Getting in shape makes many resolution lists every New Year. Even after January passes, people still find themselves looking for ways to make themselves healthier and stronger. For many, membership at a health club is the easiest, most convenient way to access exercise equipment and achieve their goals.
Retro Fitness is only one of several franchised gyms out there. With so many fitness enthusiasts in this country, it can be hard to find a marketing angle that appeals to a large majority of that crowd. Retro Fitness focuses on offering the same services that the larger chains do, but for a much lower price.
Retro Fitness is currently one of the smaller chains in the industry, but they are hoping to change that by expanding. They are currently accepting applications from hopeful franchisees.
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A Retrospective Glimpse
Retro Fitness was founded in 2002 by Eric Casaburi on the basis of offering intense, comprehensive fitness solutions for all. In 2006, Casaburi began franchising the brand, resulting in growth in various parts of the nation.
Casaburi founded Retro Fitness on the philosophy of “more fitness, less money”. He believes that a quality gym experience should not be an expensive endeavor. By offering the same equipment and amenities that the larger, more expensive gyms do, for a much lower price, Retro Fitness makes fitness services more accessible to more people.
Through this concept, Retro Fitness has been able to grow to over 150 locations across the United States, with an estimated 150 additional units in some stage of development. Their strategies are proving to be successful, giving both the brand and their members a boost toward achieving their goals.
Over the course of their operation, Retro Fitness has expanded both their location count and their offerings within each location. By expanding their services, they appeal to a wider variety of clients, bringing in more members and more revenue.
The average Retro Fitness location will contain several amenities, ranging from movie theaters, to juice bars and chiropractic services. These offerings entice several new clients each month to join Retro Fitness clubs around the country and keep them coming back. Their extensive list of amenities, along with their low monthly membership fee, put them in a very appealing light to those looking for a new fitness experience.
Opening a Retro Fitness Gym
Retro Fitness locations do well when under the ownership of entrepreneurs who are passionate about the healthy lifestyle and fitness level that the brand promotes. These types of owners are most conducive to effective and efficient operation of the location because they understand the needs of the location, and are committed to its success, making them the best candidates for a Retro Fitness franchise license.
A passion for fitness alone does not automatically qualify a candidate for a franchise license. The candidate must also be financial stable enough to afford the costs associated with opening a gym.
Because of the large sum of money required to open a Retro Fitness location, qualified candidates must be able to demonstrate their ability to shoulder the costs. Retro Fitness requires each franchisee to have a net worth of at least $1.5 million dollars. Of that, they must also be able to produce $300,000 in liquid cash.
Retro Fitness does not directly offer any financing options to their franchisees, but they do partner with some third party companies that provide business loans. The franchisee may use the loans for any facet of the business ownership process, including securing the location, purchasing the fitness equipment, and the costs associated with staffing.
The franchise license will run $69,000. Veterans of the Armed Forces are eligible for a 10 percent discount on the license fee. On top of the franchisee fee, the new owner will also need to account for the startup costs. Purchasing the license does not mean that Retro Fitness hands over a fully-operational gym and the owner gets to hit the ground running.
In fact, it’s quite the opposite. The franchisee will be responsible for building the gym from the ground up, literally, in some instances.
If the franchisee is unable to locate or secure an already-erect space that is large enough to house the fitness center, they will have to construct an entirely new building. With the space ready, it will be time to fill it with all of the latest fitness equipment, tanning beds, office space, locker rooms, and other necessary accoutrements to make it truly a Retro Fitness location.
The cost to accomplish all of this, as well as to hire and train staff and get the location off the ground is estimated to fall between $944,000 and $1,593,000.
Operating a Successful Retro Fitness Location
With the location open, it will be crucial that the owner stay on top of their game to ensure the continued success of the gym. The goal should be to attract and retain members on a growing basis, while continuing to provide the best service. Locations that achieve this have the best chance at succeeding in the market.
To help on the journey to success, Retro Fitness will be there as a guide through the opening and launching process, as well as throughout the life of the franchise license. They will provide initial training to the franchisee to ensure the staff at the new location is educated properly on the practices and policies of Retro Fitness. They will also provide assistance with the site selection process.
During the operation of the location, Retro Fitness will also be there to provide ongoing technical support. Computer systems can crash all too often and getting them back online is important to the efficient running of the business. With guidance and help from the Retro Fitness corporate team, the franchisee is more likely to correct these problems and get back to serving members sooner rather than later.
