Cyclebar Franchise Cost Worth Profits?

January 1, 2023 by No Comments

Cyclebar franchise is a fitness studio concept that primarily offers cycling classes and other related exercise classes. They are a limited liability company based in Ohio and were formed in the year 2014. They began offering franchises of their business a year later.

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Some of their affiliates are other famous fitness franchises, such as StretchLab and Club Pilates. Their current president is Trevor Lucas, who used to be the Cyclebar Director of Finance and has experience working as an Associate Manager of Finance and Strategic Development for Taco Bell.

The initial franchise fee for a Cyclebar franchise is $60,000. In the case of multi-unit franchise developers, the franchise fee is $45,000 per franchised business for three to five franchised units, $40,000 for six to nine franchise units, and $35,000 for more than ten franchise units.

The estimated total initial investment for a Cyclebar franchise ranges from $407,810 to $499,860.

The local advertising payments required of a Cyclebar franchise are a minimum of $1,750 per month. The other marketing fee is a Brand Development payment which is an amount equal to 2% of the studio’s gross sales paid every week.

The royalty fee for a Cyclebar franchise is 7% of gross sales or $1000 per month, whichever is the higher. Cyclebar determines the interval at which they collect the royalty, either weekly or monthly, with advance notice. Other important fees include a renewal fee of $10,000, a relocation fee of $5,000, and a technology fee of $715 per month.

In Item 19 of their FDD, Cycle Bar presents two charts that detail the average monthly gross sales of all their franchised studios as well as a separate chart for their studios which were active throughout each calendar month. Below are replications of the charts that were featured in the FDD, as well as our analysis of what these financial performances indicate about the health of the company.

Overall, the average Cyclebar fitness franchise does well financially in terms of gross sales per month. Except for the lower end of these studios that are being represented, most of the stores that are shown turn over a positive gross profit every month. However, there are a few things to keep in mind when evaluating the financial performance of these studios. For one, these charts only show the monthly gross profit of each studio. This is the initial revenue that a business brings in before the costs and expenses that go into operating a business, like COGS (cost of goods sold), equipment maintenance, and paying back loans that were taken out to start the business.

It is also interesting to note that fitness studios have peak seasons, meaning they have months where they experience a high surge of interest and other months that do not do as well. For example, January is one of the highest-earning months, bringing in over $40,000 per month in terms of gross revenue. This can be attributed to the tradition of New Year’s resolutions, and many people wanting to get in shape. However, by April this fitness fervor has died down and the average studio brings in less than $10,000 per month.

This inconsistent stream of revenue that fitness franchises like Cyclebar encounter are something worth considering before making your investment.

Overall, the number of studios that are being added to the Cyclebar franchise system is growing, but at a declining rate over the last year. For example, in 2019 there was a net change of 41 units being added to the franchise system from the previous year, but in 2020 only 15 units were added. A likely reason for this is the COVID-19 pandemic, which essentially shut down fitness centers for a period of time and slowed down economic growth. However, it seems that Cyclebar is making a comeback in 2021, as according to their FDD they are projecting 26 new outlets being opened this year.

One thing to be wary of when looking at unit numbers is the possibility that they are manufactured by the franchisor opening up an abnormal amount of franchises in order to cover up the many failures and closures occurring in their system. However, this does not seem to be the case for Cyclebar, because in 2020 they reacquired 5 of their existing franchises, compared to the 15 that they were able to open.

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