Fitness Franchise Cost in USA – If you’re an aspiring gym business owner, you have two options: Purchase a fitness franchise or develop a fitness brand on your own. Building a fitness brand takes years of hard work and lots of resources. Famous brands such as “MedEx Fitness” offer franchises at a similar cost to what it would take you to develop a fitness brand on your own.
So, owning a fitness franchise: Is it worth the cost? Owning a fitness franchise is worth the initial investment. Fitness franchises currently account for $4B out of the total $34B health club industry in the US. The brand recognition a franchise affords makes it easier to gain customers. If you have an investment budget of over $100,000, you should consider opening a fitness franchise.
This comprehensive guide will teach you everything you need to know about the cost of a fitness franchise, funding your venture, and ensuring your franchised gym generates profit as quickly as possible.
Pros of Opening A Fitness Franchise in USA
#1. Brand Recognition
Franchise gyms retain full rights to use the parent company’s brand name, trademarked taglines, and designs associated with the brand.
Brands such as “Gold’s Gym” and “Planet Fitness” have a strong brand following, and these brands are the most reputable gym brands in the world.
Fitness enthusiasts are actively looking for the branches of brand gyms in their city. Instead of spending decades establishing your own fitness brand, you can piggyback off existing fitness brands from day 1.
#2. Support Network
When you join a franchise, you automatically become part of a more extensive network. Many franchises have hundreds of gyms throughout the country. The gym chain can put you in touch with other franchises in your state, which can give you insight into the local market and how to thrive there.
You can talk to hundreds of other franchise owners who have had success with that franchise and replicate what they did. This support network reduces your chance of failure by a significant margin.
#3. Successful Business Model
Established franchises provide proven business models. Usually, the first gym takes off and becomes dominant in an area before it starts franchising.
After a fitness brand starts franchising, they learn about the most effective ways to build profitable gyms. The franchisors transfer this knowledge to all their franchisee clients.
You’ll get access to business blueprints, procedures, employee training, company policies, and other intellectual property that they’ve honed over many years. This process removes a ton of the hard work you’d have to do under normal circumstances because they’re sharing their experience in the industry with you.
#4. Help With Getting Started
Fitness franchisors give you their business blueprints and show you how to build a fitness business from scratch. They’ll actively help you during the initial stages. This assistance is to help you develop a fitness brand that meets their standards and to decrease your risk of failure.
Many franchises require you to consult them about the gym location which requires approval. This process ensures their gym is placed in the best possible location to guarantee profits and represent the brand.
The franchise company will also help you with the business permit/inspection procedure, making sure your gym meets all safety standards and regulations.
#5. Job Training
Each one of your staff members will receive free job training for the gym. Even though you’ll need to hire certified personal trainers, you’ll still have to train them to work for that particular gym’s brand.
Most fitness franchise ship their employees to the training facilities where they receive training on-site. The parent company can train dozens of employees simultaneously. This training prepares them to represent the brand and make them more efficient workers.
#6. Lower Equipment Costs
Large fitness franchises have connections to manufacturers who can provide lower costs for commercial equipment. Brands such as Gold’s Gym have access to the top manufacturers who can bring the price of equipment down for their franchisees.
Example: If a commercial treadmill costs $8,000 directly from the manufacturer, they might be able to lower the price to only $5,000 per unit for your gym. Franchising from established gyms is a great way to bring down your total investment costs.
#7. Gym Management Software
Running and operating a fitness brand requires significant work and experience. A fitness studio scheduling software is essential to manage and operate your gym.
The franchise will provide you with the best-in-class gym management software and have the software set-up to manage and run your gym seamlessly.
They will also provide all the administrative hardware (point of sale) and software that you will need to run your fitness brand successfully.
Factors Affecting The Cost Of Fitness Franchise in USA
Factors that influence the total investment required are the franchise license, size of the gym, equipment used, and marketing.
For small gyms, if you were to be conservative, you could get away with as little as a $50,000 total investment. This limited investment is possible by purchasing a cheaper $10,000 license fee franchise and spending less on the equipment.
Mid-range fitness franchises can expect to spend $100,000-200,000 in total. For high-end gyms, you will easily spend $500,000-1,000,000 per gym.
1) License Fee
- The parent company will initially charge you a license fee that allows you to start operating as a franchise.
- This license fee is a one-time fee that you pay, and it can be as low as $5,000 or as high as $50,000.
Note: You only pay the license fee AFTER you gain approval, not prior. If the company rejects you, you don’t have to pay the license fee.
2) Equipment Costs
The gym requires equipment designed for commercial purposes. Commercial fitness equipment is more expensive as it has to be suitable for multi-person use and compliant with the latest safety standards.
