Mixed martial arts is a growing fitness trend in the United States. With the increasing popularity of the sport and of its main governing body, Ultimate Fighting Championship (UFC), more and more people are diving in and training to get the fitness results that they desire.
UFC Gym is a chain of fitness centers around the country that focuses on getting athletes in the kind of shape required to be UFC fighters. Not all who utilize these gyms have aspirations of entering the octagon, but most of them share in the desire to get into better physical shape, and to push their bodies to their limits. The unique offerings of the gyms help their members reach their goals and get into the best shape of their lives.
UFC Gym is looking to expand and bring the UFC lifestyle to more people around the United States.
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Ultimate Starting Point
UFC, the parent company behind the UFC Gym chain, has been around since the early 1990’s. It began as a novelty competition, pitting athletes from different styles of martial arts against each other in an attempt to find the best style. The first event did so well on pay per view television that they continued to produce more and more until it had evolved into a sport in its own right.
The mainstream popularity of the sport really hit its stride in the late 1990’s and early 2000’s. Many cite the appointment of Dana White as the president of UFC as the turning point for the league. Since his appointment, the league has increased dramatically in popularity and has turned itself into a multi-billion dollar entity.
Due to the increasing popularity around the world, UFC decided to capitalize on this in many ways, one of which being the introduction of the UFC Gym chain. Watching others enter the octagon and fight it out has inspired many athletes to transform their bodies and train for the kind of combat they see in these fights.
The gyms come in two different styles, but all of them are built around the same goal: to help members transform their bodies. They offer group classes, personal training courses, and even programs for youth.
The gyms start out with a space of at least 3,000 square feet, with most of them being much larger. They offer state of the art equipment and highly trained personnel to help each member achieve their goals.
The first of the two different styles of gyms are the Signature Clubs. These gyms are open 24 hours per day, 7 days per week. They are massive, with most of them boasting between 35,000 and 45,000 square feet of space to in which to train. They have a huge array of amenities, including retail stores, dry saunas, and kids clubs. The Signature Clubs offer more to their members, and are, generally, more accommodating to families with children of all ages.
The regular UFC Gyms are usually much smaller in physical size. They typically range in size between 8,000 and 15,000 square feet. These centers are more focused on the actual fitness portion and less on the amenities. They still have the retail store and many of the same areas devoted to fitness, but they lack the strength training equipment, kids club areas, and sauna that the larger Signature Clubs have. Most of them are also not open 24 hours a day.
As of now, there are less Signature Clubs than regular UFC gyms in the United States. This is most likely due to the amount of space required to open a Signature Club, and the cost to fill it with the necessary equipment.
Whatever the goals of the franchisee, determining which kind of UFC Gym to open is the first step in pursuing this opportunity. There are vast differences between the two, and they will come with much different price tags and responsibilities.
Stepping into the Octagon
Opening a UFC Gym can be an exciting endeavor for fitness enthusiasts. With the fitness industry booming in the United States right now, there is ample opportunity to make a huge impact and even bigger profits. But, it’s going to take quite a bit of work to get there, just like starting any new fitness routine.
The first step is to submit the inquiry form. UFC Gym makes this very easy by having it on the very first page of their franchising website. Filling out and submitting this form will result in a representative contacting the candidate and speaking with them about the opportunity. It’s the way to open the doors of opportunity with UFC.
Following that initial conversation, the candidate will be sent both a copy of the application and a copy of the franchise disclosure document. With UFC Gym, this document is received much earlier in the process than with most other franchise opportunities. This gives the candidate a chance to read it and decide if UFC Gym will be a good fit for them, before wasting any time filling out the application and going through several steps of the process.
Reading the franchise disclosure document gives the candidate access to all of the pertinent information about the franchising relationship. It’s the most important piece of information the candidate can have, so it’s important that they take it seriously and read it thoroughly and carefully, making sure to note anything that seems off or that does not make sense. That way, they can ask their representative about it before moving forward with the process. Anything that they are not comfortable with should be taken as a sign that they should not pursue the opportunity.
Once the candidate is in agreement with the franchise disclosure document, and their application has been accepted, they will be invited to an in-person meeting to explore a working UFC Gym. They will also have a chance to meet with some of the top executives from the brand to talk about the opportunity and get a feel for what it’s like to own a UFC Gym. This meet and greet allows both parties to get to know each other better and to feel out the potential for a beneficial business relationship.
