Gym Life – To Franchise or Not to Franchise?

Gym Life - To Franchise or Not to Franchise? 1

Turning your passion and experience into a business, can invite several golden opportunities. Especially in the world of fitness. You can become a fitness coach, trainer, or the proud owner of your own business. 

But starting your gym from scratch can be a daunting challenge. Whilst buying into a franchise can overshadow your autonomy and independence.

A lot of thinking, effort, and time goes into opening your own business. The world of commercial fitness is competitive. So, you will need all your barbells in a row if you are stepping out as a rookie. It is going to take determination, grit, and courage.

One question we get a lot of the time is if it is better to invest in a franchise or to open your own gym. To assist you we have looked at all the advantages and challenges to both options.

Table of Contents

Franchise vs Non-franchise

Franchise gyms differ from independent gyms. A franchise requires a solid trust relationship. One of good communication between the franchise group and the franchisee. Whereas independent gyms only have the owner accountable to themself.

Franchise gyms are popular because of the immense support from the brand. This makes it easy to start up and get your gym off the ground. Individual business tends to leave you fending for yourself. 

Franchise gyms stipulate a lot of the business specifications and restrictions like layout, equipment, and signage. This can hinder the creativity and individualism of business owners. In turn, private gym owners have the creative space to design their gym as they see fit.

Marketing and Brand Development

As a gym owner, you can enjoy buying into a well-known fitness brand. Community members already know the established brand. They will recognize your business and operating methods as associated with the respective brand. 

Customers who buy into a specific brand, usually remain loyal to that brand.  So, you will have the support of an existing loyal customer base. But marketing support comes at an exceptional cost.

On the other hand, individual-owned gyms will have to establish their brand in the market. Often competing against well-known and reputable franchises. You will have to track your competition, customer needs, and feedback, as well as market demand. 

The upside is that you have marketing freedom. So, getting the name of your business noticed does not have to cost you an arm and a leg.

Operations

Within the world of commercial franchises exist a network of support. The franchise brand usually assists with sourcing your premises. They also assist with kitting out your gym, and even training your team. But this too comes at a price. 

While you are the boss, you have limited flexibility when it comes to how you operate your business.

In comparison, individual-owned gyms usually have owners reporting to themselves. You can choose the location specifics of your gym. You can decide on the unique gym equipment, your trainers, and support team. And it will cost you almost nothing. Only your creativity, energy, wit, and determination.

Business Risk

Starting on your own can carry significant risks. Whereas rolling out as a member of a well-known franchise is known to be less risky. 

But even though it might be less risky to buy into an established brand, success is not guaranteed. The success of your business, franchise or not, depends on you as the owner of the gym, and your team.  

You will need to display the key qualities of an entrepreneur who has the will and the drive to succeed. This is essential if you want your gym to be successful and profitable.

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Figure 1: Franchise vs Non-franchise

Show Me the Money

Investing in a franchise gym can be a lot more expensive than starting your fitness brand. Franchise gyms require you to pay an upfront licensing fee. This will give you the franchise rights, but it can cost you thousands of dollars. 

In addition to your license fees and marketing costs, you will also be required to pay a certain percentage of your revenue earned to the franchise group every month. 

If you start your gym as a fresh, new, independent brand, then you will not have any of the initial expenses toward licenses, marketing affiliation, or revenue sharing.  You and your team will benefit from the efforts you put in.

As mentioned earlier, the price to obtain a franchise for a commercial gym can be pricey. On top of licensing, revenue, and marketing fees, you will be required to invest in the right size of property and a large amount of branded, specified equipment. 

As an individual gym owner, you have the option to size your gym in such a way that it suits your budget. And you can start small by investing in good quality gym equipment at wholesale prices, from your choice of supplier. 

The question all potential gym owners ask is, what it will cost to start their gym? There is no set answer, and the answer is never straightforward, or simple. This is highly dependable on the size and location of the gym you have in mind.

Upfront, the total cost for a gym franchise, including the franchise license and name, can range between $35,000 and $350,000. Keeping in mind that some brands are more expensive than others. Whereas starting your gym can cost as little as $20,000 in initial investment.

Once-off costs include things like property rental, gym equipment, fitness certifications, legal fees, insurance, and building modifications. Other once-off costs might include things like signage, computer systems, web design, staff training, and uniforms.

