Earnings Claims of Top Franchises Revealed

Earnings Claims of Top Franchises Revealed

  • Anytime Fitness
  • CruiseOne
  • Firehouse Subs
  • Jimmy John's
  • Massage Envy
  • Menchie's
  • Orange Leaf Frozen Yogurt
  • Planet Fitness
  • The UPS Store
  • Yogurt Land
  • And Hundreds More...

No, thanks. I'm not interested in uncovering the actual earnings of hundreds of franchises at this time.

FDD Talk: Revenues, Expenses, and Operating Profits of Select Planet Fitness Corporate Locations

by Franchise Chatter on June 25, 2012

in Fitness Franchises, Franchise Earnings



Franchise Chatter Membership Information

Highlights of Planet Fitness’ Item 19 Financial Performance Representations (2011 FDD)

  • The total investment necessary to begin operation of a single Planet Fitness facility ranges from $673,100 to $1,658,000 for a new location. This includes $71,000 to $158,000 that must be paid to the franchisor.
  • The following section provides a revenue and operations statement for three corporate Planet Fitness locations during fiscal year 2010.
  • Of the 42 corporate locations that were operating for at least 12 months as of December 31, 2010, the three locations identified below represent clubs ranked in the 25th, 50th, and 75th percentiles in terms of total annual revenue after all 42 clubs were ranked, by annual gross revenue, in order from lowest to highest.
  • Also excluded from the section below is data for corporate clubs that Planet Fitness deems to be “outliers,” that is, both the lowest performing corporate location (with annual gross revenue of $471,219.05) and the highest performing club (with annual gross revenue of $3,649,651.37). Particularly as it relates to the annual gross revenue achieved by the highest performing location, the company does not believe these results are typical for a Planet Fitness business.

25th Percentile

  • Revenue
  • Membership Sales – EFT/Cash:  $1,189,094.  The principal source of revenue for a Planet Fitness club is membership fees. Membership fees are usually paid in cash or through electronic funds transfer (EFT), and are typically paid monthly. A fitness facility will also earn additional revenue through an annual membership fee and annual maintenance fees.
  • One membership package remains constant while the others are offered periodically throughout the year.  The “Black Card” is the constant membership package; it requires a 12-month contract. The “Black Card” is offered at $19.99/month with an annual fee of $39 which is paid once a year in June. Included with the “Black Card” is free tanning, half priced beverages, free massage chair usage, access to any other Planet Fitness club, and the ability to bring a guest free to one’s home club.
  • Promotional packages are offered at different times during the year and a franchisee has the ability to tailor the package to their club based on the benefits that come with the package.
  • Retail Sales:  $9,773.  Include beverage sales, tanning goggles and lotions, Planet Fitness apparel, and headphones.
  • Planet Fitness Interior Photo by LiconTotal Revenue:  $1,198,867. Of the 42 corporate-owned locations, (1) 31 corporate locations (or 74%) realized average Total Revenue greater than that achieved by the 25th percentile club; (2) 21 corporate locations (or 50%) realized average Total Revenue greater than that achieved by the 50th percentile club; and (3) 10 corporate locations (or 24%) realized average Total Revenue greater than that achieved by the 75th percentile club.
  • Cost of Goods Sold:  $14,556
  • Gross Profit:  $1,184,311
  • Expense. The following expense information reflects the expenses of the corporate locations included in the statement, plus an amount equal to the royalties the location would have paid if it were a franchised location. You may incur other expenses.
  • Advertising:  $104,803. This reflects the actual amounts these corporate locations spent on advertising. Franchisees must spend a minimum amount on advertising based on a percentage of the EFT Dues Draft. The amount a club spends on advertising above the required minimum varies depending on the club.
  • Bank and Billing Charges:  $50,490
  • Cleaning Supplies:  $29,980
  • Employee Benefits:  $6,893
  • Equipment Rental:  $3,934
  • Royalties:  $11,000. Royalties are paid monthly and are based on a flat percentage of the EFT Dues Draft (currently, 5%). Corporate clubs do not pay royalties. Nevertheless, this expense category was included to reflect the payment of royalties for illustration purposes only.
  • Insurance:  $11,492.  These insurance costs are based on bulk-buy pricing for multiple clubs. Your rates may differ based on various factors.
  • Miscellaneous Expenses:  $11,897. Include pizza, bagels, fees, licenses, permit, gifts, travel/meals, and training.
  • Office Expense:  $8,352
  • Payroll Expenses:  $197,199
  • Professional Fees:  $8,843. Consist of accounting, consulting, and legal fees. They have historically represented an insignificant percentage of club expenses.
  • Rental Expense:  $177,199. Your rent can vary significantly based on the size and location of your club.
  • Repairs and Maintenance:  $22,621.
  • Sales & Use Tax:  $524. Every state will have different rules applying to sales and use tax.
  • Supplies Facility:  $7,445
  • Utilities:  $63,465
  • Total Expense:  $715,940
  • Operating Revenue:  $468,371.  This figure does not include any provision for income taxes or for non-cash expenses like depreciation and amortization. It also does not include any expense assumption related to the capital structure of the franchisee entity or any reserve for future capital expenditures.
  • Of the 42 corporate-owned locations, (1) 28 corporate locations (or 67%) realized average Operating Revenue greater than that achieved by the 25th percentile club; (2) 13 corporate locations (or 31%) realized average Operating Revenue greater than that achieved by the 50th percentile club; and (3) 10 corporate locations (or 24%) realized average Operating Revenue greater than that achieved by the 75th percentile club.

