There are fitness franchises popping up all over the world promising lower monthly rates, no signup fees and the best equipment available. A decade ago, gym memberships would cost $50 or more per month. Since that time, price wars have ensued and gyms have been fighting over potential customers with monthly prices as low as $10 per month. This begs the question as to whether fitness franchises are profitable. If they need to drop their prices that low to attract customers, can they even make money?
Pros of Owing a Fitness Franchise
The primary benefit of owning a franchised gym is the association with a reputable company. In the beginning, you will receive business plans, policies, rules and procedures that have been created for franchisees from the franchisor. This takes care of a major portion of installation and the initial setup work allowing you to open quicker.
We talked with Gym Guyz Franchise who explained, “Another advantage is that the franchise will determine a location and provide equipment (that you must buy or lease) for you to setup the gym. Additionally, you will already have a membership base because many future customers will select a gym based on the name of the parent company.” By opening that gym, locals who have used the brand’s services in other areas may be loyal to that company. Furthermore, the franchisor is responsible for all manuals and tutorials that relate to the gym. All material is available and it simply needs to be applied to the staff.
Risks of Owning a Fitness Franchise
On the other hand, like in any other type of business there are entrance and operating risks that gym owners must consider. First, the total initial investment to open including future employees can be extremely costly. Owners must lease the space, buy or lease the equipment from the parent company and hire front-end and back-end staff. Also, the monthly fees and membership dues to franchise with the parent company can be considerable. In order for the parent company to continue making money, the rates usually increase each year.
Additionally, marketing costs must be factored in for acquiring new employees and retaining existing clients. Remember, not every individual in the area works out so, unless opening in or near a major city, the number of customers may be limited. Furthermore, signing up for insurance is critical to the success of the gym because if a member is hurt and you are no covered, the costs can be extraordinary.
Utilities are another risk due to the high costs. If you plan on opening a 24-hour gym, lights, televisions and equipment will be in operations around the clock which can be extremely expensive. Finally, buying and installing security and surveillance equipment as well as the liability of crimes that may occur when you are not present is an added risk and expense.
Are Fitness Franchises Profitable?
One of the only ways fitness franchises can be profitable is if they are in a high-traffic area with a population that can support the fitness center. The initial startup fees, franchise fees and other monthly fees can be a major drain on profits. Although the parent company can help with many aspects of the business, they will always take their cut of the profits regardless of how much is made and they will still require monthly membership dues. However, those who are good marketers and business people always find a way to attract customers.
Opening a franchise is often compared to a marriage. If you do not follow the rules and do what is necessary or wish to get out of the contact because the franchisor is not doing what they promised, the entire process can be as painful as going through a divorce. With that being said, there are many factors that contribute to the profitability of fitness franchises. Good marketers and businesspeople find ways to attract new business into the gym and sign up for memberships.