The initial start-up expenses for your gym might seem costly, but with a solid foundation, you can only benefit in the future. 

Ongoing costs include things like rental or mortgage payments, insurance, staff salaries, utilities, maintenance, and ongoing advertising. These too will vary, depending on the size of the gym you plan to start.

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Figure 2: Cost involved with starting a gym

Financial Security

No franchise fitness brand does not require a solid net worth. This is required to ensure that you have the funds to get your gym premises set up. 

The net worth documentation also aids the franchising brand to equip your gym with specified equipment, brand your nosiness, train your team, and carry your overheads for at least 12 months.  

If you start your fitness brand as an independent gym owner, you will not be required to document your net worth unless you are applying for financial assistance to start your business.  

If you are looking to start your gym, you might have to raise the capital you require to start your gym. To be successful in securing investment funding, you will need a solid, well-crafted business plan. 

Regardless of if you are a self-funded franchise owner or an individual entrepreneur looking for funding, everyone can enjoy great benefits from a detailed business plan. 

For franchise owners, the process of creating a business plan will be less overwhelming, due to the operational support from the franchised brand. But for individual gym owners, this might be a tiresome task. 

Put the required effort in because your business plan will serve as your map for running a successful gym.

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Figure 3: Financial Security

Business Specifications and Restrictions

A big advantage of owning a franchise gym is that members know what you are about and exactly what to expect.  

People know that franchises, in different locations, offer the same equipment and amenities. 

Members of commercial franchisee gyms also know what type of classes are on offer. Unfortunately, as a franchise gym owner, you cannot mold or bend these as they are determined by the brand.

In comparison, as an independent gym owner, you can design your gym the way you want to, offer your members the benefits you want to, and introduce new classes and styles every month if you see fit.   You are in control of how you operate your brand, with zero specifications.

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Figure 4: Gym Franchise Specifications and Restrictions

Support and Assistance

As an independent gym owner, you will be responsible for your marketing, staff training, facilities management, and business setup. As a franchise owner, you will be assisted by the brand to set up and operate your business. 

If you buy into a franchise, you will be told where to set up your gym, what equipment to buy, which vendors to use, and how to educate your team. For gym owners who do not like people looking over their shoulders, this might not be a viable option.  

Master of Marketing

Another benefit to owning a franchise gym is the marketing assistance and advice you will receive from the brand. For a franchise gym owner, your marketing research is done by the brand, and the marketing is tried and tested by the franchisor. 

If you are opting to be an independent gym owner, then you will be responsible for your marketing. This has its benefits as you will have the freedom to design and develop your marketing strategies. 

The downside on the other hand is that you may lack marketing experience or may not know how to launch an effective marketing campaign. 

The health and fitness industry is immensely competitive. If you choose to go into business for yourself, by yourself, then you would need to focus on a niche and a target market.  Look at key areas like area demographics, key community fitness needs, age groups, preferences, etc. 

The ways and opportunities you can market your business as a franchise owner or independent owner are endless.  Franchise brands rely heavily on commercial advertising and brand loyalty. We dig into some of the more popular marketing strategies below:

  • Social media campaigns – Franchise gyms have media campaigns running on every social platform – from Facebook to Instagram, and Twitter. This aids in boosting member sign ups and helps you to stay in contact with your members on a real-time basis. 
  • Membership sign-up promotions – Franchise gym groups offer sign-up promotions with great benefits to their members. This does not only create brand awareness but also establishes brand loyalty.  
  • Branded fitness gear and accessories – you will find that most of the commercial franchise gyms stock large quantities of branded gear, accessories, and health products. This establishes several additional income sources and also creates brand awareness.

Owner Experience

If you are passionate about fitness and have experience within the industry, you will find it easier to open and operate your gym. But for individuals who lack experience and passion, it might be a more challenging task. 

Owning a franchise gym is an easier option for business owners who lack fitness expertise and experience. In the franchise setup, you are not required to manage or operate the gym yourself, as long as you have an adequate team to do so on your behalf. 

For the individual gym owner, on the other hand, it is always advised to be hands-on and actively involved in your gym daily – so you would need a certain amount of knowledge and experience. 

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Figure 6: Gym Franchise Owner

Location Specifications – Securing the right property 

For any gym, be it a franchise or private, location is key. 

