How does the net operating income of Studio 1 compare to Studio 2 for Degree Wellness?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
Chart 1 discloses the historical performance of each affiliate-owned location that was open for the entire 2024 calendar year (the "2024 Measurement Period"). The studio labelled Studio 1 has the same financial and operational characteristics as a those being offered pursuant to this disclosure document and do not otherwise materially differ from what you would operate as a franchisee. Studio 2 however, although it operated under the same trademarks, is unable to offer several key services and features. Namely, it does not offer contrast therapy or cold plunge, and it does not have showers. Studio 2 is being relocated to a new site in order to offer these services. As of the issuance date of this Disclosure document Studio 2 has terminated its original lease and entered into a new lease. However, it has not yet completed its relocation.
Chart 1 – Profit and Loss for Calendar Year 2024
| Studio 1 | % of Rev. | Studio 2 | % of Rev. | Average/Median | % of Rev. | |
|---|---|---|---|---|---|---|
| Gross Revenue | 738,070 | 100.0% | 482,725 | 100.0% | 610,397 | 100.0% |
| Cost of Goods Sold | 66,837 | 9.1% | 43,044 | 8.9% | 54,940 | 9.0% |
| Gross Profit | 671,233 | 90.9% | 439,682 | 91.1% | 555,457 | 91.0% |
| Expenses | ||||||
| Advertising & Marketing | 31,900 | 4.3% | 51,106 | 10.6% | 41,503 | 6.8% |
| Insurance | 5,275 | 0.7% | 3,412 | 0.7% | 4,343 | 0.7% |
| Office Expenses | 10,058 | 1.4% | 10,305 | 2.1% | 10,182 | 1.7% |
| Payroll Expenses | 137,648 | 18.6% | 93,674 | 19.4% | 115,661 | 18.9% |
| Rent & Lease | 56,401 | 7.6% | 98,476 | 20.4% | 77,439 | 12.7% |
| Repairs & Maintenance | 4,796 | 0.6% | 4,071 | 0.8% | 4,434 | 0.7% |
| Taxes | 4,446 | 0.6% | 2,932 | 0.6% | 3,689 | 0.6% |
| Utilities | 17,030 | 2.3% | 2,791 | 0.6% | 9,910 | 1.6% |
| Total Expenses | 267,554 | 36.3% | 266,767 | 55.3% | 267,160 | 43.8% |
| Net Operating Income | 403,679 | 54.7% | 172,915 | 35.8% | 288,297 | 47.2% |
| Estimated Fees | ||||||
| Royalties | 51,665 | 7.0% | 33,791 | 7.0% | 42,728 | 7.0% |
| Brand Fund | 7,381 | 1.0% | 4,827 | 1.0% | 6,104 | 1.0% |
| Total Estimated Fees | 59,046 | 8.0% | 38,618 | 8.0% | 48,832 | 8.0% |
| Net Income Adjusted, OO | 344,633 | 46.7% | 134,297 | 27.8% | 239,465 | 39.2% |
| Studio Manager Payroll Expenses | 61,096 | 8.3% | 50,986 | 10.6% | 56,041 | 9.2% |
| Net Income Adjusted, Investor | 283,537 | 38.4% | 83,311 | 17.3% | 183,424 | 30.0% |
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–63)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, Chart 1 discloses the historical performance of each affiliate-owned location that was open for the entire 2024 calendar year. The studio labelled Studio 1 has the same financial and operational characteristics as a those being offered pursuant to this disclosure document and do not otherwise materially differ from what you would operate as a franchisee. Studio 2 however, although it operated under the same trademarks, is unable to offer several key services and features. Namely, it does not offer contrast therapy or cold plunge, and it does not have showers. Studio 2 is being relocated to a new site in order to offer these services.
Based on the provided table, Studio 1 generated a net operating income of $403,679, representing 54.7% of revenue. In comparison, Studio 2 had a net operating income of $172,915, which is 35.8% of revenue. This indicates that Studio 1 had a significantly higher net operating income than Studio 2 during the 2024 calendar year.
It's important to note that Studio 2 did not offer contrast therapy or cold plunge and did not have showers, and was in the process of being relocated. This may have impacted its financial performance compared to Studio 1, which had all key services and features. These differences in service offerings and operational status should be considered when evaluating the financial performance of the two studios. The FDD also states that Studio 1 and Studio 2 were open for some time as of the commencement of the 2024 calendar year, and as such, the profit and loss information disclosed for certain of the disclosed affiliate locations of this Item did not incur certain of the startup/initial costs that might be incurred when first opening a Studio given their more mature operations.