Gymboree
Date of Incorporation: 1979
Franchising Since: 1979
Headquarters: San Francisco, California
Country: U.S.
Description: The Gymboree franchise system operates a “play center” business involving non-therapeutic sensory-motor, child programs (with or without a parent), birthday parties, theme parties, story line parties, early childhood music program and, and an art program for children in specified age ranges. The Gymboree System currently includes programs for infants and children from birth to the age of five.
Franchise Offer: There are two related franchise offerings. The franchise offer is for both single and multiple franchise operations.
a) Play & Music Center - Approximately 2,200 to 2,600 square feet
b) Metro Play Center - This is smaller in size (approximately 1,400 square feet) and does not offer all of the programming available at a Play & Music Center.
Financial Assistance: Gymboree will not offer, directly or indirectly, any arrangements for financing the initial investment or the operation of the play center business. Gymboree may reduce, or defer payment of a portion of, the Initial Franchise Fee, where an additional franchise is awarded to an existing Gymboree franchisee.
Training and Assistance: The franchisee and operations manager must attend an initial training program before the opening of the franchise business. The mandatory initial training program takes place in Burlingame, California and at company-owned sites within the vicinity of Burlingame. The training sessions generally last eight days and average approximately nine hours per day. Currently, the initial training for Metro Play Centers is approximately 6.5 hours shorter than the training for Play & Music Centers. The instruction materials for the initial training program include the Operations Manual, Program Manual and Lesson Manual.
Territory: Each franchisee will be granted a Territory within which its site must be located. The precise geographical description of each Territory will be incorporated into the Franchise Agreement by inserting a description in an exhibit to the Franchise Agreement. The Territory may be described by reference to county lines, city lines, borders of state parks and recreation areas, and other municipal boundaries, as well as natural boundaries such as rivers and man-made boundaries such as railroad tracks and highways lines.
Term of Agreement and Renewal: The initial franchise term is 10 years. The franchisee may renew the franchise for one additional 10-year term on the terms of the then-current franchise agreement.
Obligations and Restrictions: The Center must be personally managed on a full-time basis by a person who has successfully completed all training required by Gymboree and meets all of Gymboree's other then-current standards. Gymboree strongly recommends that the franchisee personally manage the Center on an "on-premises" basis. The franchisee must keep Gymboree advised of the identities of the Operations Manager and other supervisors of the Center and Gymboree will have the right to deal with the Operations Manager on matters pertaining to day-to day operations of, and reporting requirements for, the Center. During the term of the Franchise Agreement, the franchisee must devote full time and best efforts to the management and operation of the Center, and must not engage in any other outside activities which will interfere with the performance of the duties required under the Franchise Agreement. The franchisee must require his or her Operations Manager and other personnel having access to any of Gymboree's confidential information to execute non-competition covenants and covenants that they will maintain the confidentiality of information they receive in connection with their employment by the franchisee.
Total number of units: More than 690 units worldwide.
Investment Tables:
Initial Investment (Based on a Play & Music Center)
| Expenditures | Low | High |
|---|---|---|
| Initial Franchise Fee (1st Center) |
$45,000 |
$45,000 |
|
Lease Rental and Deposits (3 months rent) |
$3,000 |
$15,000 |
|
Broker Commissions, Key Money for Real Estate |
$0 | $2,000 |
|
Construction, Architectural Fees, Related Expenses |
$0 |
$75,000 |
|
Furniture, Fixtures, Equipment |
$31,200 |
$40,000 |
| Décor and Signage |
$2,500 |
$9,000 |
| Opening Inventory | $10,900 | $15,500 |
| Pre-opening salaries and training (travel and living expenses) | $250 | $4,000 |
| Office Equipment and Supplies | $1,800 | $7,900 |
| Insurance | $1,900 | $3,000 |
| Utility Deposits | $0 | $250 |
| Professional Fees | $1,000 | $5,000 |
| Music Rights | $450 | $600 |
| Additional Funds for first 3 months | $30,000 | $45,000 |
| Total | $128,000 | $267,250 |
Ongoing Fees:
| Name of Fee | Amount |
|---|---|
| Royalty Fee | 6% of Gross Receipts |
| Catalogs and Consumer Products | Varies |
| Equipment, Program Aids and Promotional Material | Varies |
| Local Marketing Expenditures | Not less than $4,000 per calendar year per Center |
| Brand Fund | Up to 5% of Gross Receipts |
| Regional Advertising and Promotional Cooperative | For Play & Music Centers: as determined by the Cooperative, but not to exceed $250 per month ($3,000 per year) per Center; for Metro Play Centers: as determined by the Cooperative, not to exceed $150 per month ($1,800 per year) |
| PlayWeb License Fee | $110 per month ($330 per quarter) per Center |
| Insurance | Reimbursement of any insurance payments that the franchisor elects to pay on the franchisee behalf if they fail to do so plus late fees and interest |
| Initial Training | The franchisors then-current training fee, which is currently $1,000 per person |
| Additional Training | Approximately $75 to $150 per attendee per training class for regional training; no charge currently for remedial training, but Gymboree reserves right to set remedial training fee in future |
| Recordings | List cost, plus postage and handling |
| Transfer Fee | 40% of the then-current per-site initial franchise fee (this fee is discounted for transfers to existing franchisees, or transfers of more than one Center to the same transferee) |
| Renewal Fee | 10% of the then-current initial franchise fee |
| Audit | Cost of audit, including attorneys’ and accountants’ fees, travel expenses, room, board and applicable per diem charges for Gymboree’s employees |
| Interest | Interest on the overdue amount at a rate equal to lesser of 1.5% per month, or the maximum rate allowed by law |
| Late and Dishonored Check Fees | $50 late fee; plus, for each 30-day period that the payment continues to be unpaid or report not submitted, $50 per 30-day period, $50 for each dishonored check |
| Reimbursements | Amount disbursed |
| Product Testing | Gymboree’s actual direct out of pocket costs estimated to be from $1,000 to $5,000 |
| Annual Meeting | A fee equal to the then-current per-attendee fee, as designated by the franchisor prior to the meeting, multiplied by the number of the franchisees' attendees; currently, the registration fee ranges from $400 to $500 per attendee |
Date of FDD: 2009
The above information has been compiled from the FDD of Gymboree along with online sources.
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