Risk Score
Pending analysis
Investment Range
$355,920 - $512,320
Franchise Fee
$31,500
Total US Locations
4
Business Summary
Purvelo Franchising, LLC grants franchises for the establishment and operation of boutique spin fitness studios known as 'Purvelo'. These studios provide cycle/spin studio classes and other fitness class offerings, along with related products and merchandise for sale.
Corporate History
Purvelo Franchising, LLC was formed as a Virginia limited liability company on May 23, 2022, and started offering Purvelo franchised businesses in September 2022. It is a new franchising entity. Its direct parent company is Extraordinary Brands, LLC, which was also formed in May 2022, and its ultimate parent is AE Capital Group, LLC, formed in May 2021. An affiliate, Purvelo, LLC, has operated a similar cycle studio business since its formation in February 2014 and currently runs two company-owned locations in Auburn, AL, and Chapel Hill, NC, which serve as training models for franchisees. Purvelo Franchising, LLC is part of a larger family of franchise brands, including Row House Franchising, LLC, Eat the Frog Franchising, LLC, and Neighborhood Barre Franchising, LLC, as well as various home services brands like 360 Painting, Maid Right, and Pro-Lift Doors, all falling under the AE Capital and Premium Service Brands umbrella. Paul Flick serves as CEO for many of these affiliated entities.
Financial Overview
Investment Range
$355,920 - $512,320
Franchise Fee (Low)
$31,500
Franchise Fee (High)
$45,000
Royalty %
6%
Marketing %
2%
Equipment Costs (Low)
$220,000
Equipment Costs (High)
$347,000
Working Capital
$45,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Going concern qualification
Financial Health Notes
Purvelo Franchising, LLC's auditors have expressed substantial doubt about the company's ability to continue as a going concern due to recurring net losses, negative cash flows from operations, and an accumulated members' deficit. Since its inception, Purvelo Franchising, LLC's operations have primarily been funded by capital contributions from its parent company. While management expects increased revenue from existing franchisees and has received further capital contributions post-2023, there's no assurance that these plans will be sufficient, especially considering potential liabilities from guarantee agreements with affiliates. Therefore, there is substantial doubt about Purvelo Franchising, LLC's ability to sustain operations for the next 12 months.
Financing Details
Purvelo Franchising, LLC does not offer any direct or indirect financing to its franchisees. It also does not guarantee any franchisee's notes, leases, or other obligations.
Performance Metrics
Total US Locations
4
Franchised Units
2
Corporate Units
2
Avg Square Footage
2,000
Franchising Since
2022
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
9
Litigation Summary
Purvelo Franchising, LLC itself has no litigation. All disclosed litigation involves its affiliates, primarily PSB Group and its brands, and sometimes Paul Flick, the CEO. The litigation includes two private lawsuits from 2011 and 2019 against Premium Service Brands (an affiliate) related to breach of contract and fraud, both of which were settled. There are also several governmental actions against 360 Painting, LLC (an affiliate) and Paul Flick from Maryland, Illinois, Virginia, California, and Washington. These governmental actions primarily concerned franchise registration and disclosure violations, such as failure to register, using non-compliant FDDs, not executing amendments, or failing to disclose litigation. These actions resulted in consent orders, fines, offers of rescission to franchisees, and a 36-month bar order against Paul Flick in California. The California, Washington, and most recent Maryland governmental actions occurred between early 2021 and April 2023, making them recent in relation to the FDD issuance date.
Bankruptcy History
Purvelo Franchising, LLC has no bankruptcy history to disclose in this item.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew, Purvelo franchisees must provide written notice of their intent to renew 6 to 12 months before the current term expires. They must sign the then-current franchise agreement, which may have different terms including modified fees and a protected area. Franchisees are required to refurbish or renovate their Studio at their own expense to meet Purvelo's current standards for decor, signage, and equipment. They also need to sign a general release of claims against Purvelo and its affiliates. The Operating Principal and Key Manager must complete any current training requirements. Franchisees must secure the right from their landlord to continue operating at the location for the successor term. Finally, they must have substantially complied with their existing Franchise Agreement and be in good standing, and pay a $10,000 successor fee.
Training & Support Program
Franchisor Assistance
Purvelo Franchising, LLC provides franchisees with a range of assistance throughout the lifecycle of their business. Before opening, Purvelo helps with site selection by providing criteria and access to real estate brokers. It also provides initial training for the franchisee's Designated Operator, Key Manager, and instructors. Purvelo offers prototype plans and specifications for the studio's design and layout, reviews architectural drawings, and may require the use of a designated real estate project manager and pre-approved general contractors. It also provides a list of approved suppliers and assists with setting up mandatory software systems, websites, and email accounts. Additionally, Purvelo suggests pricing policies and advises on pre-opening and grand opening marketing plans. After opening, Purvelo offers additional sales, promotional, and operational assistance upon request. It provides general guidance periodically via telephone, email, and newsletters, covering operational methods, accounting procedures, and marketing strategies. Purvelo conducts periodic visits for consultation and ongoing training, and provides updates to the System and Brand Standards Manual. It approves advertising materials for local, grand opening, and cooperative advertising, and specifies or approves equipment and suppliers. Purvelo may also obtain insurance coverage for franchisees who fail to do so, passing on the cost, and may institute customer satisfaction audits.
Initial Training Hours
60
Training Location
Purvelo headquarters in Charlottesville, Virginia or a location designated by Franchisor
Ongoing Support
After the studio opens, Purvelo Franchising, LLC provides ongoing support through several channels. It offers counseling and general guidance periodically via telephone, email, facsimile, and newsletters, covering operational methods, accounting procedures, and marketing and sales strategies. Purvelo may make periodic on-site visits to the business for consultation and assistance. It also makes available operations assistance and ongoing training as deemed necessary, and provides changes and additions to the System and Brand Standards Manual. Additionally, Purvelo approves various advertising materials, specifies or approves equipment and suppliers, and may institute customer satisfaction audits. Purvelo may also require franchisees and their management personnel to attend up to five days of additional training each year, and may require remedial training if performance standards are not met. Franchisees are also required to attend an annual convention.
Franchise Requirements
Ideal Candidate Profile
Purvelo seeks qualified individuals and business entities. The franchisor relies on the business skill, financial capacity, and personal character of the franchisee and its owners. Ideal Purvelo franchisees are expected to devote their best and devoted efforts to the day-to-day management of the business. Candidates should not have existing non-compete, non-disclosure, or similar agreements that would restrict their ability to own or operate a Purvelo studio, nor should they be involved in competitive fitness businesses. Purvelo looks for individuals who understand the inherent business risks of such a venture and whose success will largely depend on their own efforts.
Industry Experience Required
No
Management Experience Required
Yes
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Hands-On
Territory Type
Exclusive
Territory Size Requirements
Purvelo's Designated Market Area typically covers a geographic radius of two blocks to two miles around the studio, adjusted based on population density, demographics, existing territorial rights, and whether the location is in a major metropolitan or central business district. Each territory may contain up to 50,000 people.
Staffing Notes
Purvelo Franchising, LLC requires franchisees to be solely responsible for hiring, managing, and training all studio personnel, including instructors. Franchisees must ensure that their employees comply with all training and other requirements established by Purvelo. The business must always be under the full-time, on-premises supervision of a Key Manager, who can be the franchisee's Operating Principal or another appointed individual. All instructors must complete Purvelo's Instructor Training or be approved through a video review process to become Authorized Instructors.