Highlights of Planet Fitness’ Item 19 Financial Performance Representations (2013 FDD)

• At December 31, 2012, there were 42 corporate Planet Fitness locations operating for at least 12 months.

• Planet Fitness excluded the corporate clubs that it deems “outliers,” that is, the two lowest performing corporate centers. The two lowest performing corporate locations had total annual revenues of $322,584 and $633,519. Particularly as it relates to the total annual revenues achieved by the two lowest performing Planet Fitness corporate locations, Planet Fitness does not believe these results are typical for a Planet Fitness business.

• The remaining 40 clubs were ranked, by annual gross revenue, in order from lowest to highest. The three locations identified below are the lowest ranked in their respective quartile for the 25th, 50th, and 75th percentiles in terms of total annual revenue.

• Planet Fitness has not included any franchisee expense information in the following table because the company does not receive complete expense information from its franchisees. Your results may differ.

Notes for Revenue and Operating Income Statement for Corporate Planet Fitness Locations

• Revenue – The principal source of revenue for a Planet Fitness club is membership fees. Membership fees are usually paid in cash or through electronic transfer of funds.

• A fitness facility will also earn additional revenue through an annual membership fee, beverage sales, tanning goggles and lotions, Planet Fitness apparel and headphones.

• Membership fees are typically paid monthly. One membership package remains constant while the others are offered periodically throughout the year. The “Black Card” is Planet Fitness’ constant membership package; it requires a 12 month contract. Planet Fitness offers the “Black Card” for $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 ability to bring a guest for free to your 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.

• For those members that are not Black Card members, the annual maintenance fee is billed once a year in October.

• Your ability to sell memberships will depend on a variety of factors, including but not limited to, factors related to your market, how much time and effort you spend on sales, advertising, and your sales ability.

• Costs and Expenses – The expense information included in the Operations Statement reflects the costs and 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.

• Rent - Your rent can vary significantly depending on the size and location of your club. Certain markets have substantially higher real estate costs than others and any prospective franchisee is urged to investigate local market real estate costs prior to making any assumption about what their costs will be.

•  Advertising – The advertising amounts listed below reflect the actual amounts these corporate locations spent on local advertising, as well as the annual NAF (previously the National Advertising Fund) contribution.

• Franchisees must spend the greater of $5,000 per month or 7% of the total EFT Membership Dues Draft on local advertising. The amount a club spends on advertising above the required minimum varies depending on the club.

• The advertising is performed through a preferred corporate vendor.

• NAF creates and develops marketing, advertising, and related programs and materials, including electronic, print, and internet media as well as the planning and purchasing of national and/or regional network advertising. Franchisees must contribute 2% of the total EFT Membership Dues Draft to the NAF.

• Royalties are paid monthly and are based on a flat percentage of the total gross EFT Dues Draft (currently, 5%). Corporate clubs, including the three referenced below, do not pay a royalty to Planet Fitness. Despite this, Planet Fitness has included an expense category reflecting the payment of “Royalties” for illustration purposes only.

• Miscellaneous - Miscellaneous expense includes pizza, bagels, filing fees, licenses, permits, gifts, travel/meals, postage, online join expense, and professional fees. Many of these costs can vary significantly depending on your location and the time you spend looking for the best possible cost on these items.

• Insurance – Insurance costs vary on a club-by-club basis. The insurance costs noted in the statement below are based on bulk buy pricing for multiple clubs. Your rates may differ based on various factors.

• Bank and Credit Card Charges – Bank and credit card charges will vary based on the banking institution used and type of club membership draft. Drafting membership fees from credit cards will result in higher fees than membership fees drafted from bank accounts.

• Sales and Use Tax – Sales and use tax will vary based on the location of the club. Every state will have different rules applying to sales and use tax.

• Operating Income – This figure does not include any provision for income taxes or non-cash expenses such as depreciation or 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.

• The statement also does not factor in your initial franchise fee or other initial investment expenses, including expenses for a lease/purchase of equipment. Planet Fitness anticipates that every franchisee will fund their initial investment differently, and it therefore cannot make any assumptions on how you would account for these items.

This post is the second of two parts. To read Part 1, please click here.