50th Percentile

  • Planet Fitness Interior Photo by Urban Partners GroupRevenue
  • Membership Sales – EFT/Cash:  $1,709,898
  • Retail Sales:  $18,567
  • Total Revenue:  $1,728,464
  • Cost of Goods Sold:  $34,415
  • Gross Profit:  $1,694,049
  • Expense
  • Advertising:  $126,905
  • Bank and Billing Charges:  $86,821
  • Cleaning Supplies:  $12,609
  • Employee Benefits:  $4,655
  • Equipment Rental:  $8,067
  • Royalties:  $18,000
  • Insurance:  $11,528
  • Miscellaneous:  $18,114
  • Office Expense:  $11,968
  • Payroll Expenses:  $218,770
  • Professional Fees:  $100
  • Rental Expense:  $141,391
  • Repairs and Maintenance:  $25,040
  • Sales & Use Tax:  $1,044
  • Supplies Facility:  $12,115
  • Utilities:  $68,413
  • Total Expense:  $765,540
  • Operating Revenue:  $928,509

75th Percentile

  • Revenue
  • Membership Sales – EFT/Cash:  $2,428,673
  • Retail Sales:  $71,857
  • Total Revenue:  $2,500,531
  • Cost of Goods Sold:  $77,094
  • Gross Profit:  $2,423,436
  • Expense
  • Advertising:  $189,308
  • Bank and Billing Charges:  $113,206
  • Cleaning Supplies:  $26,148
  • Employee Benefits:  $4,764
  • Equipment Rental:  $7,701
  • Royalties:  $37,500
  • Insurance:  $17,830
  • Miscellaneous:  $35,461
  • Office Expense:  $21,915
  • Payroll Expenses:  $290,920
  • Professional Fees:  $15,100
  • Rental Expense:  $355,841
  • Repairs and Maintenance:  $56,559
  • Sales & Use Tax:  $48,752
  • Supplies Facility:  $25,122
  • Utilities:  $126,045
  • Total Expense:  $1,372,172
  • Operating Revenue:  $1,051,264

Please check back tomorrow for the average monthly and yearly EFT revenue information for corporate and franchised Planet Fitness locations, as well as my full commentary on Planet Fitness’ Item 19 financial performance representations.

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