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Gold’s Gym Franchise Cost & Fees

Date of Incorporation: 1965
Franchising Since: 1980
Headquarters: Dallas, Texas

Business Description: The franchisor is Gold’s Gym Franchising LLC. The franchise system operates health clubs offering various fitness, health, and exercise facilities, goods, and services under the “Gold's Gym” trademarks, service marks and trade names.

Franchise Offer: Gold's Gym Facilities will offer a full array of products and services to members that the franchisor periodically specifies. Currently, all new full amenity Gold's Gym Facilities must offer cardio training equipment, resistance training equipment, cardio cinema, group fitness, personal training and locker room services, and must have a “Pro Shop” including sales of clothing, accessories, drinks, bars supplements, nutritional products and other items. New Gold’s Gym Facilities also may offer other optional amenities, products and services that the franchisor currently authorizes, like cardio cinema, kids’ club, pool, basketball, racquet and other courts, smoothie bars and juice bars. If the franchisee qualifies, the franchisor might grant the right to develop and operate a number of Gold’s Gym Facilities within a development area under its Development Rights Agreement. The franchisor will offer development rights only to certain qualified candidates who already have signed, or who simultaneously will sign, one or more franchise agreements and only in certain areas of the country.

Financial Assistance: The franchisor does not offer direct or indirect financing nor do they guarantee your note, lease, or other obligation. Gold’s Gym is currently registered with the SBA Franchise Registry, which may help franchisees when obtaining SBA financing.

Training and Assistance: The initial training program may include classroom training, instruction at designated facilities, hands-on training at an operating Gold’s Gym Facility, remote training (including via videotape, compact disk or Internet access) and/or self-study programs. Training is mandatory for all franchisees, except for some franchisees signing the Renewal Addendum. The franchisee (or the managing owner) or the Facility's general manager must complete initial training program to the franchisor’s satisfaction. The franchisee (or managing owner) or the Facility's general manager must attend an annual regional or national Gold's Gym convention. During the Franchise Agreement’s term, the franchisor may require franchisees and/or their personnel, including newly-hired managers and previously-trained and experienced employees at the Facility, to attend and satisfactorily complete various training courses and programs that it chooses to provide periodically at the times and locations it designates, although currently none are planned. The franchisor also may require franchisees to conducts periodic training for Facility personnel using the formats and procedures that the franchisor periodically specify. Franchisees (or, if they are a business entity, one of the owners) or the Facility’s general manager must attend each annual convention that the franchisor (at its sole option) organize for Gold’s Gym Facility operators.

Territory: Franchisees will operate the Facility at a specific Site that the franchisor first must accept. If franchisees have not yet located an accepted Site when they sign the Franchise Agreement, the franchisor will designate a “Site Selection Area” when they sign that Agreement. The franchisor typically identifies Site Selection Areas either using city boundaries or as a circle with a radius of a specified distance that it determines from a specified intersection. There is no minimum size for a Site Selection Area. Except as provided in the FDD, if franchisees are complying with the Franchise Agreement, then neither the franchisor nor its affiliates will, during the term of the Franchise Agreement, operate or authorize any other party to operate a Gold’s Gym Facility the physical premises of which are located within (i) the Site Selection Area (until the franchisor designates the Territory) or (ii) the Territory (once the franchisor has designated the Territory).

Term of Agreement and Renewal: The initial franchise term expires 10 years after the facility first opens for member workouts. If the franchisee (and guarantors) have substantially complied with the Franchise Agreement during its term and is then in full compliance, he or she may acquire one successor franchise under the then current form of franchise agreement (which may be materially different from the Franchise Agreement, including on Territory and fees).

