Owning A Gym Franchise: Is It Worth The Cost? | Complete Guide

If you’re an aspiring gym business owner, you have two options: Purchase a gym franchise or develop a gym brand on your own. Building a fitness brand takes years of hard work and lots of resources. Famous brands such as “Gold’s Gym” offer franchises at a similar cost to what it would take you to develop a gym on your own. 

So, owning a gym franchise: Is it worth the cost? Owning a gym franchise is worth the initial investment. Gym franchises currently account for $4B out of the total $34B health club industry in the US. The brand recognition a franchise affords makes it easier to gain customers. If you have an investment budget of over $100,000, you should consider opening a franchise gym. 

This comprehensive guide will teach you everything you need to know about selecting a gym franchise, funding your venture, and ensuring your franchised gym generates profit as quickly as possible. 

Pros Of Opening A Franchise Gym

✔Brand Recognition

Franchise gyms retain full rights to use the parent company’s brand name, trademarked taglines, and designs associated with the brand. 

Brands such as “Gold’s Gym” and “Planet Fitness” have a strong brand following, and these brands are the most reputable gym brands in the world. 

Fitness enthusiasts are actively looking for the branches of brand gyms in their city. Instead of spending decades establishing your own fitness brand, you can piggyback off existing fitness brands from day 1.

✔Support Network

When you join a franchise, you automatically become part of a more extensive network. Many franchises have hundreds of gyms throughout the country. The gym chain can put you in touch with other franchises in your state, which can give you insight into the local market and how to thrive there. 

You can talk to hundreds of other franchise owners who have had success with that franchise and replicate what they did. This support network reduces your chance of failure by a significant margin.

✔ Successful Business Model

Established franchises provide proven business models. Usually, the first gym takes off and becomes dominant in an area before they start franchising. 

After a gym starts franchising, they learn about the most effective ways to build profitable gyms. They franchisors transfer this knowledge to all their franchisee clients. 

You’ll get access to business blueprints, procedures, employee training, company policies, and other intellectual property that they’ve honed over many years. This process removes a ton of the hard work you’d have to do under normal circumstances because they’re sharing their experience in the industry with you.

✔ Help With Getting Started

Gym franchisors give you their business blueprints and show you how to build a fitness business from scratch. They’ll actively help you during the initial stages. This assistance is to help you develop a gym that meets their standards and to decrease your risk of failure. 

Many franchises require you to consult them about the gym location that requires approval. This process ensures their gym is placed in the best possible location to guarantee profits and represent the brand. 

The franchise company will also help you with the business permit/inspections procedure, making sure your gym meets all safety standards and regulations.

✔ Job Training

Each one of your staff members will receive free job training for the gym. Even though you’ll need to hire certified personal trainers, you’ll still have to train them to work for that particular gym’s brand. 

Most franchise gyms ship their employees to the training facilities where they receive training on-site. The parent company can train dozens of employees simultaneously. This training prepares them to represent the brand and make them more efficient workers.

✔ Lower Equipment Costs

Large gym franchises have connections to manufacturers who can provide lower costs for commercial equipment. Brands such as Gold’s Gym have access to the top manufacturers who can bring the price of equipment down for their franchisees. 

Example: If a commercial treadmill costs $8,000 directly from the manufacturer, they might be able to lower the price to only $5,000 per unit for your gym. Franchising from established gyms is a great way to bring down your total investment costs.

✔ Gym Management Software

Running and operating a gym requires significant work and experience. A fitness studio software is essential to manage and operate your gym. 

The franchise will provide you with the best in class gym management software and have the software set-up to manage and run your gym seamlessly.

They will also provide all the administrative hardware (point of sale) and software that you will need to run your gym successfully.

Cons Of Starting A Gym Franchise

✖ Creative Limitations

The main disadvantage of owning a franchise is that you only own a particular franchise, but you don’t own the brand. You’ll have to get used to operating with creative limitations. 

If you want to change the branding, you won’t be able to because you’re supposed to follow the guidelines exactly. You have to get permission from the parent company about every change you make. 

✖ Strict Guidelines

Many of the top franchises have strict guidelines that you’ll have to follow. It includes guidance on job training and customer retention. 

