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

Section I – Estimated initial investment (franchise costs) for a Bach to Rock franchise, based on Item 7 of the company’s 2024 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for a Bach to Rock franchise, based on Items 5 and 6 of the company’s 2024 FDD

Section III – Number of franchised and company-owned Bach to Rock outlets at the start of the year and the end of the year for 2021, 2022, and 2023, based on Item 20 of the company’s 2024 FDD

Section IV – News updates on the Bach to Rock franchise opportunity

Section V – Presentation and analysis of Bach to Rock’s financial performance representations (average revenues and/or profits), based on Item 19 of the company’s 2024 FDD, including information on the:

• 2023 average total sales (private lessons; band, group, early childhood; camps; parties; DJ; other – retail, studio, satellite, events), discounts, cost of goods sold, net sales, direct instructional costs, site general and administrative expenses (salary/benefits/taxes; all other), and marketing expenses for the 11 affiliate-owned and 42 franchised Bach to Rock Schools that have been operating for more than one year as of December 31, 2023, and were in operation during all of 2023

Section VI – Key ratios, comparables, computations, and analyses for the Bach to Rock franchise opportunity (exclusive content for Platinum subscribers)

Section I – Bach to Rock Franchise Costs

• Initial Franchise Fee:  $45,000
• Harmony Gateway License Fee:  $5,000
• Real Estate; Prepaid Rent and Security Deposit:  $3,000 to $15,000
• Leasehold Improvements:  $105,000 to $275,000
• Signage:  $4,000 to $15,000
• Furniture and Fixtures:  $2,000 to $14,000
• Architectural Plans and Design:  $6,000 to $13,000
• Lease Review Fee:  $0 to $2,500
• Computer System:  $7,000 to $12,000
• Equipment:  $20,000 to $35,000
• Insurance Deposits and Premiums:  $2,000 to $5,000
• Travel and Living Expenses During Training:  $500 to $5,000
• Grand Opening Advertising:  $25,000
• Licenses and Permits:  $2,000 to $8,000
• Professional Fees:  $3,000 to $15,000
• Inventory, Curriculum, and Course Materials:  $2,000 to $4,000
• Pre-Opening Costs:  $4,000 to $16,000
• Additional Funds (3 months):  $20,000 to $40,000
• Total Estimated Bach to Rock Franchise Costs:  $255,500 to $549,500

Section II – Bach to Rock’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Initial Franchise Fee:  $45,000
• Royalty Fee:  7% of Gross Sales
• Advertising Obligations:  currently, 6% of Gross Sales, but Bach to Rock may increase this to up to 8% over time (currently, 2% of Gross Sales for National Brand Fund, 0% of Gross Sales for Regional Fund, and 4% of Gross Sales that you spend directly on local advertising)

Section III – Number of Franchised and Company-Owned Bach to Rock Outlets

Franchised

2021

• Outlets at the Start of the Year:  35
• Outlets at the End of the Year:  39
• Net Change:  +4

2022

• Outlets at the Start of the Year:  39
• Outlets at the End of the Year:  44
• Net Change:  +5

2023

• Outlets at the Start of the Year:  44
• Outlets at the End of the Year:  45
• Net Change:  +1

Company-Owned

2021

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  10
• Net Change:  +0

2022

• Outlets at the Start of the Year:  10
• Outlets at the End of the Year:  11
• Net Change:  +1

2023

• Outlets at the Start of the Year:  11
• Outlets at the End of the Year:  11
• Net Change:  0

Section IV – News Updates on the Bach to Rock Franchise

Section V – Financial Performance Representations (Average Revenues and/or Profits) for the Bach to Rock Franchise (Item 19, 2024 FDD)

• Presented below are Total Sales and Net Sales data, and certain revenue, cost and expense data, for 2023 for all Schools that had been operating for more than one year as of December 31, 2023, and were in operation during all of 2023.