Create ‘Raving Fans’

When the day came to open the doors to his restaurant, he was ready to “create raving fans,” he said, by offering the best customer service coupled with good food.

Burger 21 Franchisee Dennis Saller and family at ribbon cutting

“We’re cutting our teeth on this new brand for the Orlando area,” he said. “We give you the best product out there.”

Burger 21 is better known in the Tampa area of Florida, where it started, but Saller said he has had no problems attracting customers to his store in Orlando. He attributes his success to the built-in traffic provided by Mall at Millenia, one of the city’s premier shopping destinations. It’s also why he cites site selection as one of his best practices.

“Not only are (customers) going to come back, they are bringing back people with them. That’s the strategy we are building on now.”

Making sure the guests feel welcomed is another one of Saller’s best practices. He stands at the entrance to the restaurant and greets his customers personally and engages them before they take a seat.

“If you’re going to be successful in any franchise, you’ve got to be a hands-on operator,” he said. “You need to have a presence with the customers, especially when starting out. I’m at the front door greeting people. They know me now. I’m talking to them. When they start seeing that the owner is there, that he has a presence, they feel a lot more comfortable.”

Highlights of Anytime Fitness’ Item 19 Financial Performance Representations (2013 FDD) for Anytime Fitness Express

• Anytime Fitness had 44 Anytime Fitness Express clubs open for at least 12 months as of February 28, 2013.

• The average number of members at these clubs as of that date was 526.

• 18 of the 44 clubs that were open for at least 12 months as of February 28, 2013 (41%) had 526 or more members, and 26 (59%) had less than 526 members.

Preliminary Notes for Statements of Annual Projected Revenues and Earnings for an Anytime Fitness Express Center

• The following are statements of projected annual revenues and earnings for a franchised Anytime Fitness Express center.

• These projections are for a second year of operation. They assume that at the end of the first year you have a fixed number of memberships, and, even though most of the clubs continue to increase their memberships after the first year, that you remain at that level for the entire year, adding as many new members as the numbers that leave. (During the first year, it will take you time to build your member base.)

• Anytime Fitness has listed below three projections, one based on a center having 350 members, one based on 526 members, and one based on 650 members.

• They are based on revenue information provided by the designated billing processor for the 44 Anytime Fitness Express franchisees that operated during all of the 12 months ended February 28, 2013, and from the franchisor’s experience operating Anytime Fitness centers

• The first example, for a 350-member club, is intended to give you an idea of the revenues, expenses, and projected income of a club that performs well below the average, but is still profitable.

• Of the 44 Anytime Fitness Express clubs open for at least 12 months as of February 28, 2013, 36 (82%) had over 350 members as of February 28, 2013.

• The 526-member example will give you an idea of the revenues, expenses, and projected income of a club that is able to maintain throughout the year the same number of members as the average number of members of Anytime Fitness clubs that were open for at least 12 months as of February 28, 2013 (a relatively strong time of year for club memberships).

• Of the 44 Anytime Fitness Express clubs open for at least 12 months as of February 28, 2013, 18 (41%) had over 526 members as of February 28, 2013.

• The 650-member example will give you an idea of the revenues, expenses, and projected income of a high achieving club.

• Of the 44 Anytime Fitness Express clubs open for at least 12 months as of February 28, 2013, 13 (30%) had over 650 members as of February 28, 2013.

Revenue, Expense, and Profit Assumptions for Anytime Fitness Express Clubs 

• Enrollment fee revenues/cost of proximity cards:  Anytime Fitness assumes that 45% of members will be replaced through attrition (which is in line with the industry average). The average enrollment fee is $49.

• Membership revenues: Based on the report from Anytime Fitness’ designated processor, the average monthly membership fee paid under each membership agreement was $43.45, and each franchisee had 75% as many membership agreements in effect as members. In other words, if you have 350 members, on average, you could expect to have 262 memberships, with approximately 75% of those memberships being individual memberships, and 25% of those memberships being couples (or family or multiple) memberships.

• Vending revenues:  This is based on the per membership revenues that Anytime Fitness’ corporate-owned clubs receive from vending.

