Franchise Report

Photo courtesy of 9Round.

Photo courtesy of 9Round.

Key information on some of the most popular fitness franchises.

9Round Fitness

9Round Fitness is a boxing and kickboxing franchise founded in 2008 in Greenville, S.C. by founder and CEO Shannon Hudson. Hudson earned the knowledge to run a boxing franchise as a professional boxer. During his time in the ring, he fought in the U.S., Europe and Canada, and won the International Kickboxing Federation’s Light Middleweight World Champion Title in 2011.

Despite his passion for boxing, Hudson explained that he’d, “always been a business guy.” Using his knowledge of the industry he earned while boxing, opening a franchise concept seemed like a natural fit. “I wanted to bring the training that professional boxers and kick boxers do to the average person,” he explained.

9Round Fitness is known for its fast-paced, 30-minute, full-body workouts that sculpt its members’ experiences. The concept began franchising in 2009, and exploded in 2012 and 2013, going from 23 franchises to 64.

Hudson hopes the franchise will reach 100 locations by the end of 2013, and believes the company is well equipped to reach its goal. “The growth lately has been fast and furious,” he said. “We’re working on new franchising plans and increased support for franchisees. We’re constantly tweaking the experience for both members and franchisees to make it better.”

Estimated growth per year: 30 plus
Total clubs open: 64
Start-up costs: $50,000-$60,000
Franchisee fees: $18,000, $449 royalty
Total members: 15,000

Anytime Fitness

Founded in 2002, Anytime Fitness has set a high standard for what defines “fast growth.” With more than 2,200 clubs serving close to 2 million members, the franchise has grown by at least 250-300 clubs each year for the past six years. Anytime Fitness clubs can be found in all 50 states in the U.S., and multiple countries including Canada, Mexico, Australia, New Zealand, England and more.

Dave Mortenson, the president and co-founder of Anytime Fitness, explained that the company has been well equipped for its precedent-setting, rapid growth. “We’re very pleased by our rate of growth,” he said. “We’re well aware of the dangers associated with growing too fast. That’s why we place such a big emphasis on making sure that we have a sufficient corporate staff and resources to properly support our franchisees. Anyone can open a fitness club. The real skill is anticipating new consumer demands and delivering on those demands while helping club owners and staff operate as efficiently and effectively as possible.”

According to Chuck Runyon, the CEO and co-founder of Anytime Fitness, that growth is expected to become more increasingly focused on international soil. “Currently, about 80 percent of our clubs are located in North America,” he said. “Now that we have clubs open on five continents, we expect that within a few years, only 50 percent of the new clubs we open each year will be in North America. In addition to Australia, where we have nearly 300 clubs open, Anytime Fitness clubs have been opening at a rapid rate in Japan and the United Kingdom and elsewhere. The business model really does work nearly everywhere.”

Estimated growth per year: 300 clubs
Total clubs open: 2,233
Start-up costs: $78,599-$345,499
Franchisee fees: Up to $29,999
Total members: Nearly 2 million
International clubs: 433

Ben Midgley. Photo courtesy of Crunch Fitness.

Ben Midgley. Photo courtesy of Crunch Fitness.

Crunch Fitness

Doug Levine founded Crunch Fitness’ concept in New York City in 1989. Now, co-owned by New Evolution Ventures (NeV) and private-equity firm Angelo Gordon, it wasn’t until 2010 that the concept became a national franchise. In three years, Crunch Fitness’ franchise model has seen great success, growing from a handful of franchises to 40 open and over 200 sold.

The first Crunch Fitness franchise opened in April 2010 in Portland, Ore. Ben Midgley, the Crunch Franchise president, explained that Crunch Fitness’ franchise clubs differ from its corporate clubs in both size and amenities. “The franchise clubs offer slightly less amenities, but are very well priced,” he said.

Named “A Hottest Franchise to Own” by Entrepreneur Magazine in 2012 and 2013, Midgley said he’s optimistic about the franchise’s future. “We’re in a great position,” he said. “Sales have been growing substantially. I feel very strongly we’re the most competitive model in the industry — we can go into almost any market.”

