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

Section I – Estimated initial investment (franchise costs) for The Little Gym franchise, based on Item 7 of the company’s 2024 FDD

Section II – Initial franchise fee, royalty fee, and marketing fee for The Little Gym franchise, based on Items 5 and 6 of the company’s 2024 FDD

Section III – Number of franchised and company-owned The Little Gym 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 Little Gym franchise opportunity

Section V – Presentation and analysis of The Little Gym’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 gross sales, cost of goods sold, occupancy, advertising, payroll, insurance, other costs, and EBITDA for the 140 franchised The Little Gym outlets in the U.S. that were open at least a full year, by quartile

Section VI – Key ratios, comparables, computations, and analyses for The Little Gym franchise opportunity (exclusive content for Platinum subscribers)

Section I – The Little Gym Franchise Costs

• Initial Franchise Fee:  $59,500
• Lease Payments (one month rent and security deposit):  $14,000 to $30,000
• Leasehold and Tenant Improvements:  $210,000 to $270,000
• Architectural and Construction Management Fees:  $16,700 to $25,000
• Signage (interior and exterior):  $30,000 to $35,000
• Initial Inventory and Equipment Package:  $65,000 to $75,000
• Furniture, Fixtures, and Equipment:  $15,000 to $18,000
• Computer Systems, A/V, Security Surveillance System, Other Systems:  $10,000 to $15,000
• Training Related Expenses:  $17,500 to $22,500
• Legal, Accounting, and Other Professional Fees:  $5,000 to $11,000
• Technology Fees (3 months):  $357
• Insurance Deposit and Premiums:  $2,440 to $2,840
• Business Licenses and Permits:  $500 to $1,000
• Grand Opening Marketing:  $20,000 to $25,000
• Initial Supplies:  $1,200 to $2,000
• Additional Funds – 3 Months:  $39,000 to $81,000
• Total Estimated The Little Gym Franchise Costs:  $506,197 to $673,197

Section II – The Little Gym’s Initial Franchise Fee, Royalty Fee, and Marketing Fee

• Initial Franchise Fee:  $59,500

• Royalty:  greater of 8% of Gross Sales or $2,500 per month (“Minimum Royalty”)

• National Advertising Fund (NAF) Contribution:  up to 2.5% of monthly Gross Sales; currently 1% of Gross Sales

• Local Marketing Expenditure:  up to 6% of monthly Gross Sales, minus the portion The Little Gym designates for NAF Contribution; currently 5% of Gross Sales

• Advertising Cooperative (if established):  determined by majority vote of cooperative members

Section III – Number of Franchised and Company-Owned The Little Gym Outlets

Franchised

2021

• Outlets at the Start of the Year:  185
• Outlets at the End of the Year:  176
• Net Change:  -9

2022

• Outlets at the Start of the Year:  176
• Outlets at the End of the Year:  173
• Net Change:  -3

2023

• Outlets at the Start of the Year:  173
• Outlets at the End of the Year:  185
• Net Change:  +12

Company-Owned

2021

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

2022

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

2023

• 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 Little Gym Franchise

Section V – Financial Performance Representations (Average Revenues and/or Profits) for The Little Gym Franchise (Item 19, 2024 FDD)

Part 1 – Annual Gross Revenues, Expenses, and EBITDA for Year Ended December 31, 2023 as Reported by US Franchisees

• Part 1 shows historic unaudited annual gross revenues as reported to The Little Gym by its U.S. franchisees for the year ended December 31, 2023 (“Fiscal Year 2023”). As of the end of Fiscal Year 2023, there were 185 U.S. outlets operating.
• The 140 outlets included in Part 1 are those that were open at least a full year. Of the 45 excluded outlets, six closed during the Fiscal Year 2023 and 39 outlets were not open for at least a full year.

Top Quartile

• Number of Gyms:  35
• Average Gross Sales:  $1,125,831
• Average Cost of Goods Sold:  $39,484
• Average Occupancy:  $146,269
• Average Advertising:  $34,309
• Average Payroll:  $290,143
• Average Insurance:  $13,065
• Average Other Costs:  $121,415
• Average EBITDA:  $481,146 (42.4%)

Second Quartile

• Number of Gyms:  35
• Average Gross Sales:  $794,526
• Average Cost of Goods Sold:  $29,551
• Average Occupancy:  $140,505
• Average Advertising:  $27,992
• Average Payroll:  $245,430
• Average Insurance:  $11,398
• Average Other Costs:  $97,483
• Average EBITDA:  $242,168 (30.3%)

Third Quartile

• Number of Gyms:  35
• Average Gross Sales:  $578,875
• Average Cost of Goods Sold:  $28,968
• Average Occupancy:  $121,130
• Average Advertising:  $37,876
• Average Payroll:  $195,346
• Average Insurance:  $8,271
• Average Other Costs:  $65,265
• Average EBITDA:  $122,019 (21.1%)

Bottom Quartile

• Number of Gyms:  35
• Average Gross Sales:  $350,152
• Average Cost of Goods Sold:  $15,646
• Average Occupancy:  $101,526
• Average Advertising:  $22,684
• Average Payroll:  $135,634
• Average Insurance:  $8,046
• Average Other Costs:  $49,651
• Average EBITDA:  $16,965 (1.9%)

Average of Four Quartiles

• Number of Gyms:  140
• Average Gross Sales:  $712,346 (100.0%)
• Average Cost of Goods Sold:  $28,412 (4.0%)
• Average Occupancy:  $127,358 (17.9%)
• Average Advertising:  $30,715 (4.3%)
• Average Payroll:  $216,638 (30.4%)
• Average Insurance:  $10,195 (1.4%)
• Average Other Costs:  $83,454 (11.7%)
• Average EBITDA:  $215,574 (30.3%)

• “Costs of Goods Sold” includes the total cost of all food, beverages, merchandise, and other costs related to products and services sold by the Gyms, including distribution and delivery costs.

• “Occupancy” includes rent (including both minimum rents and percentage rents), utilities (e.g., electricity, gas, water, cable, internet, telephone), and any sales or other taxes imposed thereon and any pass-through expenses from the landlord. Taxes refer to real estate taxes and assessments levied against the property upon which the Gym is located. Sales and use taxes are excluded from occupancy costs.

• Common area expenses reflect charges for maintenance of parking lots and common use areas, landscaping design and maintenance, weather-related maintenance (e.g., removal of debris and snow), security staff, taxes and insurance for common areas, and such other charges customarily paid by tenants for services typically provided by landlords.

• “Advertising” includes advertising, promotional and marketing expenses for the Gyms in the Protected Area to satisfy the Local Marketing Expenditure requirement.

• “Payroll” includes personnel wages, management salaries, benefits and payroll taxes but excludes bonuses, paid time off, severance payments, and fringe benefits. In addition, payroll excludes the cost of training any hourly or management personnel and any disbursements made to the owners of the Franchisees.

• “Insurance” includes information related to commercial general liability insurance only.

• “Other Costs” includes royalty fees, office expenses (e.g., office and cleaning supplies), and processing fees (e.g., payroll, point of sale and payment processing and other bank charges).

• “EBITDA” means the earnings before interest, taxes, depreciation, and amortization. As is customary, it excludes expenses related to debt services costs, whether principal or interest.

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

Section VI – The Little Gym Franchise Ratios, Comparables, Computations, and Analyses (Exclusive Content for Platinum Subscribers) ⬇️