The fitness industry has grown with the rise in disposable income and demand for a more health conscious lifestyle among millennials. The fitness industry is mainly divided into two groups, either a specialized fitness boutique, or a full-scale gym with multiple amenities and services. Fitness centers have experienced sustained growth since the post-economic crisis in 2009.
There has been a surge of boutique gyms that are more affordable relative to big box gyms. Some fitness centers only require a studio, while others may need specific machinery and equipment to accommodate to the style of training. Boutique gyms mainly do one type of practice, like a yoga studio, dance studio, barre, etc. These gyms are profitable by recurring revenues from membership programs. Many boutique gyms also accommodate to niche markets, like busy people who need only a 40-minute session before or after work.
It is important to note the rise of competition in smaller gyms, and how franchise owners need to make additional efforts to stand out amongst competitors even in the same subcategory. Competition will also occur with larger big box gyms that also provide the classes a specialized boutique would include in addition to other services. One of the most important aspects is location, so it can be close to either a person’s home or office.
In our online business platform Vetted Biz, we have reviewed and analyzed over 2,900 businesses and franchises. For the businesses we have studied in the fitness industry, we have seen a range of investment amounts that can start as low as $36,000 and can go all the way up to $2.7 million. The smaller investment amounts are for boutique gyms that may only need one studio while the larger gyms will require much more space and equipment. Additionally, in our research, the average royalty fee for fitness centers is around 6.8%, and the average marketing fee is 1.7%. When studying the SBA analysis for the 7(a) loans from 1991 to 2019, franchises in the fitness industry based on loans disbursed had a paid in full rate of 51.7% and a charged off rate of 12.56%.