The foundation of your facility.
Why do people join health facilities? It may seem like a complex question. In reality, there are multiple answers. Facilities have evolved in the level of services they provide and are constantly perfecting existing services like the locker rooms or childcare services. While these are added bonuses that will attract members to your facility, let’s not forget about the basics: the equipment. The equipment is the foundation of your facility and around the equipment come the unique programs, services and perks that members have come to love.
How do you acquire equipment?
Treadmills, elliptical trainers, bikes, strength equipment and more are all available in today’s health facilities. The facilities that have it, maintain it and refresh it on a regular basis have a distinct competitive advantage over those that don’t.
One of the benefits of our industry is that facility owners can closely correlate their equipment expense with the revenue that their equipment generates. Then why is it that time and time again we see facility owners purchase their equipment outright or take out a line of credit at their bank to buy equipment? Is this the best approach?
There is a solution.
There is a solution in the market that gives facility owners freedom from their equipment’s depreciation and more closely matches their revenues to their expenses. An operating lease, also referred to as a Fair Market Value (FMV) lease or a true lease, gives the facility owners the liberty to pay a low fixed monthly payment and match that payment to a percentage of the revenue it generates. At the end of the lease term, the facility owner has the option to purchase the products for its FMV or return the products and lease fresh new equipment.
Maintenance Expense. Every 36 months a facility can offer its members the latest and greatest commercial fitness equipment manufacturers have to offer and owners never pay out of pocket for parts or service calls.
Lower upfront costs. Many leases do not require upfront payment, so a facility owner can preserve their cash, acquire the equipment and focus on generating revenue.
Tax deductible. Lease payments can often be deducted by a business as a business expense. This is true with most leases that are classified by the IRS as “Operating Leases.”
Flexible terms. Leasing is tied to an asset, like fitness equipment, so leasing companies view the security of the transaction as the facility owner’s ability to pay the lease back coupled with the present salvage value of that asset.
Easier to upgrade equipment. Leasing allows health club owners the ability to address the problem of obsolescence. You are free to lease new, higher-end equipment after your lease expires or keep it — it’s your choice.
Manufacturer leasing solutions are best. Fitness equipment manufacturers do millions in leasing every year with banks and leasing companies and help hundreds of customers lease their equipment. Your manufacturer wants to sell you their equipment; therefore it is in the best interest of the manufacturer to find you the very best deal possible. Take advantage of a fitness equipment manufacturer’s direct leasing program and you should be getting the best deal available.
Kevin Malanga is the director of leasing for Core Health & Fitness. For more information email Kmalanga@corehandf.com or call 703-861-1098.
Great article and the timing was perfect (July is time to prepare for the busy winter season).
Great article and the timing could not have been more perfect! Get your facility ready for the busy Fall season.