In the last 20 years, the fitness industry has erupted in the United States. Chain fitness centers are popping up all over the country, and small, family owned gyms are either disappearing or getting lost in the shuffle. One of the reasons these chains are able to expand so rapidly and open new locations seemingly in every corner of America, is because of franchised locations. Fitness 19 is a franchised chain that may be a little less known than some of its biggest competitors, but they are still trying to make their mark on the industry.
Fitness 19 first opened in 2003. It was founded on the idea of offering families a simplified gym experience. The fitness centers feature top of the line equipment without any of the bells and whistles. Fitness 19 believes that by offering a straightforward experience, they can also offer cheaper membership prices to their customers. Their goal is to offer great, family-friendly fitness for all of their members, and to do so as simply as possible.
Getting in on the fitness movement could be an extremely lucrative business venture for an entrepreneur. People sign up for gym memberships every day in this country. Fitness centers around the world make an estimated $76 billion in revenue per year. Fitness is a huge industry and it has the potential to keep on growing. The right franchisee could turn a family fitness center into a very successful business career.
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Purchasing a Fitness 19 Franchise License
You’ve decided to purchase a franchise license for a fitness center chain and open a gym in your neighborhood. Now, you need to decide which brand of gym to go with. There will be many factors that need to be considered before purchasing a license, and it is important that you, as the future franchisee, do thorough research.
Let’s start with the cost. Each franchise will come with start up costs that will be required to obtain the license, purchase equipment, lease space, etc. One of the perks of a Fitness 19 franchise is that they do not charge a license fee for their franchises. This is incredibly rare and generous, considering most franchise licenses start around $20,000 and only go up from there. It is almost unheard of to have no cost associated with obtaining the license.
Just because the license does not cost anything, does not mean that it won’t cost you anything to open a location. There are still many costs associated with opening the gym that you will be responsible for. First, you will need to find a place to house the fitness center. Gyms require a lot of space, so it will be important to find a large enough storefront in a convenient area that is easy for members to access. When looking for the space, you must also keep cost in mind. Renting space in an area with a high monthly payment could be detrimental to your overall operation and cause the demise of your gym. Keeping costs as low as possible while still providing a quality experience will help keep your gym prosperous.
Your gym won’t be much of a gym without equipment. Members expect the best in cardio and strength machines, as well as access to a wide variety of free weights. Purchasing all of this equipment will be expensive but it is required if you wish to draw members in. No one wants to go to a gym with only a few dumbbells and some cheap cardio machines that break down every month. Filling your gym with quality equipment will be expensive on the front end, but will help keep your members coming back, month after month.
Another aspect of your gym that is important to customers is the staff. Clients expect fitness staff to be knowledgeable and friendly. Hiring workers that are familiar with the fitness world and have excellent customer experience is imperative to keeping your members happy. Qualified fitness professionals will cost more to employ than part-time, inexperienced workers, but they will provide a better service to your clients and help to keep your membership count up.
Having all of these components in place before opening the doors to your Fitness 19 location will help to ensure a smooth opening and operation for the beginning months. It is estimated that it will require between $593,000 and $1,606,000 in start up costs for a new location. This number may be daunting to some entrepreneurs but bear in mind that there is no charge for the license and that a lot of this cost is associated with the actual stocking and operation of the location. Quality fitness equipment costs a lot, but will not need to be purchased on a rotating schedule, like stock in a restaurant or retail location would be. Equipment may break or need to be replaced after extended use, but fitness centers require very little in rotating stock, which can mean lower monthly costs as opposed to other kinds of franchises.
Aside from the start up costs, most franchisees also have to be prepared to pay their franchisors royalty and advertising fees. Fitness 19 does not charge either of these. This will save the franchisee a lot of money over the course of the license, as the average rates are 6 percent in royalties and 2 percent for ad fees. Over the course of a 10 year initial license period, this can add up to a pretty high sum.
Fitness 19’s Current Franchise Performance
The lack of a license fee and ongoing fees should not automatically mean it is the best choice to open. As with all business, research is strongly recommended before making decisions on where to invest. A $0 license fee is only a good thing if the franchise has a good chance of being profitable and prosperous. To determine the likelihood of its success, let’s check into the performance of other Fitness 19 locations around the country.
First, we will look at the net franchise growth rate by comparing the number of locations that are opening against those that are closing. Fitness 19 first began selling franchise licenses in 2009. By 2010, they had grown to 129 locations, but that was where their growth stopped. Currently, Fitness 19 has a net franchise growth rate of -10. This means that from 2010 until 2016, 10 more Fitness 19 locations closed than opened. The national average growth rate for franchises is 97. Clearly, Fitness 19 is experiencing some issues within their system that is causing them to lose locations at a decently rapid rate.
When looking at their turnover rate, which is the percentage of locations that have transferred, been terminated, reacquired, or not renewed, the story does not get much better. Their current turnover rate is 6.21 percent. This number would not be bad if it were paired with a mid-to-high positive growth rate, but that is not the case for Fitness 19. They have a negative growth rate and a turnover rate that borders on dangerous. While neither of these pieces of data prove to be a guaranteed death sentence for a franchise, they do point to some pretty significant problems with the franchise system itself.
Generally speaking, poor growth patterns and high turnover rates can be explained due to slow economies or bad geographic location. In this case, the numbers appear to be too extreme to simply be related to these factors. Fitness 19 is losing locations and their presence in the country is diminishing. They are still franchising locations and attempting to bring their numbers back up, but it does not seem to be working.
Purchasing a license and opening a Fitness 19 location will come with some struggles. There’s no guarantee that the location will fail, but there are plenty of indicators that say that Fitness 19 is an unhealthy franchise system. Unhealthy franchise systems can be toxic to their owners and unstable in their markets. It is possible for individual locations within the system to survive and thrive, despite the issues plaguing their franchisor, but should the franchisor go under, they will take each location with them, even the successful ones.
Encountering a franchise that offers a free franchise license can often feel like winning the lottery. However, without looking fully into the nature of the franchise and their track record, that incredible deal could potentially lead to financial ruin of the franchisee. It is strongly encouraged that the entrepreneur heavily weigh the pros and cons of the license before making the investment. Fitness 19 has a good premise to the product they are offering, but, on some level, they are failing to bring that product to the fullness of its potential.
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After its all said and done, you’re lucky to walk out of there each month with a six figure income.
I ended up spending 16 hour days to maintain a franchise business that ended up making me less money than my previous job.
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