Buying a franchise fitness center?

[04SE]

A local Snap Fitness center is for sale. Anyone know the nitty-gritty details of a fitness center?

The basics:

# of members: 700 +/-
Average monthly revenue is $25,000 +/-
The current rent is $4,900
Price $30,000 + transfer fee (assuming this is franchise fee)

They were hesitant to speak to actual net income, fees/costs, and some nitty gritty details. I think they wanted to see proof of financials first. I can't imagine it is a high profit endeavor if the initial costs are so low. Could you even expect to clear $1,000 per month? You can add tanning beds for additional monthly $$$, if you are fitness savvy you can offer training or partner with personal trainers. Snap fitness facilities are mostly self service, there are not attendants. I am assuming that you are leasing the equipment from Snap Fitness or a supplier. There have been a few of these for sale in my semi-local area lately.

 

[Vern_in_IL]

So is this a 24/7 key access or it has closed hours? Does it have a women's only area?

A lot of people buy gym memberships and never use them, also do they provide discounts to major employers in the area?

 

[Leo99]

Fitness centers always seem to slowly die out in my experience. But I don't know why. They seem to do great for a while and then.... They are gone.

My local gym started as racquet ball, moved to more of a body building gym and now it's a BJJ gym. BJJ and Crossfit are the rage now.

 

[sciphi]

Originally Posted By: Vern_in_IL
So is this a 24/7 key access or it has closed hours? Does it have a women's only area?

A lot of people buy gym memberships and never use them, also do they provide discounts to major employers in the area?


The Snap Fitness locations around me are 24/7 key access. They also have an extensive list of employers they give discounts to.

 

[SZR48207]

Find out about insurance cost. I believe this is what makes running a gym expensive, especially when you have weight training equipment.

 

[CKN]

Originally Posted By: 04SE
A local Snap Fitness center is for sale. Anyone know the nitty-gritty details of a fitness center?

The basics:

# of members: 700 +/-
Average monthly revenue is $25,000 +/-
The current rent is $4,900
Price $30,000 + transfer fee (assuming this is franchise fee)

They were hesitant to speak to actual net income, fees/costs, and some nitty gritty details. I think they wanted to see proof of financials first. I can't imagine it is a high profit endeavor if the initial costs are so low. Could you even expect to clear $1,000 per month? You can add tanning beds for additional monthly $$$, if you are fitness savvy you can offer training or partner with personal trainers. Snap fitness facilities are mostly self service, there are not attendants. I am assuming that you are leasing the equipment from Snap Fitness or a supplier. There have been a few of these for sale in my semi-local area lately.



That should tell you something right there......

 

[Nick1994]

Sounds too shady, with upkeep of the building, keeping it modern, buying new equipment, replacing old equipment, paying employee wages, insurance, I don't think there's really any money to be made.

Otherwise why would they sell it?

People move on to the next latest and greatest thing, this gym will be a thing of the past.

 

[Wolf359]

Seems to be priced like a subway. Maybe you make money if you're working at place, but you're really just buying a job. Equipment costs are probably high, I think most gyms turn over their equipment every few years which is probably why they lease it. Gym quality treadmills are typically in the 3-7k range so it's not as cheap as you think. Once the equipment starts getting old, the membership leaves. People sell for a variety of reasons, you just have to do your due diligence to see if it's priced right. Not sure about gyms, but typically you pay anywhere from 1-3x net income for the place. At just 30k, net income probably isn't that high and you're just buying a job.

 

[dishdude]

That seems awfully cheap so I am sure they are not revealing all of the costs. Hire an accountant and attorney to comb the books, franchise agreement and all contracts you'll be assuming...and if they won't give you access to them run!

 

[RazorsEdge]

I'd talk to someone who owns a gym already,get the inside scoop on everything.

I've been a member of a gym for 10+plus years. I personally know alot of new gyms that just opened and are doing great!

Asking about if this is a smart investment on BITOG,will not get your answers that your looking for.

 

[RhondaHonda]

Don't forget about: liability insurance, workers comp, employee wages, franchise fee as a % of GROSS revenue, equipment and maintenance costs, utilities, licensing, accounting, legal, profit, advertising fee...

The 700 ish members is probably close to their max and they are looking to sell. You could probably get it for just the franchise assignment fee if you were serious. I'd steer clear.

 

[demarpaint]

Originally Posted By: 04SE


They were hesitant to speak to actual net income, fees/costs, and some nitty gritty details. I think they wanted to see proof of financials first.


That would be the red flag for me if I was buying the business.

 

[Lyman]

I'd want to see their books for the last 6 months. A good long look at the current lease agreement for the building and the equipment. See what they are paying for liability insurance. That will give you all you need to know for an educated decision.