Franchisors want to maintain consistency in customer experience. You’ll have to check whether you’re abiding by their guidelines continually. You’ll also have to send your employees for training by paying out of pocket.

✖ High Investment Cost

The cost to start a gym franchise is, at times, higher than the cost of starting your own gym. 

Franchising a gym requires not only the initial license fee, but also requires a significant amount of money for the facilities, equipment, and marketing. 

While franchisors only charge $10,000-40,000 for a license, they might require you to have $250,000-500,000 in possession before they approve your license. 

Some high-end gyms like Gold’s Gym require an investment of over $1M and a personal net worth of $2-3M before they issue you a license.

Starting a gym franchise is for investors with deeper pockets due to the high initial investment. If you have less than $100,000 to invest, it’s better to start your own gym.

✖ Royalty Fees

A certain percentage of the revenue your gym produces goes directly to the franchisor. If you thought you only had to purchase a license and you are mistaken. The franchise company is entitled to at least 5-10% of your monthly gross revenue. Some even take as much as 20%. 

• These fees are called royalty fees that you have to pay irrespective of whether you are profitable or not (even though many gyms lose money in their first few months of operation). 

✖ Dependence

The long-term consequences of dealing with a parent company can have adverse effects on your fitness business. In the food industry, the disagreement between Subway franchisees and the parent company is a good example.

For one, your growth opportunities get capped. If your gym is wildly successful, you won’t be able to expand it significantly by opening other branches and starting your own franchises. 

Your fate rests on the success of the parent franchise. If something happens to the parent company, this will reflect in your franchise. 

Let’s say your parent company had a scandal, or the CEO stepped down – the stocks could plummet. This situation would put your livelihood in danger, despite making all the right decisions at your franchise.

Factors Affecting The Cost Of Gym Franchise

Factors that influence the total investment required are the franchise license, size of the gym, equipment used, and marketing. 

For small gyms, if you were to be conservative, you could get away with as little as a $50,000 total investment. This limited investment is possible by purchasing a cheaper $10,000 license fee franchise and spending less on the equipment. 

Mid-range gym franchises can expect to spend $100,000-200,000 in total. For high-end gyms, you will easily spend $500,000-1,000,000 per gym. 

License Fee

The parent company will initially charge you a license fee that allows you to start operating as a franchise. 

This license fee is a one-time fee that you pay, and it can be as low as $5,000 or as high as $50,000. 

Note: You only pay the license fee AFTER you gain approval, not prior. If the company rejects you, you don’t have to pay the license fee.

Equipment Costs

The gym requires equipment designed for commercial purposes. Commercial fitness equipment is more expensive as it has to be suitable for multi-person use and compliant with the latest safety standards. 

For example, you might have to pay 5-10x for commercial running treadmills as compared to treadmills you buy for home use. 

The equipment cost could be as low as $15,000 or as high as $1,000,000. Franchises have high standards for equipment, and many will ask you to purchase brand-new equipment. They also may direct you to partner manufacturers.

Commercial Lease

To rent a commercial space for the gym, you’ll also have to put down a security deposit similar to renting an apartment. 

Most security deposits on commercial rentals are lower than residential rentals and only require three months deposit. Some commercial spaces might not require deposits at all if you can pay the yearly lease in advance. This privilege is for investors with deep pockets. 

However, with a multi-year lease, if you fold your gym before the expiry of the lease, you will still be liable to pay for the entire duration of the contract.

Legal & Business License

You’ll have to hire a lawyer to help you deal with the city administration and gain permits for the gym. The licenses issue at the local level and the mayor’s office can help you get a license for your gym as a commercial entity. 

This process happens after the gym is furnished and equipped. The city sends inspectors to check the safety standards/fire hazards, HVAC systems, electricity, plumbing, etc. 

Once you’ve passed those inspections (1-2 months on average), the city issues you a permit. It’s easier to go through the process by hiring a business attorney.

Business Insurance

One of the largest expenses is purchasing business insurance with large liability insurance coverage for the space and the people. If someone gets injured at your gym and decides to press charges, or the property at the gym is damaged, you’ll need this insurance. 

The total amount you’ll have to spend depends on the size of the gym and the activities conducted. 