For franchise owners, finding the right location is one of the benefits you will derive from investing in a gym franchise. The franchise brand will find the best possible location in your area on your behalf.

If you are a private gym owner, however, you will need time and invest some effort into locating the perfect spot for your gym. When you are out and about to find your property, keep the following points in mind:

  • Age of the building
  • Building access
  • Safety and security
  • Parking
  • Room for expansion
  • Cost

A Winning Team

Every business owner will tell you that your team is vital to the success of your business. 

For franchise gym owners, the roles and responsibilities of each team member are specified. So is the number of staff and staff training needed. Franchises support their franchise owners with continuous staff training and development. 

For individual gym owners, these tasks will sit with you. Therefore, it is so vital that you spend time and effort to interview and employ the right team to drive your business forward.

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Figure 7: Gym Winning Team

Advantages and challenges of the gym franchise system

There are several great advantages to owning a franchise gym. But several potential challenges might not sit well with you as a gym owner.

Advantages of Owning a Gym Franchise

Recognition of the Brand: Franchises have a history of operational success. They are usually well known by the general public and come with a certain number of loyal followers. Finding members is easier than in the case of a private gym because you already have an established customer base. And the franchisor normally takes care of all your marketing needs. 

Support and Training: New business owners sometimes struggle to keep all the balls in the air. As a franchise owner, you will have all the business support you need to ensure you do not drop any balls. 

Profitability: Because franchise gyms already have a loyal customer base, their profit margins are a lot higher than those of privately owned gyms. While the start-up and investment costs for franchise gyms might be a lot higher, chances are 100% that you will turn profits much quicker than you would, starting a private gym. 

Challenges of Owning a Gym Franchise

Independence: As a business owner of a franchise gym, you might own the business, but you are indirectly working for the franchisor or brand.  

In everything about your business, the franchisor will have the final say. Be it the color on your walls, signage, uniforms, staff, or salaries.  Private gym owners own the final say. You can decide what you want to do and when you want to do it based on what is right for your business at the time. 

Initial investment: As mentioned before, the initial investment for starting a franchise gym is a lot higher than when you start your independent gym and brand.  If you do not have the financial backing of millions in the bank, then franchising might not be the best business option to consider.  

Ongoing royalties: Franchise owners will always have a monthly profit share and loyalties that are payable to the franchisor, for as long as you own the franchise. Independent gym owners have none of these monthly costs to cover. 

For your peace of mind, make sure you are fully aware of all the costs involved in buying a franchise before you opt to invest in a franchise gym.

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Figure 8: Planet Fitness Gym Franchise

How to start a franchise gym – 8 steps

If you have decided that you would rather start a franchise gym instead of your gym, follow these steps to buy and set up your business. 

1. Investigate the advantages and challenges of Owning a Franchise Gym

As with any business, there are clear advantages and disadvantages to owning a franchise gym. Make sure you familiarize yourself with every aspect, including the fine print. 

2. Weigh up Your Options 

If you have thoroughly investigated your advantages and disadvantages of owning a franchise gym, you would want to look at the different franchise options available on the market.  There are hundreds of fitness franchises to consider and choose from. 

Make sure you spend time researching all your available options. Pay attention to the fine print and requirements the franchisor has and make sure you have the capital to reach them.

3. Make Contact

Once you have established what kind of franchise and brand you would want to invest in, contact the franchisor. You can do this via their website, email, or phone. Or if you are lucky enough to be located close to the headquarters, you can venture over for a face-to-face discussion. 

When you have made contact you will receive all the information needed to make an informed decision. And they will also guide you to your next steps.

4. Build your Business Plan

This is the blueprint for your business. A key component to the success or failure of your business is spending time on your business plan. 

One benefit from buying into a franchise as a gym owner is that you will most likely get most of our information needed in your business plan directly from your franchisor. Whereas an independent gym owner will have to round up all the information from scratch.

There are several things you should include in your business plan for you to have a solid foundation to build on and reference to go back to if needed. Here is the outline of the key things you must include in your gym’s business plan:

  • Executive summary
  • Market research and market analysis
  • Sales & marketing strategy and forecasts
  • Gym services, programs, and products
  • Equipment and facilities
  • Personnel
  • Investor structure and ownership
  • Financial forecasts
  • Appendix

EXECUTIVE SUMMARY

A professionally written executive summary is vital to your business plan.

