StretchLab Franchise Review – Average, Median, High, and Low Gross Sales for Franchised Studios (2020 FDD) | Franchise Chatter9 min read

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America's Most Lucrative Franchises of the Year

StretchLab Franchise

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

  • Section I – Background information on the StretchLab franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a StretchLab franchise, based on Item 7 of the company’s 2020 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a StretchLab franchise, based on Items 5 and 6 of the company’s 2020 FDD
  • Section IV – Number of franchised and company-owned StretchLab outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
  • Section V – Presentation and analysis of StretchLab’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
  • 2019 average, median, high, and low gross sales for the 4 StretchLab Studios that were owned by the original founders of the brand and were not governed by a franchise agreement with StretchLab until September 2019 when these 4 Studios were acquired by certain of StretchLab’s System franchisee(s) to be operated as Franchised Businesses moving forward
  • 2019 average, median, high, and low gross sales for the 5 StretchLab Studios that were (a) open and operating as franchised Studios throughout the entirety of the 2019 calendar year, and (b) have offered and sold the Approved Services primarily via memberships, implemented EFT billing for such members and other System components since inception of operations
  • average, median, high, and low gross sales during month 3, month 6, month 9, and month 12 for the applicable subset of franchised StretchLab Studios that were open and actively operating that number of full months as of December 31, 2019
  • average, median, high, and low gross sales during the first quarter, second quarter, third quarter, and fourth quarter for the applicable subset of franchised StretchLab Studios that were open and actively operating for at least the operational quarter at issue as of December 31, 2019

Section I – Background Information

18 Things You Need to Know About the StretchLab Franchise

Offers Week of Free Virtual Classes

1.  In early June 2020, StretchLab announced the launch of its “Stretch Into Summer” campaign to get bodies moving and ready for summer after months of quarantine. Each day from June 15 to 19, StretchLab offered three free group stretching classes, led by seasoned Flexologists from around the country via Zoom. Each class had a different focus or purpose, including core activation and stretches for golfers, among other options.

2.  Those who wished to participate could find Zoom links to the classes posted on www.stretchintosummer.com or StretchLab’s social media channels. There was no cost to join the virtual sessions – instead StretchLab encouraged participants to donate to Color of Change.

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3.  When the COVID-19 pandemic struck earlier in the year, StretchLab’s 70+ studios across the country were forced to halt in-person sessions as much of the country shut down. During that time, the leading assisted stretching franchise did its best to keep members active and healthy with a slew of virtual offerings such as StretchLab GO and virtual appointments with Flexologists.

4.  As studios gradually reopened and members started booking assisted stretching sessions again, StretchLab wanted to help those who may have fallen out of their usual healthy habits get back into consistent stretching and recovery with the “Stretch into Summer” classes.

5.  Lou DeFrancisco, president of StretchLab, said, “Sheltering in place has either led to a more sedentary lifestyle or an uptick in crazy at-home workouts or running for people. As the country starts to reopen, we want to ensure everyone is safely moving and treating their bodies right. Our ‘Stretch Into Summer’ event is a great way to reconnect with our members, but also introduces tons of new people to the importance of stretching as part of their everyday lives.”

Announces Opening of First International Location in Canada

6.  In mid-November 2020, StretchLab announced the opening of its first international studio in Toronto, Canada at the beginning of 2021. As demand for wellness services like assisted stretching continues to increase around the globe amidst the coronavirus pandemic, StretchLab is well-positioned for growth and success outside of the United States, where it already has nearly 100 locations open.

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7.  StretchLab’s expansion into Canada is being driven by a franchise agreement with Toronto resident Kevin McKague, who is also a university professor of Entrepreneurship and Strategy. The Toronto studio will be his first venture into business ownership and the perfect way to apply his many years of expertise.

8.  McKague said, “I’m incredibly excited to bring StretchLab to Canada. As a Professor of Entrepreneurship and Strategy, I wanted to invest in a brand that I believed will be successful, had a great support team and will benefit my local community in Toronto.”

9.  Lou DeFrancisco, president of StretchLab, added, “With nearly 100 locations open in the US, we are thrilled to bring StretchLab to the Canadian market. We were very selective in awarding a franchise to our first international location, and we are confident that Kevin’s leadership background and passion for helping people will make him a fantastic StretchLab owner.”

10.  This Canadian expansion is coming on the heels of an impressive year of growth and evolution for StretchLab. Despite the pandemic, the franchise has opened more than 24 studios in 2020, including new locations in California, Pennsylvania, and Minnesota. On top of that, StretchLab rolled out the TRX MAPS machine, which identifies movement inefficiencies across four critical categories, in all of its studios earlier in the year.

