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Healthy Living Franchise Report: Franchise Information

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 need to assess their qualifications to see if they match up with those required. Prospective franchisees also need to determine which franchise most closely resembles their business philosophy. It’s important to stay open minded during the research process. Some franchisees have found that a franchise was the right one for them 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.

 

Business Regulations

Franchisees are solely responsible for making sure their franchised business complies with all laws and regulations that apply to operating their business. You must ensure that any services for which a license or specialized training is done by those who have taken the necessary steps. 

 

When it comes to franchises that deal with health, there are several rules and regulations that must be addressed. For example, to operate certain recreational franchises, you will need to obtain facility use permits. These permits will come with stipulations to remain valid such as minimum insurance limits. 

 

Also, rules and regulations can vary from state to state. An example of this is a California requirement that the business owners of health clubs and health studios obtain a written emergency plan developed with a physician’s approval.6 Some state or local laws may require that you file and post a bond if your Business is considered to be a “health spa.” If your business employs massage therapists and aestheticians, many states require them to be licensed individually.

 

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 16 example franchises presented. Initial costs associated with opening a franchise include many items such as the franchise fee, training expenses (such as travel and living expenses, not the actual training courses), real estate or vehicle purchases (if applicable), and more. However, some initial investment ranges given by franchisors may not include real estate (or real property) costs because of its high variability.

 

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Estimated Initial Investment Ranges for Selected Fitness & Recreation Franchises

 

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Estimated Initial Investment Ranges for Selected Food and Weight Loss Franchises

 

Additional Funds Needed at Start of Franchise Business

An important item to consider when opening a franchise, or any business, is the amount of money needed to cover costs until the business breaks even (begins to turn a profit). There’s no set timetable for this point. Some companies will break even in a matter of months. Some might take closer to a year, possibly a bit longer. The timetable varies from franchisee to franchisee depending on multiple factors, including the local market for the franchised product/service. 

 

Franchisors recommend an amount of additional funds to have for this start-up phase of your business (given in Item 7 of the FDD as part of the total estimated initial investment). The estimate is typically given for a three month period at the beginning of operations, but can include a period of time before opening when the franchisee is in the training process. The estimate is typically based on a franchisor’s prior experience with other franchisees. 

Franchise Additional Funds Needed per Initial Investment (3 month estimate)
Anytime Fitness - Express Center $8,000 to $40,000
Anytime Fitness - Regular Center $8,000 to $40,000
Curves $1,500 to $3,000
Gold’s Gym - Express Facility $20,000 to $90,000
Gymboree Play Programs - Metro Play Center $20,000 to $30,000
Gymboree Play Programs - Play & Music Center $30,000 to $45,000
Massage Envy $40,000 to $60,000
Planet Beach Contempo Spa $8,000 to $20,000*
The Little Gym $35,000 to $70,000
WAKA $500 to $5,000

Additional Funds Estimates for Selected Fitness & Recreation Franchises

*Date Range Not Specified in FDD

 

Franchise Additional Funds Needed per Initial Investment (3 month estimate)
InShapeMD Weight Loss - Office Plan $5,000 to $24,000
InShapeMD Weight Loss - Storefront $6,000 to $49,000
Red Mango - Non-Traditional Store $10,000 to $20,000
Red Mango - Traditional Store $10,000 to $20,000
Saladworks $14,500 to $15,700
Smoothie King - Non-Traditional Location $15,000 to $25,000
Smoothie King - Traditional Location $15,000 to $25,000
Subway - Traditional Location $12,000 to $42,000
Tasti D-Lite - Non-Traditional Model $5,000 to $15,000
Tasti D-Lite - Traditional Model $10,000 to $30,000
The Diet Center $2,000 to $10,000
The Pita Pit $25,050 to $30,900

Additional Funds Estimates for Selected Food & Weight Loss Franchises

 

Ongoing Fees

The average length of the franchise agreement for the 16 highlighted franchises is approximately 9.6 years, and throughout the length of the agreement there will be costs that must be paid regularly.

 

These costs include items such as royalty fees and marketing costs, and are usually assessed for the franchisee to continue receiving 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.

Franchise Royalty
Anytime Fitness
- Express Center
$449 per month
Anytime Fitness
- Regular Center
$449 per month
Curves 5% of the previous month's gross sales
Gold’s Gym
- Express Facility
3% of monthly Gross Revenue or $1,500 per month, whichever is greater
Gymboree Play Programs
- Metro Play Center
6% of Gross Receipts
Gymboree Play Programs
- Play & Music Center
6% of Gross Receipts
Massage Envy 6% of Gross Sales
Planet Beach Contempo Spa 6% of Gross Revenue for Compliant Franchisees and
9% of Gross Revenue for Non-Compliant Franchisees.
The Little Gym 8% of Monthly Gross Revenue, subject to the Annual Minimum Royalty Requirement or Unopened Center Fee
WAKA PLAYER REGISTRATION FEES: 12% of gross revenue or $6.60 for each player registration, whichever is greater;
LEAGUE SPONSORSHIP FEES: 12% of gross revenue or $1.20 for each player registration that is part of the
sponsored league (without regard to the number of sponsors), but if there are no league sponsors,
the Franchisee shall pay Franchisor $1.20 for each player registration, which payment shall be in addition to any
other payments set forth, whichever is greater;
OTHER ROYALTIES: 12% of gross revenue

Royalties for Selected Fitness & Recreation Franchises

 

Franchise Royalty
InShapeMD Weight Loss - Office Plan The greater of 10% of Gross Revenue, or a minimum of $500 for the first 6 months. After the first 6 months, the minimum is $1,000 per month.
InShapeMD Weight Loss - Storefront The greater of 10% of Gross Revenue, or a minimum of $500 for the first 6 months. After the first 6 months, the minimum is $1,000 per month.
Red Mango - Non-Traditional Store 8% of Gross Revenue plus any government-imposed taxes, fees or assessments on the payment
Red Mango - Traditional Store 6% of Gross Revenue plus any government-imposed taxes, fees or assessments on the payment
Saladworks 5% of total Net Sales
Smoothie King - Non-Traditional Location 4% to 6% of Gross Sales
Smoothie King - Traditional Location 4% to 6% of Gross Sales
Subway - Traditional Location 8% of Gross sales
Tasti D-Lite - Non-Traditional Model 5% of Gross Sales
Tasti D-Lite - Traditional Model 5% of Gross Sales
The Diet Center $950 per month
The Pita Pit 6% of Gross Sales

Royalties for Selected Food & Weight Loss 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.

 

"Life is a Once in a Lifetime Opportunity” as health care provider Kaiser Permanente says, and prospective franchisees seeking a franchise system as an avenue to promote healthy living will find a large, diverse set of opportunities waiting for them to take the next step in their career. 

 


 6 Public Health Department (PHD), http://www.countyofsb.org/phd/ems.aspx?id=21776

 

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