They will also provide ongoing training and support to ensure each location is able to stay up with the times. In the ever-evolving world of fitness, with the new machines, classes, and training techniques that are constantly being updated, the Retro Fitness staff will need to have continuous training to stay current. This will help to keep each location operating at the optimum level and remain competitive in the fitness center industry.
As part of the relationship between franchisor and franchisee, the franchisee will be expected to pay all ongoing fees to the franchisor on time according to the contract that was signed. Retro Fitness charges their franchisees a royalty fee at a rate of 5 percent. This fee is how Retro Fitness makes their money as a franchisor.
The other ongoing fee that franchisees will have to pay is the advertising fee. This goes to help cover the cost of all advertising that is produced and distributed by the franchisor. To help recover their costs, Retro Fitness charges each franchisee a fee in the form of 2 percent of their gross total sales.
By staying in good standing with the franchisor and continuing to pay all fees on time, franchisees have access to all of the perks and amenities that go along with being a part of a franchised organization. Stand alone businesses do not have to pay any ongoing fees to a parent company, but they also do not have the help and support that franchisors can often provide.
Retro Fitness Franchise Performance
When examining a franchise opportunity to determine whether or not it is a viable choice, the first thing most potential investors look for is the performance of the chain. Chains that are high performing are generally more likely to be good money makers for their owners.
Part of the process of determining the potential of a franchise is to examine how well they have been growing. Retro Fitness has been selling franchise licenses for 12 years and they have managed to grow at a respectable rate in that time. While they are still a considerable amount behind other, larger chains, their ability to grow in an already competitive market is something to consider.
They currently boast over 150 locations spread throughout 17 states in the country, and have announced plans to open an additional 150 locations in the near future. That respectable level of growth is a good sign in a young franchise chain. It’s slow enough that they could spend the first decade working out any issues within their system and correcting them before onboarding large numbers of new franchisees. Chains that grow too fast tend to collapse under the weight of a system that does not have the infrastructure to sustain them.
Retro Fitness has yet to break into the international market, but are instead focusing on their United States development first. No concrete plans have been announced to pursue international franchising, but it can’t be ruled out yet. Potential franchisees outside of the United States will have to wait a little longer to hear if Retro Fitness will be making its way to their part of the world.
Another aspect of Retro Fitness’ performance to consider is how well their locations fare financially. Each franchisee is looking to turn big profits with their investment, so purchasing a franchise license with a chain that doesn’t make much money is not high on the priority list.
Retro Fitness reports that the top 10 percent of their locations earn an average of about $2.2 million each year. Of that $2.2 million, they report $628,000 in earnings before interest, taxes, depreciation, and amortization. While these look like good figures, it’s important to remember that this is only the average for the top 10 percent of all locations. There are no reports on the averages for the other 90 percent.
Choosing a Gym
Weighing all of the information gathered during the discovery process can be a difficult task. With so much data to consider, it can often become overwhelming. Finding the aspects of the franchise that are most important to them personally can be a good way for the potential franchisee to focus on the decision.
Having a franchise that they can be passionate about should be near the top of the list. One of the best parts of entrepreneurship is the freedom to choose the line of work being performed. Investing in an industry which holds no interest for them, kind of defeats the purpose of what the entrepreneur is looking for. They must have interest to allow them to be fully invested in the project. An interest in the fitness industry is a must for a Retro Fitness franchisee.
Retro Fitness is also a good choice for those franchisees that are looking for a more absentee type of investment. Because they allow absentee owners, the franchisee does not have to be fully involved in the daily operation of the location, but can hand it off to a team of managers, or even an operations manager. Not all franchisors allow this type of ownership, so for those to whom this is important, Retro Fitness fits the bill.
A problem with Retro Fitness that any potential franchisee may want to address before getting too far into the discovery process with the franchisor is that they have not fully disclosed the earning potential for the franchised locations. They have shown the average revenue generated by the top 10 percent, but that is only a small glimpse at their best-performing locations. In order to make an informed decision, the candidate must have all of the statistics regarding earnings.
That’s not to say that the candidate should have unlimited access to the earning statements and profit and loss reports for each location, but average figures and a realistic idea of what can be expected financially is not too much to ask. Franchisees need that data in order to make a sound choice, and Retro Fitness should be prepared and willing to provide it.
If their true average earning potential is respectable, now would be the time to invest with Retro Fitness. They are still on the small side and are expecting big growth over the next few years, putting them in a good position to welcome new investors and be able to foster that relationship. They are a rising brand, and the higher they rise the higher they take their franchisees.