After this meeting, the franchise development team for UFC Gym will make a decision regarding whether or not to extend an offer for a franchise license. Those that are accepted will receive a contract to sign and pay their licensing fee.
The cost of a franchise license with UFC Gym is $30,000, which is actually very reasonable for a fitness center franchise. Many other opportunities charge license fees that are much higher.
In addition to the license fee, the new franchisee will also have to begin gathering the funds with which they will create the fitness center. These are estimated to run between $706,000 and $1.5 million.
To ensure each franchisee can handle these costs, they have some financial requirements in place that will be verified during the application process. They require each franchisee to have a net worth of at least $300,000 and at least $100,000 available in liquid cash. These requirements can go up, depending upon what kind of gym the franchisee wishes to open, and if they are seeking a multi-unit contract. Signature Clubs and multiple units obviously cost more to launch, so they require higher net worths and investable funds to start that process.
UFC does allow their franchisees to finance portions of these costs if necessary. They do not offer any in-house financing but they do work with some third party lenders that they allow the franchisees to use. Most of their franchisees have at least some of their start up costs financed, as the minimum requirements for cash are much lower than the actual costs to open one of their gyms.
With the contract signed and the financing acquired, the new franchisee can begin working with UFC Gym to find the perfect place to construct their fitness center.
Training with the Best
UFC Gym will work closely with the franchisee to locate the perfect place in which to open the new gym. They provide their assistance with the site selection to ensure that the fitness center is located in a place that is both conducive to attracting members, and easily accessible. This assistance is just one of the many ways that UFC Gym is involved with the franchising process.
They also offer initial and ongoing training to all of their franchisees. These trainings can be on a variety of different topics but all are aimed at helping the franchisee to run the best possible fitness center.
The initial training will cover all of the things that the franchisee will need to know prior to their grand opening. This will include how to attract members, how to run the business side of the fitness center, hiring and training staff, and maintaining the UFC standards at the gym. It will include 24 hours of classroom training, as well as 40 hours of training on the job.
UFC Gym franchisees will also receive ongoing training throughout the life of the license. These will help them to stay on course with their goals, introduce them to new products or services that are to be offered in the fitness centers, and refreshers for company standards.
By offering these ongoing trainings, they keep their franchisees sharp and up to the task of running their locations, while also ensuring that they have met their requirements of providing the franchisees with support. It works out well for both parties, as they both benefit from the amplified performance of the location.
In addition to all of the training provided by the franchisor, the franchisees are also entitled to some other forms of support throughout their relationship with UFC Gym. In an attempt to give their franchisees every necessary tool to succeed, UFC Gym provides them with marketing and advertising support, proprietary software to help them operate the business, and a toll free line for members to call and gather information without having to contact the local fitness center directly. All of these benefits serve to help streamline the business and take care of some of the tedious work for the franchisees.
By offering advertising support, UFC Gym not only handles nationwide and online marketing, they also provide advertising templates that the franchisees can use for local ads. This saves the franchisee the time that it would take them to handle these projects themselves, and, instead, lets them focus on making sure their location is performing at the optimal level.
The proprietary software allows the franchisee to keep track of the business portion of the fitness center, such as memberships, without having to devise their own plans. Most franchisors have developed some sort of software to work with their product and service offerings, but not all of them have done so, which can cause problems when franchisees attempt to organize their thoughts.
The toll free line can free up valuable time and resources at the local level by sending members and inquiring parties to that phone number to have their questions answered or concerns addressed. This leaves the employees at the fitness center focused on their jobs and not tied up on phone calls for basic information requests.
UFC Gym needs a way to fund all of these support provisions, so they charge each franchised location a set of ongoing fees, which are broken down into two different categories.
The first category is the royalty fee. This is a percentage of the gyms’ gross total sales that goes toward funding the training and support that is offered by the franchisor. It also serves as UFC Gym’s source of income from the franchised location. The current rate for this fee is 6 percent of gross total sales.
The second category is the advertising fee, which goes toward paying for all of those advertising and marketing efforts that the franchisor has in place. Advertising on any platform is not cheap, so they charge this fee to help recoup some of the cost of producing and distributing those materials.