Parent Company Signs Exclusive Multi-Year Global Deal with ClassPass

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11.  In early September 2020, Xponential Fitness named ClassPass the exclusive aggregator for all eight of their brands worldwide. Xponential Fitness is the curator of leading brands across every vertical of the boutique fitness space, with a portfolio that includes StretchLab, Club Pilates, CycleBar, Row House, AKT, YogaSix, Pure Barre, and STRIDE.

12.  In addition to almost 1,600 studio locations in the US and Canada alone, Xponential has close to 4,000 franchise licenses sold across 10 countries. With this partnership, any Xponential studio or franchisee who opts to market in-person or digital fitness classes through an aggregator will do so through ClassPass.

13.  Anthony Geisler, CEO of Xponential Fitness, said, “Our brands have seen proven benefits from ClassPass’s transition from the Unlimited model to Credits and the release of its inventory management tools for studios. Given the positive impact ClassPass has had for our franchise partners, we are excited to enhance the partnership, especially as ClassPass continues to rapidly acquire new corporate and enterprise clients.”

14.  Founded in 2013, ClassPass is the largest aggregator of fitness and wellness brands. ClassPass offers access to 30,000 studios, gyms, and wellness providers, as well as a growing catalog of on-demand and livestreamed digital fitness options. In addition to building the largest B2C fitness marketplace in the world, ClassPass also entered the employee benefits space in 2019. ClassPass now partners with more than 2,000 corporate clients, equipping employers with flexible Corporate Wellness options for their teams. Individual subscribers and professionals on employee-sponsored plans will both have access to Xponential’s suite of high energy, motivating workouts.

15.  Fritz Lanman, CEO of ClassPass, added, “ClassPass curates the top fitness brands in the world, all through one membership. Xponential brands such as Club Pilates, Pure Barre, CycleBar and Row House are some of the most popular and sought after classes by our members, and we’re thrilled to add on-demand and livestream video content as part of this expanded partnership. This multi-year deal will provide our corporate clients with exclusive access to Xponential brands, something no other Corporate Wellness program offers.”

Company History

16.  StretchLab was founded by Saul C. Janson, Tim Trost, and Steve Sudell in Venice, California in 2015. The business partners decided to focus on an area of fitness that was often ignored: stretching. StretchLab is the first boutique fitness brand that focuses on one-on-one assisted stretching services and is intended to supplement traditional workouts.

17.  Following the success of the first StretchLab location, Janson, Trost, and Sudell opened a few more locations before the company was acquired by Xponential Fitness in 2018. Under Xponential Fitness’s ownership, StretchLab immediately started franchising and within a year, StretchLab signed its 250th franchise agreement.

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18.  StretchLab did not rank on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

  • Please click here for detailed estimates of StretchLab franchise costs, based on Item 7 of the company’s 2020 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on StretchLab’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2017

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

2018

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

2019

  • Outlets at the Start of the Year:  2
  • Outlets at the End of the Year:  64
  • Net Change:  +62

Company-Owned

2017

  • Outlets at the Start of the Year:  3
  • Outlets at the End of the Year:  3
  • Net Change:  0

2018

  • Outlets at the Start of the Year:  3
  • Outlets at the End of the Year:  4
  • Net Change:  +1

2019

  • Outlets at the Start of the Year:  4
  • Outlets at the End of the Year:  0
  • Net Change:  -4

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

Part 1 – Average Gross Sales Generated by the Disclosed Studios Over the 2019 Calendar Year

  • Part 1 of this Item discloses the average and other certain information regarding the historical “Gross Sales” generated amongst the 9 Studios (the “Part 1 Studios”) that were open and operating over the entire 2019 calendar year (the “Measurement Period”).
  • As disclosed more fully in Item 20, 4 of these Part 1 Studios were owned by the original founders of the brand and were not governed by a franchise agreement with StretchLab until September 2019 when these 4 Studios were acquired by certain of StretchLab’s System franchisee(s) to be operated as Franchised Businesses moving forward in accordance with the terms of StretchLab’s then-current form of Franchise Agreement that the current franchisee owners entered into with StretchLab (the “Original Studios”).
  • The other 5 Part 1 Studios were (a) open and operating as franchised Shops throughout the entirety of the Measurement Period, and (b) have offered and sold the Approved Services primarily via memberships, implemented EFT billing for such members and other System components since inception of operations (the “Part 1 Franchised Studios”).
  • This Chart excludes any Studios that (a) were open as of December 31, 2019, but (b) did not open and commence operations until some point during the 2019 calendar year.

Original Studios (Converted to Franchised Business)

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