Estimated growth per year: 100 %
Total clubs open: 41
Start-up costs: $1.2-$1.5 million
Franchisee fees: $25,000, 3% royalty
Total members: Over 220,000
Number of international clubs: 5

CKO Kickboxing

In 1997, Joseph Andreula established CKO Kickboxing in Hoboken, N.J. A franchise mainly found on the East Coast, CKO Kickboxing has been making its way across the U.S., with facilities now located in both California and Washington, in addition to New Jersey, New York and South Carolina.

“In the last two years, we’ve tripled our number of CKO Kickboxing locations,” said Andreula. “In the upcoming year, our goal is to open a CKO Kickboxing franchise in every state. Our focus will always be to improve the health and lives of our members.”

That focus is evident in the franchise’s programming, which revolves around a kickboxing class likened to be “the number one fat burner.” For beginners and advanced members, participants in the class punch and kick heavy bags, at their own pace.

Estimated growth per year: Undisclosed
Total clubs open: 40
Start-up costs: $115,737-$303,597
Franchisee fees: $30,000, 7% gross revenue
Total members: 43,627

Gold’s Gym

Gold’s Gym, founded in Venice Beach, Calif. in 1965, has recently been in the spotlight. In June 2013, Gold’s Gym International (GGI) acquired 17 Fitness First Health Club locations in the Washington, D.C. metro area. A month later, in July 2013, the company unexpectedly announced that Jim Snow, the CEO and president of Gold’s Gym International and Todd Scartozzi, the COO, were no longer with GGI. As of this issue’s publishing date, Gold’s Gym’s CFO, Aaron Watkins, had been serving as acting president of GGI.

Tim Hicks, the senior vice president of franchising and licensing for Gold’s Gym, is optimistic about Gold’s Gym’s growth internationally and throughout the U.S. “We have an iconic brand with state-of-the-art systems, training and marketing,” he said. “We are experiencing aggressive growth and expect it to continue at a rate of 10-20 percent, both domestically and internationally, over the next five years. I expect that growth will come from both existing franchisees as well as new partnerships in the pipeline. As always, we aim to be the preeminent solution to the world’s total health and fitness needs.”

According to Hicks, Gold’s Gym plans on focusing its international efforts in Latin America, Canada and Mexico. “We currently have domestic target markets identified that we believe are ideal for new growth,” he explained. “Internationally, we are continuing our growth through master franchise agreements with a focus on Latin America, Canada and Mexico. With more than 48 years of experience, Gold’s Gym is the strongest name in fitness with the highest brand awareness in the industry, which gives Gold’s Gym franchisees an instant competitive advantage.”

Estimated growth per year: 6-8%
Total clubs open: Approximately 665
Start-up costs: $1 million-$4 million
Franchisee fees: 3-5% of gross revenue
Total members: Over 3 million
International clubs: 230

Kosama

In 2012, Snap Fitness acquired Kosama, a unique group fitness franchise co-founded by Kory Pohlman, Sarah Pohlman and Matt Braet. Since the acquisition, there have been three Kosama/Snap Fitness combination clubs opened in Shakopee, Minn., Maple Grove, Minn. and Peach Tree City, Ga.

Peter Taunton, the founder of Snap Fitness, explained that a year later, he is confident in his company’s decision to purchase the group fitness concept. “The beauty of Kosama is that it’s unlike anything else in the industry today,” he said. “Having the ability to work out in that group setting, having people all around you motivating you to keep pushing, but also having the ability to exercise at your own level, helps our members feel comfortable, motivated and empowered. Our franchise owners have that same sense of motivation in helping members to reach their goals, which makes Kosama such a strong brand.”

Taunton explained that opening international clubs is the company’s new focus for the group fitness franchise. “We’re beginning to open our first Kosama locations overseas, and the concept is already gaining tremendous success in Australia,” he said. “This year, we’ll continue our U.S. and Australian expansion efforts, while also branching out to other corners of the world.”

In addition, the company is preparing a new concept that will allow Snap Fitness franchisees to license the Kosama program and offer it inside of their existing locations.

Estimated growth per year: 20%
Total clubs open: 30
Start-up costs: Between $69,000-$79,000
Franchisee fees: $27,500
Total members: 62,000
International clubs: 2

Photo courtesy of Orangetheory Fitness.

Photo courtesy of Orangetheory Fitness.

Orangetheory Fitness

In 2010, Fort Lauderdale, Fla. gave birth to a new franchise with an interesting moniker. Orangetheory Fitness, a heart-rate based interval-training franchise co-founded by partners Ellen Latham, David Long, Jerome Kern and Doug Payne, has made its way out of Florida and into 16 U.S. states and Canada.