Affiliate-Owned 2023 System Average Open 12+, 24+, 36+ Months

Sales

• Private Lessons (including DJ):  $402,284 (69.0%)
• Band, Group, Early Childhood (including DJ):  $109,785 (18.8%)
• Camps (including DJ):  $49,034 (8.4%)
• Parties (including DJ):  $8,847 (1.5%)
• Other (Retail, Studio, Satellite, Events):  $13,285 (2.3%)
• Total Sales:  $583,235 (100.0%)

Less: Discounts:  $21,819 (3.7%)

Less: Cost of Goods Sold:  $4,168 (0.7%)

Net Sales:  $557,248 (95.5%)

Total Direct Instructional Costs:  $156,316 (26.8%)

Site General and Administrative Expenses

• Salary/Benefits/Taxes:  $136,532 (23.4%)
• All Other:  $51,348 (8.8%)
• Total Site General and Administrative Expenses:  $187,880 (32.2%)

Total Marketing:  $30,533 (5.2%)

Franchise-Owned 2023 System Average Open 12+ Months

Sales

• Private Lessons (including DJ):  $409,992 (74.1%)
• Band, Group, Early Childhood (including DJ):  $98,075 (17.7%)
• Camps (including DJ):  $30,071 (5.4%)
• Parties (including DJ):  $3,984 (0.7%)
• Other (Retail, Studio, Satellite, Events):  $11,395 (2.1%)
• Total Sales:  $553,387 (100.0%)

Less: Discounts:  $26,669 (4.8%)

Less: Cost of Goods Sold:  $4,885 (0.9%)

Net Sales:  $521,832 (94.3%)

Total Direct Instructional Costs:  $144,644 (26.1%)

Site General and Administrative Expenses

• Salary/Benefits/Taxes:  $118,839 (21.5%)
• All Other:  $56,708 (10.2%)
• Total Site General and Administrative Expenses:  $175,547 (31.7%)

Total Marketing:  $27,981 (5.1%)

Franchise-Owned 2023 System Average Open 24+ Months

Sales

• Private Lessons (including DJ):  $449,728 (74.8%)
• Band, Group, Early Childhood (including DJ):  $104,302 (17.3%)
• Camps (including DJ):  $32,023 (5.3%)
• Parties (including DJ):  $3,812 (0.6%)
• Other (Retail, Studio, Satellite, Events):  $11,699 (1.9%)
• Total Sales:  $601,409 (100.0%)

Less: Discounts:  $28,840 (4.8%)

Less: Cost of Goods Sold:  $4,962 (0.8%)

Net Sales:  $567,607 (94.4%)

Total Direct Instructional Costs:  $157,193 (26.1%)

Site General and Administrative Expenses

• Salary/Benefits/Taxes:  $122,004 (20.3%)
• All Other:  $60,372 (10.0%)
• Total Site General and Administrative Expenses:  $182,376 (30.3%)

Total Marketing:  $28,407 (4.7%)

Franchise-Owned 2023 System Average Open 36+ Months

Sales

• Private Lessons (including DJ):  $452,508 (75.4%)
• Band, Group, Early Childhood (including DJ):  $102,221 (17.0%)
• Camps (including DJ):  $31,410 (5.2%)
• Parties (including DJ):  $3,666 (0.6%)
• Other (Retail, Studio, Satellite, Events):  $10,452 (1.7%)
• Total Sales:  $600,121 (100.0%)

Less: Discounts:  $27,732 (4.6%)

Less: Cost of Goods Sold:  $5,120 (0.9%)

Net Sales:  $567,269 (94.5%)

Total Direct Instructional Costs:  $154,364 (25.7%)

Site General and Administrative Expenses

• Salary/Benefits/Taxes:  $117,690 (19.6%)
• All Other:  $59,592 (9.9%)
• Total Site General and Administrative Expenses:  $177,283 (29.5%)

Total Marketing:  $26,980 (4.5%)

• The chart reflects the Total Sales, Net Sales, and certain revenue, cost, and expense data in 2023 for all Schools that have been operating for more than one year as of December 31, 2023, and were in operation during all of 2023.

• The total sample size includes 11 affiliate-owned Schools and 42 franchised Schools.

• As of December 31, 2023, all 11 affiliate-owned Schools that are included in this Item 19 were open and operating for more than one year, more than two years, and more than three years. One affiliate-owned school opened for the first time during 2023 and that School is excluded from this Item 19.

• In addition, 42 franchised Schools were open and operating for more than one year as of December 31, 2023; 36 (of the 42) franchised Schools were open and operating for more than two years as of December 31, 2023; 31 (of the 42) franchised Schools were open and operating for more than three years as of December 31, 2023. Two new franchised Schools opened for the first time during 2023, and those Schools are excluded from this Item 19.

