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Opening a Gym Business/Franchise in 2022
Written by: Shirley Cao
Last Updated by
María Fernández Amato: May 6, 2024
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Starting a fitness business can be a dream gig for health-conscious entrepreneurs. Especially after the COVID-19 pandemic, people are more aware of the fitness concept. The resilience of the fitness industry during the pandemic also proves it a rewarding business. One of the most common fitness centers is simply a gym. Similar to other businesses, there are different types of gyms you can provide varying in sizes and facilities – either a big-box gym or a boutique facility. Opening a gym business can be a very profitable opportunity.
Locations are equally important as choosing the type of gyms you want to provide. Prior to determining a location for your first gym, you have to decide on the customer base that you are targeting. Is it the neighborhood in the school district or busy workers in the cities?
Contents
Gyms in the Fitness Industry
Fitness Centers charge a membership fee in exchange for providing their customers with the ideal infrastructure for their workouts and physical activity. 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 Fitness Center industry has over 111,000 businesses with a market size of $34 billion and it supports over 800,000 jobs. With a growth rate of 26.5%.
In addition to providing facilities, 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 demanded professional help, often certified fitness professionals, inside the fitness centers.
There are two major groups in the fitness center industry: specialized fitness boutique or full-scale gym with multiple amenities and services. Traditionally, we are more familiar with the big box gym. There has been a surge of boutique gyms that are more affordable relative to big box gyms. 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 niche markets, like busy people who need only a 40-minute session before or after work.
Opening a Gym Business
As a prospective small business owner, you can be opening a gym business almost anywhere and in any form. You might start your own business in a new location, buying an existing gym business. That way you can benefit from an existing customer base, or franchise a gym business from a big franchisor.
The biggest benefit of being an independent business owner is being your own boss. You will have the choice of how to run your business without paying additional franchise fees. However, while the freedom and flexibility you get as an independent business sound great, starting your own business can be more complicated than owning a franchise – you have to build your brand from scratch, which can take more time than you expected.
On the other hand, investing in a gym franchise comes with its brand name. Customers gravitate to big brand names. When deciding on places to go, people often choose the brands they’ve heard of before.
How to Start a Gym Business
1. Locations
First of all, it is very important to select a location and do some research for yourself before opening a gym anywhere. It is very much possible that you do not get enough customer traffic for you to make enough money to recoup the initial investment and even long-term growth. Additionally, the cost of opening a gym in the central cities will certainly be higher than opening one in the suburbs. However, this comes with benefits because if you are targeting people from age 18-34, that is where they mostly will be.
As we mentioned before, choosing a suitable location means determining the customer base and the type of gym you want to open. Opening a full-scale gym is definitely different from opening a boutique studio, mostly varying on the costs
Prior to determining a location for your first gym, you have to decide on the customer base that you are targeting
2. Facility Costs
At the most basic level, this includes the building you are renting/buying for your business. Cost varies by location, size, and whether you rent or purchase. Additional costs include building improvements, remodeling, and repairs.
More importantly, you are going to need equipment, from treadmills, barbell sets, and free weights to desks and chairs. Filling your space will probably require a significant investment, one that will vary based on the size of your gym.
For a commercial gym, equipment costs can range between $300,000 and $500,000. For smaller gyms, costs usually go around $100,000. These can be significant costs, but the good news is costs are fixed. This means that you only have to buy them once and you should be good to go, in addition to future maintenance.
3. Salaries and Miscellaneous Expenses
Employee salaries are a significant expense, especially for certified professional trainers. If you are opening a full-scale gym, a team of certified professional trainers could be worth it, with more customers compared to a boutique studio. The estimated pay for a personal trainer can range from $35,000 to $55,000.
After your initial investment, you can expect ongoing business expenses. This will include credit card processing fees, cleaning supplies, and daily maintenance fees.
More importantly, investing in marketing and advertising can be beneficial to your start-up business. Choose either to build an official website or open a social media account to attract your very first customer group! Advertising isn’t cheap, but it is key to boosting membership sales and providing effective communication of the services offered.
4. Getting your License and Permits
Opening a gym requires having a business license and insurance. Insurance covers liability, theft, workers’ compensation, and business insurance. Since gyms normally operate in a membership model, it is essential to create contracts and membership agreements. Writing contracts and reviewing legal documents will require hiring a lawyer.