For example, you might have to pay 5-10x for commercial running treadmills as compared to treadmills you buy for home use.
The equipment cost could be as low as $15,000 or as high as $1,000,000. Franchises have high standards for equipment, and many will ask you to purchase brand-new equipment. They also may direct you to partner manufacturers.
3) Commercial Lease
To rent a commercial space for the fitness franchise, you’ll also have to put down a security deposit similar to renting an apartment.
Most security deposits on commercial rentals are lower than residential rentals and only require three months deposit. Some commercial spaces might not require deposits at all if you can pay the yearly lease in advance. This privilege is for investors with deep pockets.
However, with a multi-year lease, if you fold your gym before the expiry of the lease, you will still be liable to pay for the entire duration of the contract.
4) Legal & Business License
You’ll have to hire a lawyer to help you deal with the city administration and gain permits for the gym. The licenses issue at the local level and the mayor’s office can help you get a license for your gym as a commercial entity.
This process happens after the gym is furnished and equipped. The city sends inspectors to check the safety standards/fire hazards, HVAC systems, electricity, plumbing, etc.
Once you’ve passed those inspections (1-2 months on average), the city issues you a permit. It’s easier to go through the process by hiring a business attorney.
5) Business Insurance
One of the largest expenses is purchasing business insurance with large liability insurance coverage for the space and the people. If someone gets injured at your gym and decides to press charges, or the property at the gym is damaged, you’ll need this insurance.
The total amount you’ll have to spend depends on the size of the gym and the activities conducted.
6) Personal Assets
Many franchises will expect you to provide a “backing” in the form of assets, and they expect you to have a high net worth.
For example, you might have to prove you have at least $500,000 in personal assets (real estate, bank accounts, valuables, etc.) before they issue you a license.
Some gyms such as Gold’s Gym will require you to have $3M in net worth before they consider you as an investor/operator for a franchise.
Ongoing Costs To Maintain A Fitness Franchise
The costs mentioned above are start-up costs (capital expenses) you’ll have to prepare before you consider applying for a fitness franchise license.
Once you open your gym, you’ll also have to prepare for monthly maintenance costs to keep the lights on. The following are the essential maintenance costs:
Royalty Cuts
The franchisor will take a percentage cut directly from your gross profit. This cut is usually a fixed or a progressive fee on the gross profits, depending on the franchise. Most franchises have 5-10% royalty cuts, but some can be lower, and some are higher.
If the franchise company uses a progressive scale, you’ll have to pay more as your gym gets successful. In some exceptions, the gym only takes a monthly “membership fee” instead of directly charging you based on the profits.
Operational Expenses
The operational expense is the monthly amount you’ll have to spend to keep the business going: Rent, utilities, cleaning, repairs, insurance, fitness software, etc.
For small gyms, the expenses can be as low as $1000-2000 a month, while larger gyms can spend as much as $30,000 a month in operational expenses.
Human Capital
The average gym hires 2-3 employees to balance out the workload at the gym. To hire three full-time employees, you’ll need to allocate at least $100,000 a year. The gym has to have one personal trainer who can engage with the members and help them train.
You’ll also need a receptionist to keep track of the incoming members, register clients, and answer calls. Large gyms might require full-time staff for childcare facilities and cleaning (or you can hire part-time workers).
Many gyms are now expanding by offering yoga studios and other forms of fitness at the gym. You might have to bring in instructors to hold classes at your gym.
Wrapping Up!
Opening a fitness franchise instead of starting your own fitness brand makes the process of starting a gym much easier. However, the upfront costs can be significantly higher than going on your own, and the monthly royalties you need to pay to the franchiser can take a decent chunk out of your profits.
FAQs on Fitness Franchise Cost in USA
Q: My Budget is under $100,000, Can I Still Open a fitness Franchise?
A: Yes, you can open a fitness franchise with under $100,000 in total investment. However, you’ll have to go for a franchise with lower minimum investment thresholds. At this point, it’s important to analyze if opening your own gym is a better option.
Q: How Much Do Fitness Franchises Make?
A: It mostly depends on the size and location. The fitness franchise might make $1M+ a year if it’s in a trendy area of a major city. Conversely, a fitness franchise might only make $100K a year if it’s a small gym in a small town.
Q: Do I Only Need To Pay The License Fee?
A: You need a lot more money than the basic license fee. Even though the license fee might only cost $30,000, the franchisor will expect you to have a lot more capital to fund the rental costs, furnishing, staff payroll, events, marketing, and more.
Q: Does The Franchise Decide The Location?
A: The franchise does not decide the location of your gym, but they have to approve the location.
