Fitness Franchise Industry Report - Franchise Information (3)

Franchise Information

Important Note: The provisions and fees illustrated in this report are only the most common and not a complete listing. Please review the Franchise Disclosure Document (FDD) for all of the provisions and fees related to investing in that specific franchise.

The qualifications needed for each franchise system vary by franchisor. Prospective franchisees considering the fitness franchise industry need to assess their qualifications to see if they match up with those required in this field. Prospective franchisees also need to determine which franchise most closely resembles their business philosophy. One note from current franchisees is to stay open minded during the investigation. A franchise can be the right one for you even when at first it didn’t seem to be.

In researching and evaluating potential franchises, there are several factors to consider. Below are some notes on a selected few of those items that must be considered when investing in a fitness franchise.

Security

A now common attribute in the fitness franchise industry is 24-hour access. Several outlets use proprietary technology to allow members to exercise when it’s most convenient to them. Security innovations such as remote monitoring of a closed circuit television system, personal safety devices, and check-in software fully integrated with onsite security systems allow customers of a franchise to feel safe and secure, even when visiting the franchise site during non-staffed hours.

Site

Fitness franchises can be placed in strip malls or freestanding locations. With pull backs in recent years from traditional retailers and the fitness industry showing growth, fitness franchises have provided a lift to shopping center landlords. According to a Wall Street Journal article, retail landlords are seeking out non-retail tenants, including fitness franchises, to compensate for the lack of traditional retailers.¹¹   Some franchisors like Gold’s Gym offer “express” formats, a modification to their usual floorplans, which fit well into these often-smaller spaces.

Territory

The territory a franchisee will be granted to run their franchised business will be dependent on a number of factors that may include one or a combination of the following: geography, population density, demographic profiles, average household income, traffic, and additional factors. Common bases of territory size are the number of potential customers or households within a given area.

Multi-Unit Ownership

While many franchise industries discourage absentee ownership, a management style where the owner is not required to be present on-site to perform day-to-day operations, the fitness franchise industry is noticeably more accepting of the arrangement. Because of this, many fitness franchises have high multi-unit owner rates, some as high as 80%.

Regulations

Fitness franchisees are solely responsible for making sure their franchised business complies with all laws and regulations that apply to operating their business. While there are currently no specific federal regulations governing the personal training industry, there often are certain laws and regulations that must be adhered to when operating within the fitness industry in particular states. For example, among the requirements for all health clubs and health studios in California is that an automated external defibrillator (AED) must be on site at all times along with at least one staff member that is trained in usage of the AED and certified in cardiopulmonary resuscitation (CPR). It is also a requirement in California that the business owner obtain a written emergency plan developed with a physician’s approval.¹²

Initial Costs

The range of investment between franchises can be large due to variations in their business systems and what it requires to execute them. The following charts demonstrate this by comparing initial costs associated with opening one of the 17 example franchises presented. Initial costs associated with opening a franchise include many items such as equipment costs, training expenses (such as travel and living expenses, not the actual training courses), real estate purchases, additional funds needed for a specified number of months, and more.

Comparison of Estimated Initial Investment Ranges for Selected Fitness Industry Franchises

A significant item within the initial investment is the franchise fee. This part of the overall initial investment grants the franchisee the right to use the franchisor’s trademarks, service marks and other branding. It also gives the franchisee access to the franchisor’s business systems, including training.

Franchise Fees for Selected Fitness Franchises

Ongoing Fees

Regardless of length, there will be costs that must be paid regularly during that time period of the franchise agreement. These include items such as royalty fees and marketing costs, and are predominately assessed for the franchisee to continue reaping the benefits that come with being a part of the franchisor’s business system. Although fees like these are common, the amount and way they are assessed aren’t universal. The following chart illustrates this by showcasing the royalty fee for selected franchises.

Example Royalty Fees for Selected Fitness Franchises

There are additional ongoing fees that are assessed regularly such as technology fees to cover items like server hosting, internet access, etc. Select fees are assessed on an “as needed” basis such as audit fees or costs for additional training. All prospective franchisees should do their research and carefully review a franchisor’s FDD for more detailed information on all systems, procedures and costs involved before in investing in that franchise.

If you’re looking for a franchise within an established yet still growing industry, a fitness franchise may be what you’re looking for. As a fitness industry franchisee, you’ll have the opportunity of helping people in your community achieve an increased quality of life, while achieving the business goals you desire. Browse our listings, and find the fitness franchise system that best matches your vision for business ownership.

¹¹http://online.wsj.com/article/SB10001424053111903648204576554872299798998.html

¹²http://www.countyofsb.org/phd/ems.aspx?id=21776

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