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Gold’s Gym Franchise Cost & Fees

Date 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: Franchises are offered for two different sizes of Gold's Gym Facilities:

  1. 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 full amenity Gold's Gym Facilities also may offer other optional products and services that are authorized, like kids’ club, pool, basketball, racquet and other courts, smoothie bars and juice bars.
  2. Gold's Gym Express Facilities will offer a limited number of products and services to members periodically specified by the franchisor. Currently, Gold's Gym Express Facilities must offer cardio training equipment, resistance training equipment, cardio cinema and locker room services, may (at the option of the franchisee, and depending on the Site's layout) offer tanning services and massage services, and may not offer any other products or services.

 

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.

 

Territory: The franchisee will operate the Facility at a specific site that first must be approved by the franchisor. The Territory is a circle with a radius of a specified distance that the franchisor determines from the Facility’s main front entrance. The franchisor will determine that distance based on the factors that it deems relevant, which might include demographics, the character of the Site and nearby businesses and residences. The minimum Territory may be as small as ⅛ mile in a densely populated area, or in some rural areas, up to 3 miles. Franchisees will not receive an exclusive territory. Franchisees may face competition from other franchisees, from outlets that the franchisor owns, or from other channels of distribution or competitive brands that the franchisor controls.

 

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 recommends that the franchisee (or managing owner) personally supervise the Facility. The franchisee and his or her employees must perform and exercise direct management control over all Core Business Operations at the Facility, and may not contract with or allow any other party, including any licensee, lessee, consultant or other independent contractor, to perform or exercise management control over any Core Business Operations. Franchisees must offer all amenities and other products and services that the franchisor periodically specifies as being mandatory.

 

Estimated Number of Units: 725

 

Investment Tables:

Initial Investment:

New 25,000 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 $19,000 $250,000
Security Deposit for Lease $6,000 $150,000
Leasehold Improvements and Construction Costs (assuming no pool) $625,000 $2,000,000
Selectorized Equipment and Free Weights $100,000 $500,000
Cardiovascular Equipment $150,000 $500,000
Signage $10,000 $50,000
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 $1,033,000 $3,973,000

 

Other fees:

>
Type of Fee Amount
Royalty Greater of 5% of Facility’s Gross Revenue each month or $2,000 per month.
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.
Fee for Online Membership Enrollment The franchisor plans to charge $5 per transaction, which could increase if its costs increase.
Relocation Fee 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
Successor Franchise Fee
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.
Evaluation Fees Approximately $300 to $500 per evaluation, but could increase if franchisor’s costs increase.
Fee for Evaluating Consideration to be Paid in Proposed Transfer 50% of costs that a “Big Four” accounting firm may charge to
evaluate consideration's “true value” (or 100% if the franchisee elects not to move forward with transfer after receiving evaluation)
Supplier Testing Fees Approximately $500 to $5,000
Audit Expenses Cost of audit.
Liquidated Damages Upon Royalty Franchise Agreement Termination All unpaid Monthly Fees and Promotion Fund contributions for unexpired contract term, plus 50% of that amount if within 6 months after termination, the franchisee operates Facility as competitive business or you transfer and Facility will be competitive business.

Date of FDD: 2013

The above information has been compiled from the FDD of Gold’s Gym (Express Facility) along with online sources.

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