When hearing about fitness programs or gyms, people typically think of a place to go work out and get in shape. What many don’t realize is the vast amount of investment potential in those same places – which is why a growing number of investors are adding fitness franchises to their portfolios.
Fitness franchises are popping up everywhere, and the business model offers a number of benefits to owners and investors alike. We’ve taken a look at the fitness franchise space and put together a list of the top franchise opportunities of 2022. Read on to learn more.
Fitness is big business in the United States. According to a September 2022 report by IBISWorld, the market size for gym and fitness franchises in the United States is an estimated $6 billion, with more than 10,000 companies employing hundreds of thousands of people.
Franchising is a great way for new owners and investors to enter an established space. Gym-goers are often extremely brand loyal, and new market entrants can benefit from that recognition when they open a new franchise location. Also, the big fitness brands often have standing relationships with fitness equipment/machine manufacturers. Franchisees may be able to reduce the cost of their initial investment by leveraging these relationships into discounts on equipment.
There are six key factors owners and investors should consider when evaluating a fitness franchise opportunity:
Return on Investment: The cost of purchasing and building out a new franchise location range from $200K to more than $700K – but the ROI on some franchises can average from 30% to as high as 200%.
Growth: The potential for growth is a vital factor in ensuring the long-term success of a business. Look for a franchise with room to grow as your business succeeds and evolves; a strong track record of annual growth is a good indicator of sound investment.
Leadership: The first pillar of a strong business is its people. When evaluating a franchise opportunity, look beyond the numbers – get to know the leadership team and explore their partnership approach. As a franchisee, you’ll be working closely with brand leaders, so be sure alignment is there before investing.
Sustainability: Sustainable brands are more attractive to consumers – and thus, more successful in the long run. Sustainability can lower costs and add resiliency to your supply chain, so look for a brand with a strong track record of sustainable practices.
Recession- and pandemic-resistant: The past three years have served as a proving ground for business owners. Franchises historically perform well through major global events like recessions and public health crises. Look for opportunities in recession-resistant industries that provide essential services such as health care, personal services, home and auto repair, education, and others.
Manageability: Good systems and management models are a cornerstone of franchise success. Review the business model and evaluate it against current economic conditions, employment numbers, and your personal ability to run and scale the business. Look for options that align with your lifestyle and capabilities.
F45 was named one of the ten fastest-growing franchises of 2022 by Entrepreneur – and it’s easy to see why. Founded in Australia in 2013, F45 focuses on high-intensity interval training (HIIT) workouts formatted into convenient and efficient 45-minute group classes. The company’s proprietary training system is highly systemized, making it scalable across geographies. The brand prides itself on being innovative and adaptable in the ultra-competitive fitness industry, and franchisees can expect top-to-bottom support, from marketing campaigns to intranet and gym management software.
The largest brand of its kind, Pure Barre offers low-impact full-body workout classes at nearly 650 studios. New owners benefit from the strength of the leadership team’s experience in the space as well as their robust support network. From site selection to keeping music and choreography fresh, Pure Barre prides itself on putting its resources to work for its franchisees. Besides barre classes, each location offers additional revenue streams from teacher training and premium activewear sales.
If personal coaching is more your style, The Exercise Coach may be the best franchise fit. The Exercise Coach emphasizes data-driven results, utilizing its proprietary Smart 20™ Fitness System that guides clients using an advanced data platform. Training for coaches is standardized and aims to serve consumers aged 50+ who are traditionally underserved by larger fitness brands. Locations can be as small as 800 square feet with as few as two employees, making this a great option for franchisees in markets where real estate is a challenge.
A relative newcomer to the fitness franchising space, Rumble Boxing was founded in 2017 and is owned by the same parent company as Pure Barre. Each location offers 45-minute, 10-round group boxing and strength workouts, crafted around unique water-filled teardrop boxing bags. Franchisees can expect to benefit from extensive support rooted in the deep franchising expertise of the Xponential Fitness family of brands.
YogaSix is another member of the Xponential Fitness brand family. The “six” in the name references the six core class offerings that are specially curated to cover all ages and experience levels: Y6 101, Y6 Restore, Y6 Slow Flow, Y6 Hot, Y6 Sculpt and Flow, and Y6 Power. While the classes may seem standardized, students can expect a new and creative experience each time they enter the classroom. Select locations are also able to offer Y6 TRX classes, which incorporate the TRX wall mount system.
Spenga is an amalgamation of the words “Spin,” “Strength,” and “Yoga.” And that’s exactly what the fitness centers offer – an innovative, 60-minute workout that encompasses training principles from each of these disciplines. Classes are held in a 20-20-20 format, putting equal emphasis on cardio, strength, and flexibility. Instructors are highly trained and Spenga supports its franchisees through recruitment, launch, and marketing efforts.
Interested in adding fitness franchises to your investment portfolio? FranShares is committed to democratizing franchise investing. You’ll get access to a fractional fund of strong franchise brands with the ease of passive investment and the excellent returns of alternative assets – all for as little as $500. Get in touch so you’ll know when our next fund becomes available.
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(1) Portfolio IRR projections are calculated using all cash flows, including the initial investment of $25,000,000 of offering proceeds, annual earnings before interest, depreciation and amortization (“EBITDA”), less estimated corporate taxes, and the sale of the entire portfolio at the end of the fifth year at 5x EBITDA.
(2) Cash Yield projections are calculated as the arithmetic mean (average) of five years of annual cash flows (including EBITDA, less estimated corporate taxes) divided by the initial investment of $25,000,000 of offering proceeds.
(3) Equity IRR projections are calculated using the initial investment of $25,000,000 of offering proceeds and the sale of the entire portfolio at the end of the fifth year at 5x EBITDA.