The fitness industry is becoming increasingly competitive with time.
Given the competition, it’s rather difficult for a business owner to open and run a new gym while making a profit. One way to manage that is to buy a gym franchise. You’ve probably heard of some famous fitness franchises such as Anytime Fitness and Snap fitness.
Recently, Anytime fitness became the first fitness franchise to operate in all seven continents.
That raises the question: are fitness franchises profitable? And if so, what makes them better than just one location?
In this article, we will look at what a fitness franchise is, what makes a fitness franchise profitable and then list some of the most profitable franchises around the globe.
Skip ahead to:
- What is a fitness franchise?
- Are fitness franchises profitable?
- What factors make fitness franchises profitable?
- 5 of the most profitable fitness franchises
What is a fitness franchise?
A franchise is a form of business where the business owner (franchisor) gives someone (franchisee) the right to operate their business following the franchisor’s company model.
So owning a fitness franchise means you have a gym that’s yours, but you’re following someone else’s business system. Franchising is a lucrative business opportunity in the fitness market – if you can do it right.
Opening or buying a fitness franchise involves a lot of paperwork. You first have to sign a Franchise Disclosure Document (FDD) that outlines all the points of agreement on how the business relationship will work between the two parties.
You also have to learn their business model, train your employees according to their system, acquire a license and pay the annual license fee.
Gym franchises help everyone involved. The franchisor expands their business while the franchisee gets to own a gym that already has brand recognition and an established customer base.
But it also comes with some restraints. The franchisee has limitations on the freedom to try new things, and s/he can’t make changes in the business model. That’s because the franchisor has to maintain brand consistency across all locations.
Although most business owners have that misconception, franchises also don’t come with a guaranteed success label. You still have to put in a lot of hard work, attract new customers and offer them excellent services to keep your business operational. The franchisor gives you a working business model; you have to apply it the right way to see the profits you’re dreaming of.
Are fitness franchises profitable?
Yes, fitness franchises offer great profits but not as much as you might think.
You have to be aware of some fees and additional costs because these will quickly cut into your profit margins.
Startup and upfront costs
First, opening a new franchise comes with a heavy initial investment. This includes the franchise fee you have to pay to get the license, royalty fees that you pay monthly or annually, and rent for your franchise location.
For example, the franchise fee of Anytime fitness is $42,500, and on top of that, you have to cough up $699 monthly from your revenue.
The upfront costs for buying a gym franchise can be much higher than gym startup costs. You can open your independent gym startup with an investment of $10,000 to $50,000 on average.
Good locations can cost a lot
Although there is money in franchising, you have to identify the franchise opportunity carefully. Choosing the right spot is also a major factor because you have to find an area where people recognize your franchise name.
Some gym franchises offer their real estate specialists to help you decide on the locations based on their research. Others give you – the franchisee – the freedom to pick the location.
What affects your profit margins?
The business expertise of the franchise owner significantly affects the profits you can make.
You’ll have to find unique ways to generate revenue to increase your annual income. That can include leveraging social media in addition to the brand marketing that the franchisor does for you.
Or you could maintain the gym equipment really well, hire better personal trainers, offer parking space, and keep the water coolers full.
Just remember to check the fine print of the FDD to ensure that everything you do is above board. The terms of franchise agreements can sneak up on you, so you have to be extra vigilant not to violate your deal.
What factors make fitness franchises profitable?
Fitness franchises earn a major chunk of their income from gym memberships, just like other gyms do. But the profits start coming in much quicker in a franchise gym than a startup gym.
Here are some reasons that make fitness franchises profitable for the franchisee:
1. Existing brand recognition
It’s already hard to run a fitness business, but it’s even more complicated when no one knows your brand.
Owning a franchise gym is better in that sense because people are already well aware of the business. They know what to expect from your gym and what classes you offer.
A fitness startup has to market the business and wait for longer to get a stable customer base and see profits.
2. Established customer base
Having an established customer base can give you a head start.
You just have to research for the right location, and the customers will come to you almost as soon as you launch. That, of course, requires some publicity and marketing to let the people know when and where you’re opening.