• Rent: The assumption is for 2,900 square feet of space, with the gross rent paid being $13.76 per square foot per year.

• Equipment:  This amount assumes you enter into a 3 year lease purchase agreement for your equipment, paying approximately 15% down, and financing the balance (estimated balance: $85,000).

• Processing and credit card fees:  5.5% of membership fees

• Bad debts:  3.6% of membership fees

• Utilities:  $4.40 per square foot, and includes gas, electric, water, cable, Internet, and telephone

• Advertising Funds:  $300 per month to the General Advertising Fund

• Local Advertising:  $4,000 (minimum)

• Anytime Health:  Franchisees will be selling Anytime Health (web-based services) memberships and will keep everything charged above $0.50 for individual members, and $1.00 for couples or family memberships.  Maximum amount franchisees pay for these memberships:  $225 per month ($675 if you own 3 or more centers)

• Miscellaneous expenses:  This line item includes janitorial services, legal and accounting fees, cell phone, supplies, licenses, and other similar items.

• Salaries:  The projection assumes you act as manager of your center and do not receive a separate salary. Anytime Fitness has therefore not included any additional expense for salary. Because Anytime Fitness Centers are designed to operate 24 hours a day without the necessity of having staff on premises, you should not need any other employees. However, some states or municipalities may require you to have an employee on premises whenever your center is open. If you are an absentee-owner, or you operate in a location that requires the center to be staffed at all times, your expenses will increase significantly because you will have to pay salaries and benefits to employees.
  

Franchise Review:  Why Snap Fitness is One of the Top Fitness Franchises for 2013

By emphasizing value, no contracts, scaled-down amenities, and 24-hour access for members, the Snap Fitness franchise model doesn’t differ that much from some of its competitors, especially Anytime Fitness; but its aggressive expansion globally, turning it into an international brand, could give it a growing edge.

Snap Fitness may have its biggest year yet in 2013 as it follows through on previously announced plans for multiple franchise openings in countries such as the United Kingdom and Australia. At the end of 2012, it also announced newly signed master agreements that will bring its concept to Singapore, Thailand, Hong Kong, the Philippines, Indonesia, Malaysia, Egypt, and Mexico.

Such widespread cultivation of the brand will certainly be beneficial to North American franchise partners as the name becomes known around the world. The company, founded  by CEO Peter Taunton in Chanhassen, Minn., has only been around for 10 years and already has more than 2,400 locations sold worldwide; it adds about 10-15 new locations each month, according to company marketing materials. The latest agreements call for more than 700 locations to open in the new markets over the next five years.

Franchise Chatter chose Snap Fitness as one of the franchises that defined 2011 and named the company among the top fitness franchises of 2012; we continue to see excellent opportunities offered by the company for potential franchisees.

It has a slightly lower franchise fee than Anytime Fitness, $15,000 versus $27,000, respectively. However, the total initial investment ranges from $76,100 to $361,700, which is marginally higher than the comparable range for Anytime Fitness. Franchisees also pay a fixed royalty fee of $449, rather than a percentage of revenue, which allows Snap Fitness owners to keep more money in their pockets.

Snap Fitness is currently marketing itself as a chain of clubs that promotes total wellness for its members with value-added services such as custom nutrition profiles, online meal planning, and personal training, which seems to be an industry trend in response to what consumers are demanding.

To read about the next franchise on our list of Top Fitness Franchises for 2013, please check back on Friday.

To read about the previous name on our list, please click here.

Detailed Estimates of Menchie’s Franchise Costs Based on Item 7 (Estimated Initial Investment) of Menchie’s 2013 Franchise Disclosure Document

1.  Franchise Fee:  $40,000

• If you sign a Multi-Unit Agreement, the Initial Franchise Fee you will pay will depend on the number of Stores you agree to open. If you agree to open three Stores, your Franchise Fee will be $32,000 for each Store. If you agree to open five Stores, your Franchise Fee will be $25,000 for each Store.

2.  Training Expenses:  $500 – $2,430

• Menchie’s will not charge a fee for you and one additional person to attend the initial training program. You, however, are responsible for all hotel, transportation, and other costs and expenses for the people you designate to attend the initial training program.