Personal Assets

Many franchises will expect you to provide a “backing” in the form of assets, and they expect you to have a high net worth. 

For example, you might have to prove you have at least $500,000 in personal assets (real estate, bank accounts, valuables, etc.) before they issue you a license. 

Some gyms such as Gold’s Gym will require you to have $3M in net worth before they consider you as an investor/operator for a franchise.

Ongoing Costs To Maintain A Gym Franchise

The costs mentioned above are start-up costs (capital expenses) you’ll have to prepare before you consider applying for a gym franchise license. 

Once you open your gym, you’ll also have to prepare for monthly maintenance costs to keep the lights on. The following are the essential maintenance costs:

Royalty Cuts

The franchisor will take a percentage cut directly from your gross profit. This cut is usually a fixed or a progressive fee on the gross profits, depending on the franchise. Most franchises have 5-10% royalty cuts, but some can be lower, and some are higher. 

If the franchise company uses a progressive scale, you’ll have to pay more as your gym gets successful. In some exceptions, the gym only takes a monthly “membership fee” instead of directly charging you based on the profits.

Operational Expenses

The operational expense is the monthly amount you’ll have to spend to keep the business going: Rent, utilities, cleaning, repairs, insurance, fitness software, etc. 

For small gyms, the expenses can be as low as $1000-2000 a month, while larger gyms can spend as much as $30,000 a month in operational expenses.

Human Capital

The average gym hires 2-3 employees to balance out the workload at the gym. To hire three full-time employees, you’ll need to allocate at least $100,000 a year. The gym has to have one personal trainer who can engage with the members and help them train. 

You’ll also need a receptionist to keep track of the incoming members, register clients, and answer calls. Large gyms might require full-time staff for childcare facilities and cleaning (or you can hire part-time workers).

Many gyms are now expanding by offering yoga studios and other forms of fitness at the gym. You might have to bring in instructors to hold classes at your gym.

Top 10 Gym Franchises For Investors 

1) Anytime Fitness

• Total Franchises: 4000 
• Minimum Investment: $107K

Anytime Fitness is the largest gym franchise in the world and currently holds the record for the fastest-growing fitness franchise in existence. It is famous for offering exceptional 24-hour service for clients, and there are currently 4000+ franchises located in every corner of the globe. 

Anytime Fitness has won awards for franchisee satisfaction, and they provide top-notch service & training for each one of their franchises. Their franchises are equipped with advanced security systems to offer service 24/7/365 without closure. 

The franchise charges franchisees a royalty fee between $450-550 a month, depending on the size of the gym. They have a relatively low minimum investment threshold of $107K, but investors are encouraged to invest more. 

2) Snap Fitness 24/7

• Total Franchises: 2500
• Minimal Investment: $160K

Snap Fitness 24/7 is a full health club, offering a range of services in addition to basic fitness services. 

It is currently one of the fastest-growing health fitness franchises, operating over 2500 franchise units throughout the world. It started in the US and has expanded to Canada, Australia, Europe, and India. 

Snap Fitness 24/7 offers the advantage of flat monthly royalties of only $529 per month, irrespective of your gross profits. Their minimum investment threshold is $160K. 

Snap Fitness does place emphasis on exceptional equipment in their facilities, and they recommend investors furnish their gyms with new equipment.

3) 9Round Fitness

• Total Franchises: 700 
• Minimal Investment: $91K

9Round is one of the newest and fastest-growing fitness franchises in the United States. These gyms completely dominate the boxing and kickboxing fitness industry by offering premier gyms for these sports. 

9Round gyms provide educational training for students in short 30-minute training formats. Members are encouraged to move between 9 workout stations where fitness trainers supervise them. 

Since 9round started offering its franchise model in 2009, it quickly expanded to become one of the largest franchises in the US with over 700 locations. 

Their minimum investment threshold is relatively low at only $91K. 9Round has a fixed monthly royalty fee of $550/month for all franchises.

4) Fit Body Boot Camp

• Total Franchises: 600 
• Minimal Investment: $135K

Fit Body Boot Camp is an established boot camp franchise gym that specializes in group training exercises called “boot camps.” Their main workout is taught in group classes, featuring 30-minute high-intensity workouts for losing weight and staying in shape.  