Paying these fees is an integral part of the relationship between franchisor and franchisee. Failure to pay them will cause the franchisee to fall out of compliance with their franchisor, as well as placing them in breach of contract, which can lead to a lawsuit. As a potential franchisee, it is important that each candidate understand that most franchisors are going to charge these fees and that they are a normal part of a franchising relationship. Having the support and guidance of a franchisor comes at a price.
Cutting Weight
Being a product of the incredibly popular UFC, it would be expected that UFC Gym would be a thriving fitness center. They have seen success in their years of existence, but their total history has proven to be a bit unstable.
Back in 2009, there were 117 total UFC Gyms in the United States, all of which were franchised. Over the next year, that number would take a sharp downturn, resulting in a paltry location count of only 59 by the end of 2010. It’s unknown at this time what caused the major shift.
Not allowing that event to crush them, they began rebuilding and focusing on getting their numbers back up to where they used to be. UFC Gym spent the next five years growing their presence and it paid off. By the end of 2015, they had surpassed their goal of regaining all of those lost locations and reached a count of 125 worldwide. Only one of those gyms was located outside of the United States.
Unfortunately for them, the success didn’t last long. That year was the last time that they posted a positive location growth. Since 2015, they have regularly closed gyms and seen a dramatic decline in their franchising efforts.
Whereas their entire location roster used to consist of mainly franchised units, with maybe a handful of corporately-owned gyms, that has changed. Their number of corporate gyms increases every year, while their overall count, and their franchised locations continue to decline.
As of the end of 2018, there were 17 corporate UFC Gyms, 86 franchises in the United States, and 30 franchises internationally.
Because they are continuing to promote their franchise licenses, it is unlikely that they are attempting to move away from a franchising model in the United States, which would be possible. They could simply buy out any franchised locations, or absorb them as their licenses expire. Instead, it appears that they are experiencing some sort of issues within their franchising system.
If that is the case, it makes it harder to feel comfortable entering into a franchise relationship with them. When a franchise system is losing locations at a steady rate, it could be a sign of a couple of different issues. The first is that the fitness centers are not making enough money to sustain themselves. This is a problem because it casts serious doubt on a new franchisee’s ability to open a successful gym. If the current locations aren’t making enough money, it’s unlikely a new one will.
The other possibility is that the franchisees are unhappy with the relationship with UFC Gym and are either seeking ways to get out of the contract, or simply riding them out to their expiration and not renewing. This is also problematic for potential franchisees. If a business is making good money but the relationship with the franchisor is so unbearable that the franchisee is willing to let it go just to be done with UFC Gym, it’s probably not an arrangement that other investors will want to get into.
No matter what the actual cause of the problem is, it doesn’t look good for the UFC Gym franchise system.
Fight or Flight
It can often be appealing to jump into a franchising agreement with a company with a big name like UFC. They offer a feeling of safety and confidence in their product offerings that can trick many franchisees into thinking that it’s a sure thing. UFC Gym is proof that that is not always the case.
The troubles that have been plaguing them for several years now are proving to be more than their franchising system can handle. They are losing their locations at a steady rate and, while it’s not a complete guarantee that they are doomed, it is a sign of hard times to come.
Even though the fitness industry is currently booming in this country, not all fitness center chains are created equal, and not all of them are able to successfully capitalize on the opportunity that the industry presents. UFC Gym’s unique approach to fitness appeals to a wide range of athletes, but it can also be intimidating for those that are just starting out, or who do not feel that they are in good enough shape to use the facilities.
Their decline in locations shows potential franchisees that they are having problems with their business model and that now may not be a good time to invest. It’s true that they will not be able to rebound and increase their location count without some trusting franchisees who choose to invest despite the current problems, but even a stop to the loss would be helpful. If they can level off and prevent themselves from losing any more locations, it would show entrepreneurs that they have a handle on the problem and that it is likely to be safe to invest once again.
For the time being, it’s best to leave UFC Gym alone and let them work out their own issues. Only after they get themselves out of their current pattern and begin working on the rebuilding phase will it be a good idea to explore this option. It’s just too big of a risk at this point.
Entrepreneurs looking for a fitness center chain with which to invest should explore other options. There are plenty of others that are currently thriving and growing at a respectable pace. Investing with a chain that is struggling would be a poor judgement call. UFC Gym is not strong enough at this point in time to warrant pursuing a franchise license.