• The amount above represents the estimated costs and expenses you will incur for you and one additional person to attend the initial training program.

3.  Development Services Fee:  $1,920

• At the time you sign the Franchise Agreement, you must pay Menchie’s the Development Services Fee. The Development Services Fee is earned upon receipt and is non-refundable.

4.  Real Estate Rent and Deposit:  $8,000 – $10,000

• A Menchie’s Store occupies 900 to 1,700 square feet of space. Stores can be located in strip shopping centers, shopping malls, free-standing units, and other venues in downtown commercial areas and in residential areas.

• Rent depends on geographic location, size, local rental rates, businesses in the area, site profile, and other factors, and could be considerably higher in large metropolitan areas than in more suburban or small town areas.

• Menchie’s anticipates that you will rent the premises. It is possible, however, that you will choose to buy, rather than rent, real estate on which a building suitable for the Store already is constructed or could be constructed.

• The rental security deposit may be refundable depending on your agreement with your landlord.

5.  Leasehold Improvements:  $70,000 – $110,000

• Leasehold improvement costs, including floor coverings, wall treatments, counters, ceilings, painting, window coverings, electrical, carpentry, and similar work, and architect’s and contractor’s fees depend on the site’s condition, location, and size; the demand for the site among prospective lessees; the site’s previous use; the build-out required to conform the site for your Store; and any construction and other allowances the landlord grants.

• The lower figure assumes that you have a unique real estate model; the higher figure assumes a high square footage model.

• These monies are not refundable after they have been expended.

• The estimates included above reflect the average deduction provided by landlords for tenant improvements and other allowances.

6.  Furniture, Fixtures, and Equipment:  $69,792 – $146,570

• These amounts include the frozen yogurt-making machines that you must purchase from Menchie’s required supplier. The amount also includes the cost for refrigerators, freezers, and other equipment, such as office equipment and furniture and a telephone system.

• These amount are not refundable, but the machines may be sold.

7.  Computer (POS) System:  $9,998

• You must purchase a Computer (POS) System that meets Menchie’s specifications and requirements.

8.  Signage:  $1,900 – $10,000

• This includes inside and outside signage. The monies are usually not refundable after they have been expended.

9.  Technology Fee:  $240

• You must pay Menchie’s a monthly technology fee in the amount of $80 per month. The estimate reflects your Technology Fee for the first three months of operation.

10.  Opening Inventory:  $3,000 – $5,000

• This includes food and beverage products, paper products, cleaning supplies, printing, uniforms, promotional material, and other supplies.

• Monies spent on these items are not refundable, but the unused items may be sold.

11.  Uniforms, Merchandise, Equipment, and Supplies:  $3,000

• You must purchase your uniforms, merchandise, and certain equipment and supplies from Menchie’s.

12.  Advertising:  $2,975 – $5,000

• Monies to be included in initial marketing for the first 3 months of operation. This includes funds to be used for your Grand Opening Marketing campaign. These monies are not refundable.

13.  Utility Deposits, Security Deposits, Business Licenses, etc.:  $1,000 – $3,500

• You must obtain business licenses as dictated by local regulations. You will need to provide monies for deposits for utilities and insurance.

• Insurance costs depend on policy limits, types of policies, nature and value of physical assets, gross revenue, number of employees, square footage, location, business contents, and other factors bearing on risk exposure.

• The estimate contemplates insurance costs for 3 months.

• These monies are not refundable.

14.  Inspection fee:  $0 – $1,500

• Menchie’s will inspect your Store prior to opening. If your Store does not pass initial inspection, you will be charged for all costs and expenses Menchie’s incurs in conducting any subsequent inspection, which amount will not exceed $1,500.

15.  Additional Funds – 3 Months:  $6,000 – $36,000

• This item estimates your expenses during the initial period (first 3 months) of operation of your Menchie’s Store (other than the items separately identified in the table).

• This estimate includes payroll costs.

• These figures are estimates and Menchie’s cannot guarantee that you will not have additional expenses starting the business.

16.  Total:  $218,325 – $385,158

• Menchie’s relied on its Affiliates’ years of experience operating a Menchie’s Store to compile these estimates.