FBBC’s workout sessions start with a warm-up, which is followed by HIIT training, cardio/strength training, and resistance training. 

Fit Body Boot Camp franchise is relatively affordable because it only requires a fixed monthly royalty fee of $1000. Their minimum investment requirement is only around $130K. 

Fit Body Boot Camp currently has over 600 franchises located in North America, Europe, and Australia. 

5) Gold’s Gym

• Total Franchises: 550
• Minimal Investment: $2.2M

Gold’s Gym is the most iconic gym franchise in the world and the most recognizable brand-name among gyms. Gold’s Gym was established more than 50 years ago in Venice, California, and became the leader in fitness worldwide. 

The minimal requirement to open a Gold’s Gym franchise is $2.2M. They suggest investing up to $5M – their average franchise investment is $2-3M. Currently, there are more than 550 operational Gold’s Gym franchises worldwide. 

Each franchise has to have a state-of-the-art health club with numerous facilities and retail stores to sell Gold’s Gym appeal. They charge a monthly royalty fee of 5% on gross profits. 

6) GYMGUYZ

• Total Franchises: 200
• Minimal Investment: $56K

GYMGUYZ is a creative franchise that operates completely differently from conventional gyms. GYMGUYZ stands out by providing private classes to fitness students in their homes. This fitness franchise introduced a new concept called “in-home training” by deploying personal trainers directly to customer’s homes. 

The franchise dominates the home training business, and since it began franchising in 2013, it has expanded to over 200 units in the United States. GYMGUYZ has the lowest minimum investment requirement at only $56K, making it viable for investors who want to spend the least at the beginning. GYMGUYZ has a fixed royalty fee of 6% of the monthly gross profits.

7) World Gym

• Total Franchises: 200
• Minimal Investment: $762K

World Gym is an iconic American fitness enterprise which has been a staple in the fitness industry for over 40 years. It is also a fitness manufacturing company, producing some of the best-selling fitness items such as backpacks, exercise bags, nutrition products, gym apparel, and accessories. 

It offers investors the opportunity to start a franchise with a flat royalty fee of only $1000/month, and it also allows them to convert existing fitness centers into World Gym franchises. 

World Gym requires a very substantial investment of at least $760K per gym. It recommends entrepreneurs to invest as much as $2M. Currently, there are 200+ World Gym franchises in operation. 

8) Workout Anytime 24/7

• Total Franchises: 155
• Minimal Investment: $555K

Workout Anytime 24/7 has been thriving in the fitness industry for over 20 years. It’s gyms help members meet their fitness goals by providing state of the art cardio training, personal training services, and extras such as tanning. 

Workout Anytime 24/7 is excellent for investor returns because it only has a flat $500/month royalty fee irrespective of gross profits. The franchise does require a substantial investment of at least $555K, and it currently has over 150 franchises in operation. 

9) CycleBar

• Total Franchises: 150
• Minimal Investment: $284K

CycleBar brings freshness to the fitness studio industry with a focus on spin (cycling) training. With a growing demand for cardio and cycling studios, CycleBar started offering its franchises in 2015 and since then have exploded with over 150 locations throughout the United States. 

CycleBar eases the set-up process because studios only have to be equipped with cycling equipment, and their franchise models are straight-forward. 

CycleBar provides a premium cycling experience for members. In the spin fitness space, it is one of the few that offer franchising options.

Their minimal investment requirement is relatively high at nearly $300K. However, the monthly royalties are moderate at 7% of gross profits.

CycleBar is one of the fastest-growing new franchises for investors who are excited about the spin fitness trend. 

10) UFC Gym 

• Total Franchises: 100           
• Minimal Investment: $150K

UFC Gym is an iconic gym franchise started by the MMA UFC brand. UFC Gyms have been in business since the early 90s, and they started franchising almost ten years ago. 

Currently, UFC gym franchises exist nationwide, and they provide fitness educational programs in a fun environment with high safety standards. 

UFC Gym offers several franchise options such as the “Core,” “Signature,” and “Class.” UFC Gym franchises offer educational programs such as MMA style training for the youth, group fitness training, and private-class training. 

