In this FDD Talk 2015 post, you’ll learn the following:

• Section I – Background information on the Retro Fitness franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Retro Fitness franchise, based on Item 7 of the company’s 2015 FDD

• Section III – Presentation and analysis of Retro Fitness’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:

• fiscal year 2014 average gross sales for the 102 Retro Fitness franchised outlets that were officially open, operating, and reporting to ABC Financial for more than 13 full months as of January 31, 2015

• fiscal year 2014 average gross revenue per square foot for the 102 Retro Fitness franchised outlets that were officially open, operating, and reporting to ABC Financial for more than 13 full months as of January 31, 2015

• average number of members as of February 28, 2015 for the 102 Retro Fitness franchised outlets that were officially open, operating, and reporting to ABC Financial for more than 13 full months as of January 31, 2015

• 2013 average earnings before interest, taxes, depreciation, and amortization for the 75 Retro Fitness franchised outlets that were owned and operated by franchisees for the entire 2013 calendar year, and submitted copies of their 2013 tax returns to Retro Fitness

• 2013 average earnings before interest, taxes, depreciation, and amortization as a percentage of total revenue for the 75 Retro Fitness franchised outlets that were owned and operated by franchisees for the entire 2013 calendar year, and submitted copies of their 2013 tax returns to Retro Fitness

• 2013 average payroll expenses for the 75 Retro Fitness franchised outlets that were owned and operated by franchisees for the entire 2013 calendar year, and submitted copies of their 2013 tax returns to Retro Fitness

• 2013 average rent expenses for the 75 Retro Fitness franchised outlets that were owned and operated by franchisees for the entire 2013 calendar year, and submitted copies of their 2013 tax returns to Retro Fitness

Section I – Background Information

Retro Fitness got a boost from Jordan Knight of New Kids on the Block fame when the NKOTB lead singer signed a franchise agreement in March 2015 to convert his gym into a Retro Fitness facility.

Knight’s gym, Fit World, is in Cranston, Rhode Island. He opened the club there in 1995 and rebranded it as Fit World after a move in 2008. Knight plans to open more locations in Massachusetts.

Renovations began in early May. The gym will be rebranded with the franchise’s red and yellow color scheme and amenities such as the Retro Theater, where members sit on cardio equipment instead of seats and watch movies on a large screen; the Retro Blends Smoothie bar; and a training area.

Best Fitness Franchise

Retro Fitness was named the best fitness franchise in the country as it made it onto the good side of Forbes’ “Best and Worst in Franchising” list in June 2014. The chain was also listed as the second-best franchise among chains with entry costs of $500,001 and higher. The chain was recognized for its 24 percent growth rate and 94 percent continuity rate.

Chain Aims for 300

Retro Fitness was founded in 2004 by Eric Casaburi, who expanded the chain and ended up taking it to “Undercover Boss” in 2013. The theme of “more fitness for less money” refers to the numerous fitness and health-related choices for a low-cost monthly membership of $19.99. Casaburi, still the company’s CEO, previously operated on a regional level in the Northeast, but the company’s reach is expanding rapidly.

The chain announced in January 2015 that it planned to move from 120 gyms to 300 in the next two years. This follows the addition of 20 new clubs in 2014, which increased membership to 500,000. New markets are planned in major cities in Florida, California, Illinois and other states, as well as Washington, D.C.

Multiple Revenue Streams

Numerous opportunities for revenue exist for Retro Fitness franchisees. The facilities offer more than just memberships for people using workout equipment. Income also comes from personal trainers, sales of juices and smoothies, child-care services, and add-on services such as tanning, massage and chiropractic care.

Each facility offers circuit training equipment, free weights, and many pieces of cardio equipment outfitted with LCD television screens. The Retro Movie Theater sets Retro Fitness apart, combining fitness activity with a large-screen movie experience.

Mobile App Added

Retro Fitness announced a new mobile app in October 2014 for users of Apple and Android mobile devices. The app helps members track their workouts, chart goals, earn points, take part in challenges and share information, and connects with third-party devices like the Fitbit and apps like MyFitnessPal.

RetroResults Contest

Retro Fitness sponsored a national 90-day personal training weight-loss contest to start off 2015. Weigh-ins were done at the start of the contest, at the midpoint, and at the end. The top 15 finishers in the RetroResults competition won prizes, including the grand prize of $10,000 for the person with the biggest change in body weight.

Section II – Estimated Costs

• Please click here for detailed estimates of Retro Fitness franchise costs, based on Item 7 of the company’s 2015 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis

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