Five Top Rated Franchise Fitness Studios – Los Angeles

Financial & Assets Details

About the Business

Business Description

This business opportunity involves the resale of five (5) existing, fully developed, fully operating boutique franchise fitness studios, with collective annualized revenues of over 1MM and total Active members of 689 (based on June 2021 numbers).

All locations are less than two years old, and have active clients paying monthly dues. The Seller acquired them from owners who were under-capitalized and stressed by the pandemic. The locations enjoy a loyal clientele and have a very strong reputation – 5-star ratings on social media platforms like Yelp and Facebook. The current revenue base at these locations is a good mix of membership fees, personal training revenue, and merchandise sales. Membership fees are collected on an automatically recurring basis via credit card and ACH debit.

Even though typical all-in startup costs were around $450K each, the Seller is motivated and will sell at a very attractive valuation. The portfolio can be sold in its entirety or in part.

Studio locations are as follows: Los Angeles, Orange County, and San Diego.

These Franchise opportunities are differentiated as follows:
• A franchisor who has decades of experience in fitness and franchising.
• They excel in generating strong brand awareness in every market with robust national brand advertising.
• They leverage the best resources available to provide superior franchisee support across every department, including a 100% E-commerce platform.
• Their operational excellence ensures impressive unit-level economics.
• They execute local studio marketing and sales strategies to create community engagement and drive memberships.

Acquisition Benefits

The right franchise Buyer will inherit:
• Strong brand name recognition.
• An existing member base (as opposed to starting a new studio) and competing effectively for market share in a solidly growing industry in the US.
• Excellent support and outstanding growth potential.
• A fully operational fitness studio, or a collection of studios, at a steep discount.

Growth opportunities include:
• Develop a robust recurring revenue stream.
• Continue expansion by acquiring additional available franchise locations.
• Own an opportunity that can easily be semi-absentee, manager-run.

The Market

According to a recent IBISWorld Industry Report, the Gym, Health and Fitness Clubs industry has benefited from the health of the broader economy and growth in health-consciousness over most of the five years to 2021. Companies in this industry operate fitness and recreational sports facilities that offer exercise equipment and recreational sports activities for consumers. Some gym, health and fitness clubs have appealed to consumers by offering low-cost memberships with full operational hours. Comparatively, niche studios have appealed to consumers by offering classes with specific workouts or environments. According to 2020 data from International Health, Racquet & Sportsclub Association, the number of health club memberships in the United States increased to 64.2 million members in 2019 (latest data available), illustrating heightened industry demand. Overall, monthly memberships with low cancellation fees have fared well during most of the period.

The number of adults aged 20 to 64, the largest gym-going demographic, has expanded over the past five years, spurring demand for gym memberships. To the industry's detriment, the COVID-19 (coronavirus) pandemic had forced industry operators to temporarily close their doors, hurting industry revenue. Nevertheless, as the pandemic subsides, industry establishments have reopened. Thus, industry revenue has remained stable at $37.0 billion over the five years to 2021, including growth of 7.2% in 2021 alone. However, industry profit has declined during the same period. Growing consumer demand for low-cost monthly memberships has constrained profit for gyms with low member retention rates because this type of business model typically requires a higher volume of subscriptions to generate growth.

Over the next five years, many baby boomers are expected to purchase health club memberships as they grow more health-conscious due to age. Furthermore, many employers subsidize gym memberships for their employees, while parents will likely continue to seek fitness programs for their children as concerns about childhood obesity grow. In addition, increases in both per capita disposable income and consumer spending are expected to boost industry expansion. Additionally, increased participation in sports is expected to bolster demand for industry services, which will likely help drive revenue growth. Industry revenue is expected to grow at 2.7% annually, rising to $42.3 billion by 2026.