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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...

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FDD Talk 2016: The Planet Fitness Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on June 27, 2016

in FDD Talk 2017: Fitness Franchises, Fitness Franchises, Franchise Earnings



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Planet Fitness Interior Photo by Urban Partners Group

In this FDD Talk 2016 post, you’ll learn the following:

  • Section I – Background information on the Planet Fitness franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Planet Fitness franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Planet Fitness’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • 2015 average gross EFT revenue for the bottom third, middle third, and upper third of franchised Planet Fitness clubs that have been open and operating for at least 12 months as of December 31, 2015
  • 2015 average gross EFT revenue for the bottom third, middle third, and upper third of corporate Planet Fitness clubs that have been open and operating for at least 12 months as of December 31, 2015
  • 2015 average gross EFT revenue for the bottom third, middle third, and upper third of franchised and corporate Planet Fitness clubs (combined) that have been open and operating for at least 12 months as of December 31, 2015
  • 2015 average membership sales (EFT); other membership sales; total net revenue; payroll costs; marketing expenses; royalties; utilities; supplies and maintenance; miscellaneous expenses; rent; total operating expenses; and earnings before interest, taxes, depreciation, and amortization (EBITDA) for the bottom third, middle third, and upper third of corporate Planet Fitness clubs that have been open and operating for at least 12 months as of December 31, 2015
  • 2015 average net revenue per square foot, average EBITDA per square foot, and average number of square feet for the bottom third, middle third, and upper third of corporate Planet Fitness clubs that have been open and operating for at least 12 months as of December 31, 2015

Section I – Background Information

Planet Fitness Aims to Open Record Number of New Stores in 2016

Planet Fitness, which has ballooned to more than 1,150 locations, is looking to open 210 to 220 new franchised gyms in 2016 and is focusing on improving systemwide same-store sales growth.

“Our group of well capitalized franchisees is on schedule to open a record number of new stores this year and the pipeline is robust looking beyond 2016,” CEO Chris Rondeau said in a May 2016 news release.

“We believe our differentiated, asset-light business model has our company well positioned to deliver enhanced profitability and greater value to our shareholders over the long term,” Rondeau said.



Grondahl Attracted Attention With Lower Prices

Michael Grondahl started Planet Fitness in 1992 when he acquired a gym that had performed poorly. Grondahl reduced membership prices to stand out against more well-known gyms as well as to cater to occasional or new gym users.

All locations hold a pizza night once a month for members, and a bagel morning. Tootsie Rolls are available at all times. While sometimes criticized for providing calorie-heavy food, the chain says it’s important for people to treat and reward themselves.

Closed Sports Authority, Walmart Stores Could Fuel Planet Fitness Growth

Planet Fitness is looking at Sports Authority stores that were to close as part of reorganization after filing for Chapter 11 bankruptcy protection in March 2016. Rondeau said Planet Fitness also is interested in more than 20 closed Walmart Neighborhood Market locations.

Xist Fitness Locations to Become Planet Fitness Gyms

Planet Fitness Midwest, a Planet Fitness franchisee, announced in February 2016 that it was buying three Xist Fitness locations in the St. Louis, Missouri, area from owner Todd Beckman. The Cincinnati, Ohio-based franchisee will also add 17 more gyms in the region. Planet Fitness Midwest currently operates 18 gyms.

Planet Fitness will honor current memberships in the Xist Fitness locations.

Planet Fitness No. 95 in Franchise 500

Planet Fitness was No. 95 in Entrepreneur’s 2016 Franchise 500 list, down from No. 67 in 2015. The chain has a 26 percent unit growth rate over three years, with 265 new locations. Ninety-six gyms opened in 2015.

Planet Fitness is known for its No-Judgement Zone, as well as its Lunk Alarm, which is tripped by dropped weights and loud grunts by members using heavy equipment.

The Lunk Alarm doesn’t apply just to the average Joe or Jill. Steve Weatherford, a Superbowl champion and fitness guru, complained that he was kicked out of a Planet Fitness for “excessive breathing/grunting.”

Weatherford said such an alarm discourages serious athletes from making the best of themselves.

A basic membership with Planet Fitness costs $10, plus a $20 activation fee. Members can also opt for a “black” membership, through which they can visit other franchises and use the massage chairs and tanning salons.



The chain offers no classes, but offers two circuits: one 30-minute full-body circuit and a 12-minute ab circuit. Locations have rows of cardio machines, along with some strength-training machines and free weights.

Section II – Estimated Costs

  • Please click here for detailed estimates of Planet Fitness franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

Section III – Financial Performance Representations (Item 19, 2016 FDD) and Analysis



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