Can I Buy an Existing Gym Business?
Yes, you can! Look for an existing gym in your desired area. There are also listings on BizBuySell you might want to look at—these listings come and go, that’s why you should keep your eyes out for people wanting to sell their existing gym businesses. Certainly, the costs will vary in size, cash flow, and the location of the business in sales.
For example, an established wellness center on North Shore, Long Island, can cost $250,000 with a cash flow of $130,000. A boutique fitness studio in Norwood, New Jersey, costs $100,000, with a cash flow of $25,000.
3 Gym Franchise Opportunities
Anytime Fitness
Starting in 2002, Anytime Fitness opened 4,700 locations on all seven continents with 4 million members. 60% of their franchisees have owned more than one location, proving a growing business opportunity. It is one of the biggest gym franchises in the nation, even in the world, thanks to its unique business model. Anytime Fitness locations are open 24 hours a day, seven days a week. In addition to standard fitness services, Anytime Fitness also provides yoga sessions, cardio, and personal training.
Luckily, the big brand name comes with a relatively low investment, ranging from $381,575 to $783,897. Instead of a royalty fee on total sales, franchisees are required to pay a monthly fee of $699 per center and an advertising fee of $600 per center. This is a big advantage compared to other franchises if you are having a large customer base and generate big sales.
Orangetheory Fitness
Unlike other fitness centers, Orangetheory provides a unique set of fitness experiences – it provides customers with a group workout service. Orangetheory is a heart-rate-based HIIT total-body group workout that combines science, coaching, and technology to guarantee maximum results from the inside out. The course is designed to be an hour-long, interval-based, coach-led workout, where they provide members with a heart-rate monitor. People are able to keep track of their own records while comparing with others. Its membership involves the number of classes that the member is able to take per month.
Currently, Orangetheory Fitness has over 1,400 franchises around the world in 27 countries.
The total investment for an Orangetheory Fitness franchise ranges from $61,200 to $334,000. As an Orangetheory franchise, you will pay a monthly royalty fee of 8% of gross sales. Brand fund contributions are 2% of monthly gross sales.
Planet Fitness
Planet Fitness aims to build a fitness community for all members, no matter adolescents and adults. The franchise strives to create a judgment-free zone for members to work out and meet their wellness and fitness goals. Planet Fitness started its business in 1992 and began franchising in 2003.
Currently, it has over 2,200 locations across 50 states and in Canada, Latin America, and Australia, with more than 16.2 million members.
The total investment for opening a Planet Fitness franchise ranges from $1,625,600 to $3,677,000 if you finance your equipment and $2,502,600 to $4,921,000 if you choose to purchase your equipment. This is a significant initial investment compared to other franchises listed above. You are required to pay 7% of the total gross monthly to the franchisor.
Profits in the Gym Franchise Opportunities
Revenues in the gym franchise business vary across companies, ranging from $300,000 to over $1 million. Although the gym franchise business has a relatively high profit margin, the average initial investment significantly exceeds the average annual gross sales. This means franchisees will take a long time to recoup their initial investment. Since gym franchises rely on a customer-based, recurring model, they would be a profitable business in the long term when establishing a solid customer base.
Profits of Existing Gym Franchises
| Company Name | Number of Reporting Business | Average Anuual Gross Sales | Average Initial Investment | Average Profit Margin |
|---|---|---|---|---|
| Anytime Fitness | 1,103 | $ 384,958 | $ 582,736 | 16.48% (company-owned) |
| Orangetheory Fitness | 1,247 | $ 850,000 (estimate) | $ 1,105,199 | 15% (estimate) |
| Planet Fitness | 651 | $ 1,550,746 | $ 2,261,300 | 27% |
Conclusion
Gym business could be a stable and profitable business once there’s a loyal customer base established. You can either buy an existing business or franchise with a famous franchisor or even start your own business. As it is highly dependent on the recurring revenue business model, it is important to be ready for a long-term investment. More importantly, this is an industry that will never go away, with the trend of the fitness concept all over the world!
Visit our website Vetted Biz to find out more about gym franchise opportunities in the fitness industry.
