Considering the restrictions on product sources for Bft in Item 8, what are the implications for the franchisee's estimated initial investment in Item 7?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchise offering; and (ii) none of our officers own an interest in any of our Approved Suppliers other than us.
We may designate us or any of our affiliates as an Approved Supplier with respect to any other item you must purchase in connection with your Studio in the future.
Required Purchases and Right to Derive Revenue
The products or services we require you to purchase or lease from an Approved Supplier, or purchase or lease in accordance with our System Standards, are referred to collectively as your "Required Purchases." We estimate that your Required Purchases in total will be about 39% to 73% of your total purchases to establish the Studio and about 50% to 66% of your purchases to continue the operation of the Studio. Please be advised that these percentages do not include the lease payments that you make in connection with your Studio.
We and our affiliates may derive revenue from any of the purchases that our System franchisees are required to make in connection with the Studio. In fiscal year 2024, we did not receive any revenue from the sale of goods and services to franchisees, but our Predecessor received $4,727,544 from franchisees.
Non-Approved Product/Service and Alternate Supplier Approval
We may, but are not obligated to, grant your request to: (i) offer any products or services in connection with your Studio that are not Approved Products and Approved Services; or (ii) purchase any item or service we require you to purchase from an Approved Supplier from an alternative supplier.
If you wish to undertake either of these actions, you must request and obtain our approval in writing before: (i) using or offering the non-approved product or service in connection with your Studio; or (ii) purchasing from a non-approved supplier. You must pay us our then-current non-approved product or supplier evaluation fee
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, Item 8 outlines restrictions on the sources from which franchisees can purchase goods and services, which directly impacts the estimated initial investment detailed in Item 7. Bft estimates that Required Purchases will be about 39% to 73% of the total purchases to establish the Studio and about 50% to 66% of your purchases to continue the operation of the Studio. These percentages do not include lease payments.
The restrictions on product sources mean that franchisees may be required to purchase or lease certain items from Bft-approved suppliers. Item 7 lists several expenditures where purchases from Approved Suppliers are required, such as Net Leasehold Improvements ($72,000 to $560,500), Signage ($8,000 to $37,000), Insurance ($5,017 to $9,826), Audio/Visual Package, Computer System, and Related Components ($38,500), and Initial Marketing & Advertising Spend ($36,800 to $50,200). Additionally, franchisees must purchase Fitness Equipment & Initial FF&E Package ($198,500 to $236,000) and Pre-Sales and Soft Opening Retail Inventory Kit ($14,000 to $18,000) from Bft.
These designated supplier requirements can influence the initial investment costs, as Bft or its affiliates may derive revenue from these required purchases. While Bft states that it did not receive any revenue from the sale of goods and services to franchisees in fiscal year 2024, its Predecessor received $4,727,544 from franchisees. Franchisees do have the option to request approval for non-approved products or alternative suppliers, but Bft may charge a fee for evaluating such requests, adding another potential cost. Therefore, the restrictions on sources of products and services can significantly affect the franchisee's initial investment, potentially increasing costs depending on the pricing and terms negotiated by Bft with its approved suppliers.