 

[raytseng]

Originally Posted By: demarpaint
Originally Posted By: 04SE


They were hesitant to speak to actual net income, fees/costs, and some nitty gritty details. I think they wanted to see proof of financials first.


That would be the red flag for me if I was buying the business.


I disagree. Posted a couple things for sale on craigslist, and you'll get tired really quickly of lowballers. People want Info for free.
You are not going to open your books for every person that comes crawling unless you know they are a bit serious.

This is what it says in the SNAP franchise FAQs. https://www.snapfitness.com/franchise-faq
I say if you don't qualify at this, there's no reason why you'd be accepted, so no reason why you should be given access to the info.

If you are serious, proof of financials is not a big burden considering what they are going to show you. You just print out your couple bank or brokerage statements showing your net assets and redact any identifying info.
Oh, you don't have a bank/brokerage with $75k in liquid assets on it per the snap franchise faq?, get lost, just like the guy who offers to you his not-running project car for what you're selling.
If YOU can't share this to show you're serious, then stop wasting the sellers time.

 

[bvance554]

I would ask 'why are you selling?' Sounds like a turd if you ask me.

 

[Mr Nice]

No way I'd buy that business / franchise.

 

[xfactor9]

The reason fitness centers tend to fade is because of lack of maintenance & upkeep. Over time the machines get old and break down, the fitness center becomes drab & dingy, and patrons stop coming for that reason. People want a clean, nice-looking, well-kept gym, with modern equipment.

You need to factor in the ongoing costs of replacing/repairing the machines, and remodeling the gym eventually. Commericial equipment is very expensive; on the order of 8-10x as much as consumer equipment. Is there a sauna room too?

Go to the gym and estimate the cost of all the equipment. Now assume all of it will need to be replaced in, say 6 years. How much is that per month?

 

[Andrew1972]

Is the gym wit popular and cheap like planet fitness? Those franchises make a incredible amount of coin for the owners I know locally. Also the folks who created it live large locally.

 

[demarpaint]

Originally Posted By: raytseng
Originally Posted By: demarpaint
Originally Posted By: 04SE


They were hesitant to speak to actual net income, fees/costs, and some nitty gritty details. I think they wanted to see proof of financials first.


That would be the red flag for me if I was buying the business.


I disagree. Posted a couple things for sale on craigslist, and you'll get tired really quickly of lowballers. People want Info for free.
You are not going to open your books for every person that comes crawling unless you know they are a bit serious.

This is what it says in the SNAP franchise FAQs. https://www.snapfitness.com/franchise-faq
I say if you don't qualify at this, there's no reason why you'd be accepted, so no reason why you should be given access to the info.

If you are serious, proof of financials is not a big burden considering what they are going to show you. You just print out your couple bank or brokerage statements showing your net assets and redact any identifying info.
Oh, you don't have a bank/brokerage with $75k in liquid assets on it per the snap franchise faq?, get lost, just like the guy who offers to you his not-running project car for what you're selling.
If YOU can't share this to show you're serious, then stop wasting the sellers time.


You bring up a good point. My initial thoughts were part of buying a business is disclosing the finances. But I'm referring to serious buyers. If the OP came across as a tire kicking tool or broke then I agree, I didn't think that was the case here. I sent more than a few tools walking in my day when I was selling cars, things on Craig's list, or giving estimates for my business. But that's the fun part of sales. I screen every potential customer.

OTOH if I'm in the market to buy something and I'm serious and someone fails to disclose something important I'll move on. I don't shop for things I can't afford. The knife isn't cutting both ways in this case. LOL

 

[Al]

Originally Posted By: Leo99
Fitness centers always seem to slowly die out in my experience. But I don't know why. They seem to do great for a while and then.... They are gone.

Gyms per se are a growing thing..or at least certainly are not dying out. Individual gyms die out
because:

Originally Posted By: xfactor9
The reason fitness centers tend to fade is because of lack of maintenance & upkeep. Over time the machines get old and break down, the fitness center becomes drab & dingy, and patrons stop coming for that reason. People want a clean, nice-looking, well-kept gym, with modern equipment.

You need to factor in the ongoing costs of replacing/repairing the machines, and remodeling the gym eventually. Commericial equipment is very expensive; on the order of 8-10x as much as consumer equipment. Is there a sauna room too?

Go to the gym and estimate the cost of all the equipment. Now assume all of it will need to be replaced in, say 6 years. How much is that per month?


And as pointed out LIABILITY COST

The Gym I go to has great equipment. And in 2 weeks all of that equipment will be gone..they are moving into a larger facility with the best equipment available. Can't wait.