Is Buying a Fitness Franchise a Solid Investment?
The Des Moines Register has an interesting article on the fitness business market in Des Moines. Included in the article is a discussion on the growing number of 24/7 franchises in Des Moines. So, it begs the question, "Is buying a fitness franchise a solid investment in this market?"
I have represented a number of franchisees in the fitness industry. Based upon this experience, I would say the competition is fierce and a prospective franchisee needs to carefully consider whether to purchase a fitness franchise gym given the current market conditions in Des Moines. Specifically, I would look very carefully at the trends of the franchisee concerning the number of outlets. You should closely review the information regarding outlets. Carefully study the number of transfers and not just the number of closures. A high number of transfers may be an indication that franchisees in the system are struggling, but unprofitable gyms have not been shut down. Of course if there is a significant number of closures in the system that is definitely a bad sign. The reality is that profitability in this market with a fitness franchise gym is often a tough task to achieve.
Be sure to visit with current franchises and franchisees that have left the system. Ask the franchisor whether its records are updated so you can talk to as many franchisees (and former franchisees) as possible. Consider what will differentiate your facility from other gyms in the area.
I am not saying that profitability cannot be achieved in this industry but I encourage any prospective fitness gym franchisee to conduct thorough research (and maybe think twice) before making the investment.
FYI: Coming soon I have developed a new niche site related solely to franchise issues called RushonFranchise. It will include programs on how to research and buy a franchise for franchisees and how to develop a franchise program if you are a franchisor. I will interview experts in the industry and will have in-depth materials on franchising. For those of you that are regular readers, this is the ever-evolving Interactive Learning Environment I referenced previously on this blog.
Another well-written blog entry. Nice work, Rush! I too have noticed the explosion of smaller fitness facilities around the metro and have been wondering how they could possibly all be profitable. Clearly, not all are. It will be interesting to see how many are still around in a couple of years.
Rush is absolutely right as there has been a huge explosion over the past 4 years in 24 hour access gym franchises. They are literally popping up everywhere and they are trying to compete with the larger corporate gyms like 24 Hour Fitness. Franchisees have been sold on the idea that the business runs itself. Unfortunately, in Denver we have seen many of these gyms close because they just don't offer the amenities that some of the 'mega' membership gyms offer. The key is you need to pick a fitness franchise that offers something unique from the average membership facility. I think we are at capacity with the 24 hour access fitness franchise model.
As a person who is involved with the fitness franchise industry I would first say that there is always risk within any franchise model. However, a perspective franchisee must do his or her homework on the demographics of the community and on the fitness competition in the area. A fitness franchise can really be a low-cost business model that can become profitable very quickly if done correctly however, knowing your community and if the particular fitness franchise will work there is the beginning of the process.