How to Successfully Open a Gym Franchise in 10 Steps
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The fitness industry is on fire these days.
Revenue for the health club industry totaled $87.2 billion globally in 2017. In the U.S. alone, the gym, health club and fitness industry boasts revenue of $34 billion and annual growth of 2.8 percent. The number of U.S. residents holding health club memberships has grown almost 34 percent in the last decade. A survey by Guidant Financial found that the health/beauty/fitness industry is one of the top three most popular industries for small business.
“I think that the fitness category is one of the hottest categories in franchising today,” said Steve Beagelman, CEO and founder of SMB Franchise Advisors. Beagelman has helped at least 100 businesses franchise since 2010, including GymGuyz mobile personal coaching business. “You’re swimming with the current, not against the current. Everybody wants to be a part of it.”
Benefits of owning a gym franchise
Gyms work well for franchising — they are increasingly in demand around the country and expanding aggressively. Fitness centers’ relatively high startup costs and complex management needs can be forbidding to independent entrepreneurs. When you become part of a franchise your startup, management and funding are facilitated, and you’re able to pool your resources with other franchisees for marketing and outreach.
“If you’re independent you’re at such a disadvantage to compete with the big chains,” Beagelman said. “You can’t get the marketing dollars they have. It’s hard to compete if you’re a small mom and pop; it really is.”
Big fitness chains are becoming ubiquitous around the country. A range of fitness companies made it onto the 2018 Entrepreneur Franchise 500 list: Planet Fitness, Anytime Fitness, Orangetheory Fitness, Crunch Fitness, Retro Fitness, Snap Fitness, Fit Body Boot Camp, Workout Anytime 24/7, UFC Gym, GymGuyz, My Gym Children’s Fitness Center and The Little Gym. Planet Fitness is the third-fastest growing franchise in 2018; Orangetheory Fitness, Anytime Fitness and Club Pilates are also among the top 50 fastest-growing franchises.
Challenges of owning a gym franchise
Gyms are large, complex investments, especially the bigger establishments. You’ll need to rent and outfit a large space and obtain a wide array of expensive equipment. Finding and hiring the right trainers can be difficult; you need to ensure they’ll inspire users to want to return again and again.
As with all franchises, a central challenge of a gym franchise is that it takes time to ramp up the business to profitability. Some franchise owners enter the fray with unrealistic expectations about how long it will take to break even and then start seeing healthy returns on investment. It’s a process that takes patience and persistence.
“You have to build it,” Beagelman said. “Sometimes you can break even very quickly and sometimes it takes time. You have to be prepared for that, and a gym business is the same.”
10 steps to starting a gym franchise
1. Assess your interest
Before you begin, make sure you’re getting into this business for the right reasons. There are thousands of franchise concepts you can choose from — is opening a gym your passion, or are you in it just because gyms are hot right now? If you answer is the latter, you may want to reconsider; you’ll succeed much more readily if you have a strong interest in the field you’re entering.“If someone doesn’t like working out, that’s not a good fit for a fitness business,” Beagelman said. “I’m not saying you have to be the buffest person in the world, but you have to be into it.”
2. Do your research
Once you’re committed to the concept, research your options. Figure out which ones match your style, values, priorities, desired location and financial situation. Make sure the ones you focus on are in an affordable price range for you. Franchise businesses usually have a dedicated website or webpage that discusses details and costs of franchising.
3. Contact your top choices
Get in touch with the franchisors you’re interested in to ask questions and get more information. Most companies will host a Discovery Day at which you can gain a much more thorough understanding of the business. Meet those involved and get a sense of whether you would enjoy working with them. Ask about which territories are available and whether the location you’re considering will likely provide a good return on investment.
4. Call franchisees
Ask the business for referrals to franchisees who would be willing to speak with you about their experiences. Ask them about both the good and the bad. What’s the day-to-day experience like? Are the franchisor’s policies fair and the staff responsive? How long did it take to break even? What are some of the biggest challenges?
5. Find a location
Find a place for your business that is well positioned to attract customers. The franchisor may help you find a location; if you find your own, they will have to approve it.
6. Obtain financing
Look at all your options for franchise financing. Many small business loans have requirements for what percentage of the upfront cost you need to finance yourself. The franchisor can be a good guide and can help by leveraging relationships with banks that can help make your dream of opening a gym a reality.
7. Sign an agreement
Once you’ve decided what will work for you, negotiate terms and sign on with the company of your choice. Pop the bubbly. Then get ready to get to work.
8. Get permits and insurance
The requirements vary by state and locality; do independent research, work with your franchisor and consult with local and state authorities to ensure your business’s compliance.
9. Hire staff and attend training
You’ll need to hire all the staff you need to open your company. Franchisors will give training to the franchisee and at least one other manager who can then train the employees properly in company procedures and policies.
10. Open your gym
Congrats! You’ve got the gym; now you need customers. Do marketing in your community, arrange a grand opening and consider what discounts or specials you can offer to get people in the door.
The cost to open a gym franchise
Gym franchises range in size quite substantially, from mobile training businesses with low overhead to massive fitness centers that cost millions of dollars to set up. On the low end, a GymGuyz mobile training franchise costs $56,072 to $121,673 to start. On the other extreme, startup costs for a Planet Fitness franchise run between $857,080 and $4,234,750.
“It’s a big, big investment for those facilities,” Beagelman said.
The elements of startup cost vary by business — the needs for a mobile training franchise are far different than those for a large gym. For most gyms, one cost will be rent for a space large enough to accommodate its needs. For a Planet Fitness, that means 20,000 square feet. You’ll need to outfit the space appropriately, including a vast array of equipment such as cardio and weight machines, free weights, exercise bands and balls and stationary bicycles, among other things. Locker rooms, rooms for fitness classes, a swimming pool and courts for basketball or racquetball are other potential expenses. Systems for security, customer registration and sign-in, billing and scheduling will all have to be in place before the new gym opens its doors.
Another factor in the cost is the scale at which you’re interested in pursuing your franchise business. According to Beagelman, some of the larger franchising companies will want franchisees to commit to buying a specific number of units with a set schedule of openings over several years or a decade.
Is a gym franchise business right for you?
Start by doing thorough research on the details of owning a gym and attend the Discovery Days for companies that pique your interest. Contact other franchisees to understand what it’s like to be in their shoes. Make sure you can see yourself doing what they do — you should feel excited about the prospect or else it isn’t the right fit.
There are many options in the fitness space — you don’t have to pursue a big corporate gym to find a good match. Yoga, pilates and dance studios; children’s gyms, rock climbing gyms and personal training businesses are all options that a fitness-oriented entrepreneur may want to look into.
“You can tell me that I can make a million dollars doing automotive repair, but I have zero interest,” Beagelman said. “You need someone who believes in the category.”
Beagelman recommends asking yourself four questions:
- Do you like the concept?
- Do you like the people you’re going to be working with at the franchisor?
- Do they have a territory available where you want to be?
- Can investing in this option get you the return you’re looking for?
“If you can’t answer the first three things positively, it doesn’t matter how much you can make,” Beagelman said. “People who are opening fitness franchises are usually really, really into fitness. It’s not just about the money.”