Highlights of Anytime Fitness’ Item 19 Financial Performance Representations (2013 FDD)

• The franchise offered is for the operation of a fitness center designed to operate with minimal overhead and labor costs under the trademark Anytime Fitness or Anytime Fitness Express.

• The franchisor began offering Anytime Fitness franchises in October 2012. It began offering Anytime Fitness Express franchises in October 2006.

• Through an affiliate, Anytime Fitness has developed a card access system and security system that allows members of an Anytime Fitness center to have access to an Anytime Fitness center 24 hours a day, automated tanning and vending services, and reciprocal benefits between centers. In some cases, Anytime Fitness may allow your center to not be accessible 24 hours a day.

• If a center will have more than 3,500 square feet, it will usually be identified as an Anytime Fitness center. If it has less than 3,500 square feet, it will usually be identified as an Anytime Fitness Express center.

• The principal differences between an Anytime Fitness center and an Anytime Fitness Express center, other than size, are that an Anytime Fitness center will have showers, while the Anytime Fitness Express center will not, and an Anytime Fitness Express center will either be located in a town of less than 5,000 people, or it will be a second club you open within the Designated Territory of a club you already operate.

• Anytime Fitness centers will also usually have two tanning beds, while an Anytime Fitness Express center will typically only have 1 tanning bed, and the Anytime Fitness Express center will have less exercise equipment.

• Today’s post will focus on Anytime Fitness centers, while tomorrow’s post will be devoted to Anytime Fitness Express centers.

• Anytime Fitness had 1,521 Anytime Fitness clubs open for at least 12 months as of February 28, 2013.

This post is the first of two parts. To read Part 2, please click here.

When Dennis Saller’s daughter was 10 years old, she suggested to her father that he should invest in a Chick-fil-A franchise. Saller was too busy building his dental practice and ignored his daughter’s suggestion; and the Chick-fil-A that eventually opened in his area became one of the highest-grossing in the chain.

Burger 21 franchisee Dennis Saller and family at ribbon cutting

Now 27, Mary Alison Saller told her dad that he should invest in another up-and-coming food service franchise, Burger 21; and this time he wasn’t going to make the same mistake. He listened.

Saller, 62, is the first franchisee of a chain headquartered in Tampa, Fla., and on its way to becoming a leading brand across the country. Saller opened his unit in Orlando, Fla., in November 2012 and is already discovering that customers are crazy about the brand.

Launched by the owners of the Melting Pot Restaurants Inc., Burger 21 is a new fast-casual concept featuring 21 chef-inspired burger creations, hand-dipped signature shakes, and other menu items such as chicken tenders, hot dogs, and salads. There are six Burger 21 restaurants in Florida and immediate plans call for additional stores to open in New Jersey, Georgia, North Carolina, and Washington, D.C.

The chain differentiates itself from other burger purveyors by offering not only traditional beef patties, but also burgers made from chicken, turkey, seafood, and vegetables along with an array of signature sauces.

“Burger 21 offers so much more than what people refer to as the competition — Five Guys, BurgerFi, In-N-Out Burger,” Saller said. “The owners of the Melting Pot restaurants spent a year and a half looking at developing the menu.”

First Franchisee

Saller spent 29 years building his dental practice in Melbourne, Fla., before taking his daughter’s advice and looking into the Burger 21 concept. It was the only franchise he was interested in once he had visited a store in Tampa and tasted the food.

“I just saw it as an unbelievable opportunity,” Saller said. “The trend in the restaurant business right now is the fast-casual gourmet.”

Plus, he said, the company’s research shows that women find the menu items particularly appealing and they tend to be the decision makers for a family’s food choices.

“If women love the food, you’re going to drive the family, so a very big decision maker for me was the menu and the atmosphere.”

Today, Mary Alison and her sister, Whitney Prieto, 31, are part of their father’s business, acting as managers of the store at the Mall at Millenia in Orlando. While the family had no prior restaurant experience before becoming franchise partners, Saller sees himself as an entrepreneur who built his own dental practice and his daughters have business experience in marketing and human resources.

