This article is based on its most recent FDD. You can watch here the video originally recorded on Vetted Biz Youtube Channel
Vetted Biz is the leading platform for accessible and analytical data on franchises and businesses available in the U.S. Our research team has reviewed over 2,900 franchises and knows the key facts and data that signal a successful franchise system. Upon extensive review using a number of internet research tools, our team was able to compile a shortlist of the “Top 20 Most Popular Franchises in the United States.” In the article below, we review the business model proposed by one of these 20 franchises: Planet Fitness, as well as the requirements that encompass its franchise application process.
Planet Fitness got started in 1992 when its founder, Michael Grondahl, acquired a struggling gym in Dover, New Hampshire. He reduced membership prices to compete against better-known brands while focusing on serving occasional or first-time gym users. Additionally, Grondahl developed a business model that created a community – beyond that of a fitness center – where pizza nights for new members are held monthly, and “Lunk Alarms” are included in the equipment. This is to discourage behaviors such as grunting and dropping weights at the center. Franchising then began in 2003 when the first franchise opened in Altamonte Springs, Florida. By 2015, Planet Fitness was already opening its 1000th club.
The concept now has over 2,000 franchises in the United States. It has recently begun expanding internationally as well, particularly across Central America. Planet Fitness is currently headquartered in West Hampton, New Hampshire, and is run by its CEO, Chris Rondeau. He began his story at Planet Fitness with a front-desk job in 1993 at the company’s initial location in Dover.
The first factor to consider when interested in investing in a Planet Fitness franchise is the financial requirements accompanying this opportunity. The total investment amount to establish a franchise ranges from $1,084,600 to $4,178,000, including a franchise fee of $20,000. Once the store has been built and operations begin, franchisees are expected to pay Planet Fitness’s corporate team a royalty fee of 7% on gross sales. This also includes a marketing fee of 9% on gross sales in exchange for the marketing services provided.
The company is currently not accepting new franchise applications for US investors. However, they are particularly looking for candidates willing to run the business daily and maintain the place open 24 hours. Additionally, they are also searching for applicants willing to invest in a minimum of 3 clubs. That said, the minimum net worth required to own a Planet Fitness franchise is $3,000,000. In addition to this, the candidate must have liquid assets of at least $1,500,000.
When evaluating Planet Fitness’s potential, we do not need to go beyond the fitness industry’s numbers to understand the prospect of success of this opportunity. The fitness industry generated $94 billion in revenues in 2018. And its global growth rate remains at a steady pace of 8.7% globally. Planet Fitness itself was ranked by Forbes #4 amongst the best franchises to invest in 2016. Additionally, that same year its 5-year growth rate was 24%. And it was ranked #7 in Entrepreneur’s 2019 Franchise 500 list.
Looking at the franchise’s internal performance, the average annual EFT revenue for 2018 ranged from $1,145 to $2,449. Out of which 51% of franchisees met or exceeded the bottom value, while 39% met or exceeded the highest range.
Investing in a Planet Fitness franchise is an interesting opportunity. Especially for individuals looking to make their way into the Fitness industry. The prospects for growth and success within the industry, and the brand itself, are extensive. A limited amount of markets continue to be available as they move forward with growing their presence across the country. If you are an individual with a passion for fitness and are willing to invest an amount ranging from $1,084,600 to $4,178,000 or more, then Planet Fitness is the right franchise for you!
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