Anytime Fitness Franchise. What a great business – you just invest and sit back as the money rolls in. But is that really the case? Today, lets take a critical look at the Anytime Fitness Franchise.
So let me start by saying that there are owners that have done very well with their Anytime Fitness Franchise. When the model works, it works well and you can have a relatively passive business that provides predictable income.
Now that’s the side you will hear from the franchise, but as always we like to give you the other side of the story so you can make an educated decision.
Taken from their brand new 2018 FDD the cost to open an Anytime Fitness center will range between $131,002 and $722,796. Keep in mind that number includes your operating capital for the first 3 months, and assumes you will be leasing your gym equipment. If you buy your equipment count on about $140,000 on top of that number. There is also the option for an Anytime Fitness Express location which we won’t cover today. You will pay a $549 monthly fee to Anytime Fitness, a general advertising fee of $300 monthly and you will be required to invest between $8,000-$18,000 on a Grand Opening and Ramp up Program when you first open up. You will pay a fee of 50 cents for each member of your club monthly for the Anytime Health membership, to a maximum of $225 for a single location or $675 a month if you have multiple locations. There is a global access fee of $249 per month. Training suite fees are $149 per center.
So those are the fees, but how much can you make with an Anytime Fitness Franchise? The 2018 Item 19 financials in Anytime Fitness FDD provide suggested earnings for 500, 865 and 1150 member scenarios. The earnings BEFORE debt expense, depreciation, interest and taxes are $9,900 for a 500 member location, and if you read the fine print that number assumes you are working at the center yourself. If you have installed a manager from when you opened you will not be making that amount. Next level is $99,800 for an 865 member location, and these following numbers do assume you now have a a manager and $192,000 for an 1150 member location. Keep in mind that representation assumes that all members stay for a full year with zero attrition or zero new ,members, which is not realistic. These numbers were based on an estimated value of $371.90 per year per member, and a club size and approximate cost related to 5000 sf.But how many members will an average club have? Well if we look again at the item 19 in the FDD we see Anytime Fitness gives the average of 697 monthly paying members, and a median of 646. Pay per visit members average count was was 168 and median was 101. The lowest membership in their system was 177 the highest was 3316. So essentially these numbers paint the picture in your mind that the 697 paying members plus pay per visit of 168 gives us the average of 865 members so we can expect $99,800. Pretty good right? And if you are emotionally driven through the FDD that’s the only number you will see.
But read the fine print more closely and there are other considerations you need to understand such as paragraph 6 in the Item 19 relating to training income. This is important as certain clubs who did not report personal training income of at least $1500 monthly were just not included in the numbers. So under-performing PT locations were removed from the figures, and remember franchisors have the ability to present these numbers to you any way they like. Also remember this number is before debt expense, depreciation, interest and taxes. As always make sure you have read and understand all the points in the FDD and have a competent franchise lawyer advise you.
Now the growth of Anytime Fitness has been strong with almost 400 new locations opening in the past 3 years. Litigation is almost zero which is really amazing for a franchise of this size.
But hold on 400 locations opening that sounds like no locations have closed doesn’t it? A quick Google of the words Anytime Fitness Closed will prove otherwise. Now one of the initiatives we conduct with our clients is to contact people who closed their locations, their names will be listed in the FDD, and ask them what happened. You don’t just want to speak to franchisees who are doing well. This is how we make an educated and balanced franchise buying decision, not by fixating on only the positives. All franchises have some obstacles or negatives you need to be aware of those and be confident you can overcome them.