Highlights of SweetFrog’s Item 19 Financial Performance Representations (2013 FDD)

Explanatory Notes for Table 1 (Statement of Period and Monthly Average Net Sales for Select Affiliate-Owned Shops)

• SweetFrog has prepared the attached statements of (1) net sales and (2) average net sales and selected expenses for 9 Affiliate-Owned Shops that were in operation for the entire period January 1, 2012 through December 31, 2012.

• As of December 31, 2012, there were 41 additional Affiliate-Owned Shops that were not included because those Shops were not open during that entire 12 month period.

• All Shops included offer substantially the same products and services to the public that franchised sweetFrog Shops are expected to offer.

• The information presented is unaudited and was prepared using uniform accounting methods consistent with generally accepted accounting principles and on a basis consistent with those included in sweetFrog’s annual audited consolidated financial statements.

• The Affiliate-Owned Shops included use the same accounting methods and system.

Explanatory Notes for Table 2 (Statement of Period Average Net Sales and Selected Expenses for Select Affiliate-Owned Shops)

• Net Sales means all revenue from the sale of all services and products and all other income of every kind and nature related to the Shop, whether for cash or credit and regardless of collection in the case of credit.

• Cost of Goods Sold includes the total costs of frozen yogurt and merchandise sold at the Shops. It includes, but is not limited to, yogurt mixes, topping supplies, and serving and packaging supplies. These costs may vary from year to year, or within a year, and among different locations due to price fluctuations of supplies.

• Gross Profit is calculated by subtracting Cost of Goods Sold from Net Sales.

• Labor includes employee wages, payroll taxes, and benefits for Hourly and Management Labor at the Shops. The Labor also includes allocated payroll expenses for District Management and performance based compensations for Shop and District Management.

• Rent includes rent, property taxes, and other miscellaneous items.

• Repair and Maintenance includes equipment repair and maintenance and building janitorial service.

• Utilities include costs for gas, electricity, water, and sewage.

• Other Operating Expenses include, but are not limited to, royalty fees (5% of sales), costs for shop supplies, office supplies, uniforms, armored car, credit card fees, bank charges, telephone and internet expenses, taxes and fees, insurance, and equipment rental charges.

• During the time period covered above, these Affiliate-Owned Shops did not pay any advertising and marketing fees that you are required to pay SweetFrog. In addition, given that Affiliates operate multiple sweetFrog shops, the Affiliate will benefit from economies of scale that may not be available to you.

• EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization.

Explanatory Notes for Table 3 (Average Monthly Gross Sales for Certain Licensed Shops)

• SweetFrog has prepared this statement of average gross sales for 12 Licensed Shops that were in operation for the entire period from January 1, 2012 through December 31, 2012.

• As of December 31, 2012, there were 23 additional Licensed Shops that were not included because:

• (1) 20 of those Licensed Shops pay royalty fees to SweetFrog on a flat fee basis and SweetFrog does not have gross sales information from those Licensees; and

• (2) 3 of those Licensed Shops pay on a percentage basis but SweetFrog waived the royalty fee due for this period.

• Licensed Shops operate under the “sweetFrog” name and sell similar products to Franchised Shops. Unlike Franchised Shops, Licensed Shops are not required to pay marketing or advertising fees to SweetFrog’s Affiliate.

• Under SweetFrog’s License Agreements for the Licensed Shops, SweetFrog does not have the right to audit the computer systems, books, and records for Licensed Shops to obtain additional information regarding gross sales of the Licensed Shops.

• The information below was taken from royalty reporting forms submitted by Licensed Shops. SweetFrog believes the information to be accurate but has not audited the Licensed Shops’ records to confirm this information.

• The License Agreements do not define “gross sales” but SweetFrog considers the term to mean total selling price of all services and products and all income of every other kind and nature related to the Licensed Shop.

• Since SweetFrog only began franchising in April 2012, and its first franchised sweetFrog Shop opened on June 8, 2012, SweetFrog does not have sufficient historical information for the franchised sweetFrog Shops to make a reliable financial performance representation.

