In this exclusive Franchise Chatter FDD Talk post, you’ll learn the following:
Section I – Estimated initial investment (franchise costs) for a Club Pilates franchise, based on Item 7 of the company’s 2022 FDD
Section II – Initial franchise fee, royalty fee, and marketing fee for a Club Pilates franchise, based on Items 5 and 6 of the company’s 2022 FDD
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Section IV – News updates on the Club Pilates franchise opportunity
Section V – Presentation and analysis of Club Pilates’ financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2022 FDD, including information on the:
- average monthly gross sales generated in each calendar month comprising the 2021 calendar year and first calendar month of 2022, by the franchised Club Pilates studios that were (i) owned and operated by a system franchisee over the entirety of the measurement period; and (ii) operating for at least 6 months beyond their soft opening date as of the end of that calendar month (the “Disclosed Studios”)
Section VI – Key ratios, comparables, computations, and analyses for the Club Pilates franchise opportunity (exclusive content for Platinum subscribers)
Section I – Club Pilates Franchise Costs
- Club Pilates franchise costs, based on Item 7 of the company’s 2022 FDD:
- Initial Franchise Fee: $60,000
- Initial Training Program (Fees): $0
- Travel and Living Expenses While Training: $500 to $3,000
- Real Estate/Lease: $11,500 to $39,500
- Net Leasehold Improvements: $28,500 to $140,500
- Signage: $10,000 to $21,000
- Insurance: $1,000 to $2,500
- Payments in Connection with Pilates and Other Exercise Equipment: $5,000 to $9,000
- Retail Inventory Package for Presale and Soft Opening: $12,000
- Furniture, Fixtures, and Related Supplies: $18,500 to $19,500
- Computer System and Related Components: $2,500 to $3,500
- Initial Marketing Spend (including amounts on Opening Support Program): $15,000
- Shipping: $4,500 to $12,000
- Installation: $6,000 to $8,500
- Orientation Program Fee: $200 to $1,600
- Tech Fee(s) – 3 Months and 1 Month Prior to Opening: $2,200
- Additional Funds – 3 Months: $10,000 to $40,000
- Total Estimated Club Pilates Franchise Costs: $187,400 to $389,800
Section II – Club Pilates’ Initial Franchise Fee, Royalty Fee, and Marketing Fee
- Club Pilates’ initial franchise fee, royalty fee, and marketing fee, based on Items 5 and 6 of the company’s 2022 FDD:
- Initial Franchise Fee: $60,000
- Royalty: 7% of Gross Sales
- Contributions to Brand Development Fund: currently, 2% of Gross Sales
- Local Advertising Requirement: you must expend a minimum of $1,500 per month on the local advertising and promotion of your franchised Studio
Section III – Number of Franchised and Company-Owned Club Pilates Outlets
Franchised
2019
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- Outlets at the End of the Year: 553
- Net Change: +174
2020
- Outlets at the Start of the Year: 553
- Outlets at the End of the Year: 601
- Net Change: +48
2021
- Outlets at the Start of the Year: 601
- Outlets at the End of the Year: 667
- Net Change: +66
Company-Owned
2019
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 0
- Net Change: 0
2020
- Outlets at the Start of the Year: 0
- Outlets at the End of the Year: 5
- Net Change: +5
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- Outlets at the End of the Year: 0
- Net Change: -5
Section IV – News Updates on the Club Pilates Franchise
Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Club Pilates Franchise (Item 19, 2022 FDD)
- All of the historical performance information disclosed in this Item below were generated by traditional franchised Studios that meet the eligibility criteria set forth below.
- As of the Issue Date of the Disclosure Document, Club Pilates does not have any Non-Traditional Studios that its System franchisees have opened and operated – and, as such, nothing in this Item provides any kind of financial performance representation or earnings claim regarding any Non-Traditional Studios that are operating from within an agreed-upon space within a Non-Traditional Site.
- In this Item, Club Pilates discloses the average, median, and certain other monthly Gross Revenue generated in each calendar month comprising the 2021 calendar year and first calendar month of 2022 (each, a “Calendar Month” and collectively, the “Measurement Period”) amongst the franchised Studios that were: (i) owned and operated by a System franchisee over the entirety of the Measurement Period; and (ii) operating for at least 6 months beyond their soft opening date as of the end of that Calendar Month (the “Disclosed Studios”).
- The Applicable Subset for a given Calendar Month excludes any Studio that was not open for at least 6 months beyond its soft opening date as of the end of that Calendar Month (the “Excluded Studios”).
Average Gross Revenue Amongst the Applicable Subset of All Disclosed Studios for Each Calendar Month Comprising the Measurement Period
- January 2021: $30,392
- February 2021: $32,304
- March 2021: $39,006
- April 2021: $41,578
- May 2021: $44,711
- June 2021: $48,042
- July 2021: $48,915
- August 2021: $49,514
- September 2021: $50,642
- October 2021: $51,901
- November 2021: $54,787
- December 2021: $52,911
- Total 2021: $544,703
- January 2022: $53,659
- 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.
- “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.
- When reviewing this Item 19 and evaluating the franchise offering generally, it is particularly important to note the following characteristics of Existing Studios described in this Item 19 (as compared to a new Franchised Business):
- a. Each of the Disclosed Studios utilizes the Marks and System in a manner similar to how you will be required to use such intellectual property in the operation of the Franchised Business that is being offered under the Disclosure Document;
- b. Certain of the more mature Disclosed Studios did not incur the various other pre-opening costs and expenses over the Measurement Period that you are likely to incur in connection with the development of a new Franchised Business because such Disclosed Studios were all open and operating for some time as of the date the Measurement Period commenced; and
- c. Some aspects of certain Disclosed Studios are primarily managed on a day-to-day basis by a single individual that manages such matters for both locations. While this engagement would be similar to you engaging a “Designated Manager” or other third party to assist in managing certain aspects of your Franchised Business, Club Pilates does not expect that you will be engaging such a third party at the outset of operating your new Franchised Business (unless you are a multi-unit owner).
- This Item 19 does not disclose or discuss any of the operating costs and expenses that will be incurred in connection with the establishment and ongoing operation of a Franchised Business, nor does it account for amortization, depreciation, tax liabilities, and/or costs associated with debt services (if and as applicable).
- 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.
Section VI – Club Pilates Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️
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