The first page of your business plan needs to lure your investor or franchisor to read your entire plan. If your first page lacks interest, then your investors or franchisor will probably not continue past the executive summary. 

Use the following questions as a guide to draft a comprehensive executive summary: 

  • What makes your gym different from others?
  • What are the strengths of your business?
  • What market gap will your gym fill?
  • What are your financial strengths and input?
  • How do you plan to grow your gym?

MARKET RESEARCH AND MARKET ANALYSIS

Successful gym owners know their industry like the back of their hands. You will have to spend time doing thorough market research and analysis. You need to know everything there is to know about the fitness industry, your competition, and the future of the gym world. 

SALES AND MARKETING STRATEGY AND FORECASTS

Funders that are worth their salt will navigate from your executive summary to this section in your business plan before they go on to your financial projections.

Make sure you stipulate and provide details about how you plan to grow your market and the investment. Use the below questions as a guide to draft your strategies and forecasts:

  • What is your membership types 
  • What is your cost per membership
  • What is your sales forecast
  • What are your pre-sale marketing strategies 
  • Post-launch and pre-launch promotions
  • Strategies toward member retaining

PRODUCTS AND SERVICES

This section should clearly define the service and products your gym will provide to the community. Also, stipulate what makes you different from the competition.  

FACILITIES AND EQUIPMENT

This section of your business plan will include details about the design and outlay of your gym, as well as what equipment your gym will house.

You need to provide details about what your gym will look like inside. Will it have a pool, sauna, specialized studios? Also, ensure that you provide a detailed list of all the quality fitness equipment that your gym will offer to the members.

PERSONNEL

This section of your business plan will provide details on your staffing model. It will also provide job specifics and remuneration specifics per person.  

Labor forms a large part of your monthly expenses. So, make sure you pay attention to each cost line and job description in the personnel section of your business plan.  

INVESTOR STRUCTURE AND OWNERSHIP

In this section, you will cover all the legal jargon of your business. Make sure to include copies of your registration documents, trading licenses, franchise agreements, and training certificates in this section. 

FINANCIAL PROJECTIONS

This section will take up a lot of your time. The Budget and financial projections section of your business plan must convince your potential investors that your business will work, grow and become financially stable.

Make sure you create detailed financial projections. Include details on all your forecasted income revenue streams and all expenses.

APPENDIX

Lastly, include an appendix section in your business plan. This area will list all included supporting documentation for your business plan. These can include items like:

  • Drawings
  • Equipment images
  • Location Maps
  • CV’s for your team
  • Logo, flyer, and marketing material designs
  • Potential promotional ideas

5. Secure Financing

If you decide to buy into a franchise, the cost to set up your gym will vary depending on the size of your gym and which franchise you opt to buy into. Chances are, that you will need some sort of financial backing to get your venture off the ground. Below are some options to look at:

  • Bank Loan
  • Angel Investor
  • Venture Capitalist
  • Corporate investment

6. Choose a Location 

It is crucial to the success of your business that your gym is easily accessible and visible to everyone. Most gym-goers prefer a gym that is close to home so that they can easily get to a workout on their way to or from work. 

Remember that location requirements will differ from franchise to franchise. So if you choose to invest in a franchise gym, make sure that you know what the requirements of your franchisor on location are. 

7. Permits

Any business needs licenses and permits to operate. The fitness industry is no different. Make sure you obtain a business registration number, trading license, certifications for your trainers, and a legal bank account and tax number. 

8. Hire your team

Once you have established your location, got your licenses and proper permits to operate, you are ready to invest time in finding the right people to work for you. 

Any gym needs several employees to operate the facilities from trainers and front-desk staff to cleaners and managers.

Remember that the fitness industry requires employees to be active for long hours on end, so make sure you hire staff that is open to working long hours and has the health and durability to go with it. 

Final words

Starting a gym is not for the faint-hearted. For a franchise gym, you will need upfront investment capital to buy you the support you need for a ready-made road into the world of commercial fitness. 

For the independent gym owner, this journey will be built from the ground up, with the creativity, flair, and passion needed to succeed.

However you look at it, and whatever option you choose to venture into, remember: It is up to you as the owner of the gym, whether your business will succeed and be profitable.

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