Table 1 – Statement of Period and Monthly Average Net Sales for Select Affiliate-Owned Shops (January 1, 2012 to December 31, 2012)

Franchise Review:  Why RetroFitness is One of the Best Fitness Franchises for 2013

While other fitness franchise models focus on scaling back the size of clubs and eliminating unessential amenities, RetroFitness is defining its brand as “more fitness for less money” with big-box facilities chock-full of distinct features based on a ’80s theme.

The idea is to provide members with good value through an extensive array of amenities for a low, monthly membership fee of $19.99.

Founded by Eric Casaburi in 2002, New Jersey-based RetroFitness began franchising in 2006. The clubs feature cardio movie theaters, circuit training equipment, weights, personal training, group fitness, tanning booths, a RetroBlends smoothie bar, supplements, and chiropractic services.

Casaburi has worked on building brand awareness nationally with some unusual strategies, such as purchasing a billboard in Times Square that could be seen on the New Year’s Eve broadcast of “New Year’s Rockin’ Eve,” hosted by Ryan Seacrest on ABC; Casaburi also promoted the franchise on an episode of the CBS reality show “Undercover Boss.”

Franchise Chatter recognized RetroFitness before those two marketing coups. It named RetroFitness one of the top franchises that were operating “under the radar” before ranking it the No. 1 fitness franchise in 2012. From New Jersey, RetroFitness has spread to New York, Pennsylvania, Connecticut, Delaware, and elsewhere. It began 2013 with 90 clubs open and expects to have another 25 open before the end of the year, including its first in California and North Carolina.

By focusing on new technology and top-of-the-line equipment, it hopes to continue attracting new members and franchisees. The company aligns itself with other established brands by offering Life Fitness and Hammer Strength equipment, P90X gear, and Under Armour apparel in its clubs.

According to the company’s Franchise Disclosure Document, the total investment necessary to begin operation of a RetroFitness franchise is between $861,250 and $1,522,499. While the initial investment is higher than many of its competitors, the company has also offered higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).

In addition to being a franchisor in the fitness sector, Casaburi also founded a second franchise operation, Let’s YO! frozen yogurt, in 2011. Franchise Chatter also recognized that chain as one of the top frozen yogurt franchises of 2013.

To read about the next franchise on our list of Top Fitness Franchises for 2013, please check back on Wednesday.

To read about the previous name on our list, please click here.

Detailed Estimates of Firehouse Subs Franchise Costs Based on Item 7 (Estimated Initial Investment) of Firehouse Subs’ 2013 Franchise Disclosure Document

1.  Deposit:  $2,500

• The deposit is not refundable, but it will be applied to the initial franchise fee.

2.  Balance of Initial Franchise Fee (Less Any Deposit):  $17,500

3.  Mural:  $2,800 – $4,000

• Firehouse Subs will commission a mural for your Restaurant, which you must pay to Firehouse Subs when they order it.

4.  Travel and Living Expenses During Training:  $300 – $13,350

• Firehouse Subs provides initial training to you and 1 other person (or up to 2 of your owners) without charge. If space is available at such training session, Firehouse Subs will provide initial training for up to 3 additional people at no charge for a total of 5 attendees.

• You are responsible for all travel and living expenses for trainees.

• This estimate assumes that the franchisee will get the required training in their market at the Area Representative’s training store and the franchisee would be going home at the end of each day during this extensive training period and does not include the 1 week of classroom training in Jacksonville, Florida.

• The high end of the estimate is only for the 1 week of classroom training in Jacksonville and includes travel, hotel, rental car, and reasonable food allowances.

5.  Opening Advertising:  $5,000 – $10,000

• Firehouse Subs requires you to conduct a market introduction advertising and promotional program within the first 12 months after the opening of the Restaurant. This requirement may be waived if your Restaurant exceeds the franchisor’s expectations for sales performance.

• The market introduction program is in addition to your ongoing marketing obligations.

6.  Real Property:  $500 – $75,000

• The Restaurant’s location (the “Site”) typically will be located in a strip mall that is close to retail or other commercial area.

• The size of a Restaurant is estimated to be between 1,700 and 2,500 square feet. The estimated rental is from $18 to $50 per square foot per year.

• Costs of leasehold improvements, which include floor covering, wall treatment, counters, ceilings, painting, window coverings, plumbing, electrical, carpentry, and related work and contractor’s fees, will vary significantly depending on the condition, location, and size of the Site; the demand for the Site among prospective lessees; and any construction and other allowances granted by the landlord after negotiations.