3. Proven business model
A big reason why new fitness studios take a while to see any profits is that their business model lacks in some ways. Following a proven franchise system helps you avoid common mistakes that new business owners make.
That automatically speeds up your timeline to success, and you can start earning handsome profits much earlier than some startup gyms.
4. Lower equipment cost
Access to big business networks is a key advantage of buying a fitness franchise.
You can leverage that to get great deals on the equipment rather than exploring different options and risking your investment in lower-quality equipment.
Reduced equipment costs lead to more savings and increased revenue per month. Hence more profits for you.
Some franchisors allow you to get equipment from only certain companies. That’s because they want to maintain the quality of services and uniformity across all locations. Sometimes that can lead to better deals; other times, you end up paying more than the market average.
5. Training and support provided
Franchisors don’t just hand you the business model and leave you be. They provide training to your coaches, personal trainers, and instructors to operate according to their standards.
As a new business owner, it can be difficult to know what kind of training is necessary. And hiring third-party business coaches to train you and your team can get expensive.
Access to training from the best in the industry – either without additional charges or at a discounted price – is a big reason why fitness franchises are profitable.
6. You have a team of experts
When you run a gym franchise, you have an entire team working with you to make your gym profitable.
Marketing is done by experts hired by the franchisor, data on the audience is provided to help you pick a location, there are people to train your staff, and you get access to current industry news and trends without doing the work.
This team comes in handy so that you can focus entirely on the business. Since you get the best in the industry, you see profits much sooner because you’re doing most things right.
5 of the most profitable fitness franchises
Gymguyz, Pure Barre, UFC, Anytime fitness are some of the top names in fitness franchises. Here are some more, along with the franchise cost associated with each:
Anytime fitness franchise
This fitness club franchise offers personal training and group classes in almost all domains of fitness and wellness.
Franchise fee: one-time $42,500
Royalty fees: $699/mo
Planet fitness has locations in Canada, Mexico, Panama, and all 50 states of the US. It offers classes for dance, aqua, cycle, box, pilates, and many more.
Franchise fee: one-time $10,000 for a 10-year renewable agreement.
Royalty fees: 7% of all sales generated through monthly and annual membership fees.
This health club offers fitness classes for HIIT, strength, cardio, dance and flow, and more. It has locations in five countries and most states in the US.
Franchise fee: initial $25,000. You also need to have $1 million in net worth and $300,000-$400,000 liquid capital.
Royalty fees: 5% on monthly gross sales.
UFC gyms have a great franchise model. Because of the excellent business strategy, they’ve expanded all over the US and abroad in different counties.
All of their locations have personal trainers, yoga instructors, pilates instructors, and other coaches for health and fitness classes.
Franchise fee: one-time $30,000 – $40,000.
Royalty fees: 6% of monthly gross revenues.
This fitness center offers classes in yoga, Zumba, strength training, and more. You can choose to attend group classes or train with a personal trainer. Gold’s gym franchise business has been operating for over 50 years, and it now has locations in six continents.
Franchise fee: one-time $40,000. You also need to show a minimum net worth of $1 million with a liquidity of $400,000.
Royalty fees: 5% of gross revenue monthly.
This fitness studio offers unique classes. These usually include the rower, treadmill, and strength training floor. You also have to wear a heart rate monitor, and they determine your progress based on your max heart rate values.
Some people consider its membership fee to be a bit on the expensive side. But it depends on each person’s fitness goals.
If you want to own an Orangetheory fitness franchise, you have to find the right location where customers will be willing to pay a higher than average membership fee.
Franchise fee: one-time $42,500 to $49,500. You also need to show a net worth of $488,000.
Royalty fees: 8% of gross sales.
Running a gym franchise is a profitable business. If you’re serious about owning one, then be prepared for a lot of hard work and upfront costs.
You also have to remember that the initial franchise fee is only one part of the total investment. As the gym owner, there will be many more franchise costs that you’ll have to pay. But since so many people successfully profit by operating a franchise, so can you.
Gym management software can help you streamline your operations. It can help you schedule classes, manage personal trainers, get analytics on members, and more. All that makes your gym more efficient and better management can increase your profit margins.