Fitness Industry – Franchises and Businesses
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Fitness Industry
General Industry
Fitness Centers charge a membership fee in exchange for providing their customers with the ideal infrastructure for their workouts and physical activity. In addition to active physical fitness conditioning and recreational sports activities, operators are also involved in facility management and fitness instruction.
The U.S. has the biggest Fitness market in the world both in terms of revenue and in the number of members enrolled in a fitness facility. The industry has over 111,000 businesses with a market size of $34 billion and it supports over 800,000 jobs.
Fitness Industry Trends
A factor that is shaping the Fitness Centers industry is wearable technology, which includes fitness trackers, smart watches, heart rate monitors and GPS tracking devices. In addition, most centers are now investing in high intensity interval training (HIIT), group training, personal training, body weight training, and health/wellness coaching as the demand for these activities has been constantly rising. Customers have also demand professional help inside the fitness centers. Thus, centers have been employing certified fitness professionals to help customers with their physical performance while working out.
Key Industry Numbers
The Paid-in-Full RateReferring to the SBA 7(a) Loan Program, how many businesses in a particular industry paid their SBA loans in full including interest relative to all the businesses in that industry. Note that many businesses are exempt from sharing their loan statuses as part of the nondisclosure exemption, and not included in the paid-in-full rate.[p1]… is when the SBA loan is fully paid off by the small business owner including interestA payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum, at a particular rate. In Vetted Biz, it is typically the additional rate of a loan a business buyer would pay off over time to borrow in purchasing a business…., indicating financial strength.
The Charged Off RateAlso can be referred to as the SBA Loan Default Rate, the charged off rate is percentage of businesses in set field (e.g. industry) that defaulted their loan, are unable to pay their loan in full, and/or there is no confidence that they will be able to pay back the loan…. is the SBA loan default rate where loans have no confidence in being paid off by the small business owner.
For every 8 SBA franchiseA franchise is when a business (franchisor) allows a party (franchisee) to acquire its know-how, procedures, processes, trademarks, intellectual property, use of its business model, brand and rights to sell its products and services. The franchisee signs a contract (franchise agreement) with the franchisor to acquire the franchise and generally has a territory granted to operate…. loans fully paid including interest, 1 SBA loan was unable to be paid back, or defaulted.
*SBA Franchise Loan Data from 2010-2019
*Non-Franchise Businesses taken into account: 6,473
Franchises in the Fitness Industry
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.
Boutique Gyms
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 profitableWhen the earnings in a given period of time is more than the expenses in a business…. 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.
Fitness Franchising Trends
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.
How much can a Fitness franchise cost?
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 $2,405 and can go all the way up to $7,129,850. 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 6.4%, and the average marketing fee is 1.8%. 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 39.6% and a charged off rate of 8.7%.
Average Fitness Franchise Industry Percentage Fees
Standard Fitness Franchise Industry Investment
This metric is the standard industry investment amount for a single unit franchise investment in this industry. Our research and analytics team analyzed over 120 franchise concept investment breakdowns in order to calculate this figure.
The Paid-in-Full Rate is when the SBA loan is fully paid off by the franchisee including interest, indicating financial strength.
The Charged Off Rate is the SBA loan default rate where loans have no confidence in being paid off by the franchisee.
For every 13 SBA franchise loans fully paid including interest, 1 SBA loan was unable to be paid back, or defaulted.
*SBA Franchise Loan Data from 2010-2019
*Franchise Businesses taken into account: 3,686
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