• These costs also include architectural drawings.

• Some restaurants may also have to pay government imposed impact and permit fees depending on the Site. They vary considerably due to numerous factors and Firehouse Subs is unable to estimate them.

7.  Equipment and Fixtures:  $55,437 – $130,940

• This item may include tables and booths, sinks, refrigerators, ovens, steamers, ventilation systems, display cases, stools, chairs, utensils, computers, POS System, a phone system and facsimile machine that meets Firehouse Subs’ specifications and standards, a desk, filing cabinets, and related office supplies for a Restaurant.

8.  Signs:  $3,200 – $19,500

• The cost of signage varies depending on the size and type of signs, the size and location of the Restaurant, and any local and development requirements.

• If local law permits, you must display a curb or marquee sign that complies with Firehouse Subs’ specifications and standards.

9.  Leasehold Improvements:  $40,095 – $391,000

• Build-out or renovation of your Site to conform to Firehouse Subs standards includes paint, tile work, lighting, salt walls, drywall partitions, counters, and the like.

• The cost of these improvements will be significantly more if you select a Site with no pre-existing improvements.

• If you lease your Site, you may be able to negotiate an allowance to cover a portion of these build-out and leasehold improvements.

10.  Rental of Site (3 Months):  $7,650 – $57,135

11.  Opening Inventory:  $5,312 – $25,556

• You must purchase a beginning inventory pursuant to Firehouse Subs’ Inventory Stock Plan as described in the Operations Manual.

12.  Deposits and Prepaid Expenses:  $0 – $69,400

• The amount of rent and security deposit will depend on the size, condition, and location of the Site; and the demand for the Site among prospective lessees.

13.  Business Licenses:  $20 – $15,235

• You must obtain business and health licenses for the operation of your Restaurant. Other considerations are, but not limited to, zoning, electrical, plumbing, fire inspection, fictitious name, occupations, and various other licenses or permits.

• You should consult the appropriate governmental authority concerning such licenses and/or permits and the associated expenses for your Restaurant before you sign a Franchise Agreement.

14.  Insurance:  $2,000 – $10,800

• Insurance must be obtained to meet the minimum requirements established by the System Standards.

• The insurance policy must be in force and effect when the lease for your store is signed. If there is no lease (for example, you own the property), then the insurance policy must be in force and effect when you begin construction.

15.  Miscellaneous Expenses (3 Months):  $2,000 – $100,000

• This item estimates your initial start-up expenses. These expenses include payroll costs.

• Firehouse Subs cannot guarantee that you will not have additional expenses starting the business.

16.  Additional Funds (Working Capital – 3 Months):  $25,000

17.  MIS System Fee:  $100 – $1,200

• The annual MIS System Fee is $1,200 and is prorated for the first year. The low end is for a Franchise Agreement signed in December and the high end is for a Franchise Agreement signed in January. It is calculated as follows:  for a Franchise Agreement in December, you will pay an MIS Fee of $100 with $1,200 due in January for the following year; and for a Franchise Agreement signed in January, you will pay an MIS Fee of $1,200.

18.  Accounting System Fee:  $0 – $21,437

• If you obtain legal and accounting services to help with business formation; review of contracts, financing documents, and leases; setting up of books and records; and other services. This amount varies greatly depending on the services performed and rates prevailing in your market.

19.  Total Estimated Initial Investment Under the Unit Franchise Program (Excluding Real Estate Purchase Costs):  $169,414 – $989,553

• Firehouse Subs relied on its experience and that of its affiliates to compile these estimates.

• Firehouse Subs does not offer financing directly or indirectly for any part of the initial investment for your Restaurant.

• The actual lowest total investment for an individual Restaurant during 2012 was $120,830 and the highest total investment for an individual Restaurant was $732,145.

Continuing Fees

1.  Royalty:  6% of Gross Sales, per Accounting Period

2.  System Fund Contributions:  1% of Gross Sales, per Accounting Period

3.  Local Advertising:  2% of Gross Sales, per Accounting Period