• All of the Schools are considered standard Schools and utilize the System, Courses, instructional guides, and curriculum. All of the Schools in the sample offered some of the Core Courses online. All of the Schools in the sample were permitted to offer the AMS Online Classes, but not all of them chose to do so.

• Sales from online programs are comingled with in-person sales of the same type (e.g., “Private Lessons” includes both online and in-person Private Lessons).

• The size of the Schools varies from 2,010 square feet to 5,637 square feet.

• “Total Sales” includes all revenue from the sale of all Courses, services, and products offered to customers and clients at or from the School or online.

• “Net Sales” includes all revenue from the sale of all Courses, services, and products offered to customers and clients at or from the School or online, less Discounts and Costs of Goods Sold.  As is evident from the chart generally, the net sales of Schools that have been open longer tend to be greater than the Schools with a shorter operating history.

• “Discounts” reflect promotional discounts, sibling discounts, employee discounts, donations, free lessons, and similar reductions.

• “Cost of Goods Sold” includes the costs and expenses related to retail items (e.g., guitar picks, drum sticks, guitar strings) and curriculum materials (e.g., books).

• “Direct Instructional Costs” includes costs and expenses related to the provision of classes, Courses, and programs, including salaries, wages, and benefits for teachers and other instructional staff who teach or otherwise provide instructional programming. Instructional Costs do not include the salaries of the site director, assistant director, or any manager, except to the extent a portion of their time is used in teaching or delivering instructional programs or services. Also included in Instructional Costs are the costs for instructional materials used in the Courses, or provided to students.

• “Total Site G&A” includes the salaries, wages, overtime, commissions, taxes, benefits, and bonuses paid to the schools’ administrative staff such as the site director, assistant director, administrative assistant, and music director. (If the franchisee is acting as the site director, assistant site director, administrative assistant and/or music director, salaries, wages, overtime, commissions, taxes, benefits, and bonuses may or may not be included. Bach to Rock does not receive that data from its franchisees.)

• It also includes monthly Harmony Gateway license fees, copyright fees, equipment repair, telephone, ISP, postage, office supplies, meals and entertainment, minor equipment purchases and repairs, insurance, credit card fees, bad debt, travel and lodging, and training costs associated with operating the school. It does not include rent, building services, facilities repair/maintenance, utilities, or real estate taxes.

• “Marketing” includes the 2% National Brand Fund contribution (which each affiliate-owned School is required to pay) plus the cost of paid media, design, and production.

• The cost and expense data does not reflect all of the costs of sales, costs of goods, operating expenses, or other costs or expenses that must be deducted from gross revenue or net sales to obtain a net income or net profit figure.

• Examples of costs that are not included are:

• rent and other occupancy costs;
• utilities, equipment lease costs;
• debt service and financing costs;
• business and regulatory fees and licenses;
• recruitment expenses; and
• bookkeeping, accounting, legal, and other professional services.

• In addition, a franchisee will have royalty payments (7%) and/or contributions to the Regional Fund or Cooperative, if established.

• Examples of costs that are included are:

• National Brand Fund contributions;
• Harmony Gateway license fees;
• copyright fees;
• salary, wages, taxes, and benefits for managers, site directors, assistant directors, and non-instructional staff;
• music, audio, video and instrumental equipment, telephone and internet service;
• advertising and marketing costs;
• voluntary employee benefits, such as health, vacation, or pension plan contributions;
• insurance; and
• ongoing and supplemental training expenses.

• Your costs will vary from those of the Schools in the chart, and costs will likely vary from School to School, and from franchisee to franchisee. For example, your labor costs and management costs will vary based on geography, demographics, economics, and market conditions, as well as items about which you and other business owners have wide discretion, such as whether to provide certain employee benefits (e.g., vacation, health care, and pension or retirement benefits), the type of benefits provided and the scope or value of those benefits, and whether the franchisee owner will pay himself/herself any compensation.

• Bach to Rock is not aware of any material differences, except as described above, between the affiliate-owned and franchised Schools and the franchises being offered in the disclosure document.

Section VI – Bach to Rock Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️