“As a franchise, we offer a valuable product and strong, consistent brand,” said David Long, the CEO and partner of Orangetheory Fitness. “Our expertise as franchisors with a track record of success gives franchisees an invaluable road map for running their business and marketing their studio. Another key with our model is convenience. We are different from big-box gyms. Orangetheory’s small studio footprint allows us to open in high-traffic areas frequented by our target market. This is a huge competitive advantage.”

Long expects that competitive advantage to continually grow across the U.S. and internationally. “Our expectation for the future is to have 500 successful studios internationally in five years and be the most notable, rising wellness brand in the world,” he said. “Orangetheory Fitness will be associated with results and an amazing customer experience.”

Estimated growth per year: 100% in 2013
Total clubs open: 40 plus
Start-up costs: $167,075-$352,475
Franchisee fees: $29,500 to join
Total members: Over 40,000
International clubs: 5

Planet Fitness

Founded in 1992 in Dover, N.H., Planet Fitness has founded a unique club environment based around “No Judgements.” Since its founding, the franchise has grown to more than 650 locations nationwide serving more than 4.5 million members.

The company recently hired Dorvin Lively as its new chief financial officer. According to Planet Fitness, Lively will lead the company’s finance, treasury, financial planning and supply chain functions, as well as strategic and long-term planning.

A multitude of new locations are expected to open soon across the U.S., including Albuquerque, N.M., Cincinnati, Ohio, Louisville, Ky., Miami, Fla., Prescott, Ariz. and more.

Estimated growth per year: 20-25%
Total clubs open: 665
Start-up costs: $500,000 – $3.305 million
Current Franchisee fees: 5% on monthly and annual fees
Total members: 4.5 million
International clubs: 2

Photo courtesy of Powerhouse Gym.

Photo courtesy of Powerhouse Gym.

Powerhouse Gym

Powerhouse Gym was founded in Detroit Michigan in 1975, by brothers William and Norm Dabish. A well-respected and seasoned brand, Powerhouse Gym gives owners a licensing agreement, versus a traditional franchising agreement. As of August 2013, 300 owners have signed that licensing agreement to open Powerhouse Gyms of their own.

“We’re the only health club chain out there that’s run by gym owners — not CEOs,” said William Dabish, the co-founder of Powerhouse Gym. “So we’re very in touch with our members.”

This year, Powerhouse International will be launching a new fitness concept at Joe Weider’s Olympia Fitness and Performance Weekend 2013. Called “Powerhouse Fx,” the concept is a functional training franchise that will be available for purchase in October 2013. Capitalizing on the trend of functional training, the concept will be a complete functional training facility specializing in speed training, agility and strength. The first Powerhouse Fx will open in Novi, Mich. in September 2013.

Estimated growth per year: 16%
Total clubs open: 300
Start-up costs: $800,000+
Franchisee fees: Initial fee of $25,000, $850 royalty
Total members serviced nationwide: 4 million
International clubs: 110

Snap Fitness

Snap Fitness was founded in 2003, in Chanhassen, Minn., and has continued to experience rapid growth. In December of 2012, the franchise signed master agreements that will bring Snap Fitness to Singapore, Thailand, Hong Kong, the Philippines, Indonesia, Malaysia, Egypt and Mexico. Currently, Snap Fitness boasts 1,350 clubs, 186 of which are overseas.

Peter Taunton, the founder of Snap Fitness, explained that international growth is one of the company’s main focuses. “The continued growth and success of Snap Fitness is based on our ability to consistently evaluate the needs of our members, and to incorporate the best technology and value-added services to help them achieve results,” he said. “In addition to our continued domestic growth, we’re in the process of an aggressive global expansion, having found that our business model and value proposition translates to all corners of the globe.”

In 2012, domestic growth was catapulted by Snap Fitness’ partnership with Rolling Strong (which provides wellness solutions to the nation’s professional truck drivers), bringing Snap Fitness to Pilot Flying J Travel Centers or travel plazas in multiple states, including Texas, Illinois, Tennessee and Georgia.

Estimated growth per year: 30%
Total clubs open: 1,350
Start-up costs: $64,000-$185,000
Franchisee fees: $19,500
Total members: 900,000
International clubs: 186

By Rachel Zabonick

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