Each gym franchise provides state of the art training, punching bags, cardio equipment, and strength training. It also has a sales/retail section for guests promoting UFC merchandise. 

UFC Gym charges only 4-6% royalties depending on the profit of the gym, and they have relatively low minimum investment thresholds of only $150K. 

Precautions Before Owning A Gym Franchise

There are precautions you’ll have to take before you sign a gym franchise license agreement. You’ll first have to visit the site of an operational gym and read their disclosure agreements to make sure everything matches up. Here’s what you need to do:

Precaution #1: Visit The Gym

If you don’t know which gym you want to invest in, fly out to Los Angeles, CA, and spend a month there investigating the potential franchises. 

LA has the highest concentration of fitness clubs in the world. You’ll be able to investigate all the top chains there. Experience the gym as if you’re a customer yourself. 

Meet the staff and take a walk around the facilities as if you’re a client. Try to see if any of these gyms stand out and make a strong impression on you. 

Gyms are not what they seem online, and many times you might be underwhelmed by the management of the gym as opposed to what you see on the internet and Instagram.

Precaution #2: Hire An Attorney

To obtain a license for a gym franchise, you’ll not only have to pay a license fee, but you have to sign legal documents. The most important legal document is the “Federal Disclosure Document” (FDD), which details everything associated with the costs of starting the franchise and legal specifics. 

Note: You and your attorney have to have a very detailed look at the document to understand that you’re aware of all the costs and responsibilities that come with the franchise. 

The franchise company might be involved with past lawsuits, and you should research that. You should also research if the company has filed for bankruptcy, which is not uncommon with smaller franchise chains. 

The FDD document is the most important document you can analyze because it contains all the key information about the franchise opportunity.

Gym Franchise FAQ: Frequently Asked Questions

Q: My Budget Is under $100,000, Can I Still Open A Franchise Gym?

A: Yes, you can open a franchise gym with under $100,000 in total investment. However, you’ll have to go for a franchise with lower minimum investment thresholds. At this point, it’s important to analyze if opening your own gym is a better option.

NOTE: I have written a detailed step-by-step guide on how to open a gym. If you are looking for someone to provide you with every single step you need to take to open a gym, then my guide is perfect for you. Give it a read.

Q: How Much Do Gym Franchises Make?

A: It mostly depends on the size and location. The gym franchise might make $1M+ a year if it’s in a trendy area of a major city. Conversely, a gym franchise might only make $100K a year if it’s a small gym in a small town.

Q: Do I Only Need To Pay The License Fee?

A: You need a lot more money than the basic license fee. Even though the license fee might only cost $30,000, the franchisor will expect you to have a lot more capital to fund the rental costs, furnishing, staff payroll, events, marketing, and more. 

Many of the franchises will request proof of assets and an excellent credit score before they approve you for an investment. Iconic franchises like Gold’s Gym average out $3M per investment, which means you’ll need to have a high net worth to finance gym franchises.

Q: Can Franchises Help With Funding?

A: Certain franchises will help you get funding. For example, if you have $100,000 to invest, they might help you get a bank loan for $300,000 to meet their minimum investment requirements. Always consult with the franchise company before getting discouraged.

Q: Does The Franchise Decide The Location?

A: The franchise does not decide the location of your gym, but they have to approve the location. 

You can research potential locations in your city and consult the parent company about the sites. Many of the franchisors will tell you which location is the best based on their experience and research. 

Q: Does The Franchisor Team Arrive On Location?

A: The parent franchise company trains its employees at their facilities (usually the headquarters). The senior leadership might make an appearance at your location if you host a celebration, such as a “Grand Opening” launch event, to kick-start your gym franchise.

Q: Do I Have To Hire People?

A: Most gym franchises hire at least 1-2 full-time employees at the start. The average gym franchise starts with three employees. However, some hire as many as 12. Each employee will have to receive job training by the franchise company.

Conclusion

Opening a gym franchise instead of starting your own fitness brand makes the process of starting a gym much easier. However, the upfront costs can be significantly higher than going it on your own, and the monthly royalties you need to pay to the franchiser can take a decent chunk out of your profits.