Obligations and Restrictions: The franchisor does not require, but does recommend, that franchisees (if they are an individual) or the managing owner (if the franchisee is an entity) participate personally in the direct operation of the Facility. Franchisees must at all times retain and exercise direct management control over all aspects of the Facility’s business and all amenities and other products and services it offers. Only an individual who devotes his or her full working time and best efforts to the day-to-day, on-premises operation of the Facility, has satisfactorily completed our management training program, and is not engaged in any other business endeavor except passive investments which do not interfere with the performance of his or her duties as manager may manage the Facility. Franchisees must offer all amenities and other products and services that the franchisor periodically specifies as being mandatory. Franchisees may not offer, sell, provide or otherwise distribute at the Facility, the Site or any other location any amenities or other products or services the franchisor has not authorized, and they must discontinue selling and offering any amenities and other products or services that the franchisor at any time disapproves in writing.

Estimated Number of Units: 570

Investment Tables:
Initial Investment for a New 35,000 square foot Gold’s Gym Facility
Name of Fee Low High
Initial Franchise Fee $32,000 $40,000
Travel and Living Expenses During Training $4,000 $7,000
3 Months' Rent $26,250 $367,500
Security Deposit for Lease $9,000 $225,000
Leasehold Improvements and Construction Costs (assuming no pool) $1,750,000 $2,800,000
Selectorized Equipment and Free Weights $125,000 $500,000
Cardiovascular Equipment $150,000 $500,000
Signage $35,000 $85,000
Initial Inventory, Other Equipment and Supplies $12,000 $56,000
Computer System and Gym Management System $20,000 $35,000
Advertising and Marketing $25,000 $170,000
Miscellaneous Opening Costs $10,000 $65,000
Additional Funds - 3 Months $20,000 $150,000
TOTAL ESTIMATED INITIAL INVESTMENT (excluding real estate purchase costs and assuming no pool) $2,218,250 $5,000,500
Other Fees
Type of Fee Amount
Royalty Greater of 5% of Facility’s Gross Revenue each month or $2,000 per month.
Holding fees (under Development Rights Agreement) $5,000 per year for each franchise agreement for which the franchisee has not yet paid the initial franchise fee.
Marketing Contribution Greater 2% of monthly Gross Revenue or $1,000 per month.
Cooperative Contributions Amount that the Cooperative determines, up to 3% of Gross Revenue.
Marketing Spending Requirement Shortfall Difference between Marketing Spending Requirement and amount the franchisee spent.
Billing Services Fee Currently 4.5% of Credit Card Billing Revenue and 2% of ACH Billing Revenue during the previous month under Standard Program, or 4.25% of Credit Card Billing Revenue and 2% of ACH Billing Revenue under Premium Program.
Collections Services Fees Varies depending on the services.
Relocation Expenses Actual out-of-pocket costs and expenses incurred by Gold’s Gym in inspecting the proposed new site.
Convention Registration Fees Under $500, but could increase if costs increase.
Fee for Ongoing Training Currently $500 per person per session, but could increase if costs increase.
Transfer Fee $2,500 for non-control transfer and $10,000 for control transfers.
Successor Franchise Fee 50% of initial franchise fee then charged for new Gold's Gym Facility franchises (currently would be $20,000)
Management Fee 3% of Gross Revenue, plus direct out-of-pocket costs and expenses.
Costs and Attorneys' Fees Will vary under circumstances.
Indemnification Will vary under circumstances.
Administrative Fee and Interest $100 administrative fee and interest at 1.5% per month or highest interest rate the law allows, whichever is less.
Follow-up Inspection Fee Approximately $300 to $500 per evaluation, but could increase if franchisor’s costs increase.
Supplier Testing Fees Approximately $500 to $5,000
Insurance Costs Premiums plus the franchisor’s costs and expenses.
Audit Expenses Cost of audit.
Liquidated Damages Upon Royalty Franchise Agreement Termination If the Franchise Agreement terminates for any reason other than the franchisee’s termination for the franchisor’s uncured breach, then in addition to other amounts the franchisee owes the franchisor, the franchisee must pay the franchisor the defined “Termination Damages.”

The above information has been taken from the FDD of Gold’s Gym. Year of FDD: 2016

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