Are fitness franchises profitable in 2022?

The fitness industry is becoming increasingly competitive with time. 

In 2021, there are over 103,626 gyms, health and fitness clubs in the US alone. That’s a 1.6% increase since 2020 and a 28% increase since 2010.    

Given the competition, it’s rather difficult for a business owner to open and run a new gym while making a profit. One way to manage that is to buy a gym franchise. You’ve probably heard of some famous fitness franchises such as Anytime Fitness and Snap fitness. 

Recently, Anytime fitness became the first fitness franchise to operate in all seven continents. 

That raises the question: are fitness franchises profitable? And if so, what makes them better than just one location? 

In this article, we will look at what a fitness franchise is, what makes a fitness franchise profitable and then list some of the most profitable franchises around the globe. 

Skip ahead to:

What is a fitness franchise? 

Are fitness franchises profitable?

What factors make fitness franchises profitable?  

5 of the most profitable fitness franchises  

 

What is a fitness franchise? 

A franchise is a form of business where the business owner (franchisor) gives someone (franchisee) the right to operate their business following the franchisor’s company model. 

So owning a fitness franchise means you have a gym that’s yours, but you’re following someone else’s business system. Franchising is a lucrative business opportunity in the fitness market – if you can do it right. 

Opening or buying a fitness franchise involves a lot of paperwork. You first have to sign a Franchise Disclosure Document (FDD) that outlines all the points of agreement on how the business relationship will work between the two parties.  

You also have to learn their business model, train your employees according to their system, acquire a license and pay the annual license fee. 

Gym franchises help everyone involved. The franchisor expands their business while the franchisee gets to own a gym that already has brand recognition and an established customer base.  

But it also comes with some restraints. The franchisee has limitations on the freedom to try new things, and s/he can’t make changes in the business model. That’s because the franchisor has to maintain brand consistency across all locations. 

Although most business owners have that misconception, franchises also don’t come with a guaranteed success label. You still have to put in a lot of hard work, attract new customers and offer them excellent services to keep your business operational. The franchisor gives you a working business model; you have to apply it the right way to see the profits you’re dreaming of. 

Are fitness franchises profitable? 

Yes, fitness franchises offer great profits but not as much as you might think. 

According to Investopedia, most franchise owners take home around $50,000 per year, but about 7% of franchise owners earn more than $250,000 per year. 

You have to be aware of some fees and additional costs because these will quickly cut into your profit margins. 

Startup and upfront costs 

First, opening a new franchise comes with a heavy initial investment. This includes the franchise fee you have to pay to get the license, royalty fees that you pay monthly or annually, and rent for your franchise location. 

For example, the franchise fee of Anytime fitness is $42,500, and on top of that, you have to cough up $699 monthly from your revenue. 

The upfront costs for buying a gym franchise can be much higher than gym startup costs. You can open your independent gym startup with an investment of $10,000 to $50,000 on average. 

Good locations can cost a lot 

Although there is money in franchising, you have to identify the franchise opportunity carefully. Choosing the right spot is also a major factor because you have to find an area where people recognize your franchise name. 

Some gym franchises offer their real estate specialists to help you decide on the locations based on their research. Others give you – the franchisee – the freedom to pick the location. 

What affects your profit margins? 

The business expertise of the franchise owner significantly affects the profits you can make. 

You’ll have to find unique ways to generate revenue to increase your annual income. That can include leveraging social media in addition to the brand marketing that the franchisor does for you. 

Or you could maintain the gym equipment really well, hire better personal trainers, offer parking space, and keep the water coolers full. 

Just remember to check the fine print of the FDD to ensure that everything you do is above board. The terms of franchise agreements can sneak up on you, so you have to be extra vigilant not to violate your deal. 

What factors make fitness franchises profitable?  

Fitness franchises earn a major chunk of their income from gym memberships, just like other gyms do. But the profits start coming in much quicker in a franchise gym than a startup gym. 

Here are some reasons that make fitness franchises profitable for the franchisee:  

1. Existing brand recognition 

It’s already hard to run a fitness business, but it’s even more complicated when no one knows your brand. 

Owning a franchise gym is better in that sense because people are already well aware of the business. They know what to expect from your gym and what classes you offer. 

A fitness startup has to market the business and wait for longer to get a stable customer base and see profits. 

2. Established customer base 

Having an established customer base can give you a head start. 

You just have to research for the right location, and the customers will come to you almost as soon as you launch. That, of course, requires some publicity and marketing to let the people know when and where you’re opening.  

3. Proven business model 

A big reason why new fitness studios take a while to see any profits is that their business model lacks in some ways. Following a proven franchise system helps you avoid common mistakes that new business owners make. 

That automatically speeds up your timeline to success, and you can start earning handsome profits much earlier than some startup gyms.