (44%)

2021

• Average Annual Gross Sales:  $216,912
• Studios in Applicable Subset:  41
• High Annual Gross Sales:  $392,870
• Median Annual Gross Sales:  $202,041
• Low Annual Gross Sales:  $104,395
• Number of Studios That Met or Exceeded the Average:  21 (51%)

Table 1C – Affiliate Location

2020

• Annual Gross Sales for This Studio Only:  $188,811

2021

• Not in operation for full calendar year 2021.

Part 2 – Average, Median, and Other Monthly Gross Sales Information Reported for the 2020 and 2021 Calendar Years: (i) Amongst the 2.0 Studios (Franchised) and (ii) 1.0 Studios (Franchised), Respectively; and (iii) the Affiliate Location

Table 2A – 2.0 Studios (Franchised)

2020

• Average Monthly Gross Sales:  $23,991
• Studios in Applicable Subset:  10
• High Monthly Gross Sales:  $29,536
• Median Monthly Gross Sales:  $25,142
• Low Monthly Gross Sales:  $14,849
• Number of Studios That Met or Exceeded the Average:  6 (60%)

2021

• Average Monthly Gross Sales:  $31,662
• Studios in Applicable Subset:  13
• High Monthly Gross Sales:  $44,863
• Median Monthly Gross Sales:  $28,791
• Low Monthly Gross Sales:  $25,280
• Number of Studios That Met or Exceeded the Average:  5 (38%)

Table 2B – 1.0 Studios (Franchised)

2020

• Average Monthly Gross Sales:  $16,176
• Studios in Applicable Subset:  43
• High Monthly Gross Sales:  $35,312
• Median Monthly Gross Sales:  $14,917
• Low Monthly Gross Sales:  $5,053
• Number of Studios That Met or Exceeded the Average:  19 (44%)

2021

• Average Monthly Gross Sales:  $18,076
• Studios in Applicable Subset:  41
• High Monthly Gross Sales:  $28,978
• Median Monthly Gross Sales:  $16,837
• Low Monthly Gross Sales:  $8,700
• Number of Studios That Met or Exceeded the Average:  21 (51%)

Table 2C – Affiliate Location

2020

• Average Monthly Gross Sales for This Studio Only:  $15,734

2021

• Not in operation for full calendar year 2021.

• The term Disclosed Studios includes all Studio locations that were open and operating over the applicable calendar year at issue.

• For each Disclosed Studio, the term “Gross Sales” means the total sales that the Studio generated from the sale of all Approved Services and Approved Products, including memberships, that a System franchisee will be authorized to offer and sell at his/her Franchised Business. The term “Gross Sales” does not include sales tax that is collected by the Studio owner and paid directly to the appropriate taxing authority.

• The term “2.0 Studios” refers to those locations which are operating under the new “Farrell’s 2.0” business model, and following brand guidelines for pricing, membership sales packages, enrollment timing, and sales strategy.

• “1.0 Studios” includes all franchise locations that are not following the new brand guidelines.

• All new System franchisees and Franchised Businesses will be required to follow the 2.0 System model as of the Issue Date of the Disclosure Document.

• The 2020 numbers reflect significant business interruption due to COVID-19. All locations in Farrell’s system were subject to mandatory shutdowns, significant capacity restrictions, and increased regulations on traffic, behavior, and hygiene protocols.

• Individual locations varied in their ability to offer virtual training; many offered members the opportunity to suspend membership fees during times they could not access the facilities. In addition to the impact on collection of membership fees from existing members, the restrictions and shutdowns also resulted in multiple months where certain Studios were unable to sell new memberships, which also impacted revenue for 2020.

Section VI – Farrell’s eXtreme Bodyshaping Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️