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

In this FDD Talk 2016 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 2016 FDD

• Section III – Presentation and analysis of Retro Fitness’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• fiscal year 2015 average gross sales for the 125 Retro Fitness franchised outlets that either commenced pre-sales more than 11 months prior to December 31, 2015, or were fully open and operating for more than 11 months as of December 31, 2015

• fiscal year 2015 average gross revenue per square foot for the 125 Retro Fitness franchised outlets that either commenced pre-sales more than 11 months prior to December 31, 2015, or were fully open and operating for more than 11 months as of December 31, 2015

• average number of members as of February 28, 2016 for the 125 Retro Fitness franchised outlets that either commenced pre-sales more than 11 months prior to December 31, 2015, or were fully open and operating for more than 11 months as of December 31, 2015

• 2014 average earnings before interest, taxes, depreciation, and amortization for the 66 Retro Fitness franchised outlets that were open to the public and in operation for more than 13 months as of December 31, 2014, and submitted copies of their 2014 tax returns to Retro Fitness

• 2014 average earnings before interest, taxes, depreciation, and amortization as a percentage of total revenue for the 66 Retro Fitness franchised outlets that were open to the public and in operation for more than 13 months as of December 31, 2014, and submitted copies of their 2014 tax returns to Retro Fitness

• 2014 average payroll expenses for the 66 Retro Fitness franchised outlets that were open to the public and in operation for more than 13 months as of December 31, 2014, and submitted copies of their 2014 tax returns to Retro Fitness

• 2014 average rent expenses for the 66 Retro Fitness franchised outlets that were open to the public and in operation for more than 13 months as of December 31, 2014, and submitted copies of their 2014 tax returns to Retro Fitness

Section I – Background Information

Retro Fitness Crossing the Country

Retro Fitness has big cross-country growth-strategy plans as the fitness chain plans further development in markets in California, Texas and Florida.

Within these markets, the company’s goal is for development to produce a Retro Fitness club within every 3-5 miles. That’s a big change for a chain for which most of its locations are in New Jersey and the New York City metropolitan area. Retro Fitness is based in Colts Neck, New Jersey, and has about 150 locations.

“Retro Fitness is born and bred out of New Jersey – we know the Northeast and are being tactical in our development approach,” Eric Casaburi, founder and CEO of Retro Fitness, said in a news release. “We want to make sure we’re expanding in the right markets with the leading real estate landlords and brokers, and exhibiting at ICSC New York is a great opportunity for us to get one-on-one face time with these key players in the development industry.”

Chain Rises to No. 242 on Franchise 500 List

Retro Fitness was ranked No. 242 on the 2016 Franchise 500 list by Entrepreneur magazine. The company had dropped from No. 217 in 2013 to No. 289 by 2014, but rose to No. 274 in 2015 and improved by 32 positions in 2016.

The fitness chain finished 2015 with 144 locations, all in the United States and all franchised.

Company Has Been Franchising for 10 Years

Retro Fitness was founded in 2004 by Eric Casaburi and is based in New Jersey. The chain started franchising in 2006.

The gyms feature cardio equipment with LCD screens, circuit training equipment, weights, group fitness, personal training, tanning, Retro Movie Theaters that play ’80s films, the Retro Blends Juice Bar, supplements, and chiropractic services. Members pay a low rate of $19.99 per month.

Multiple Revenue Streams Fuel Business

The Retro Fitness business model hinges on multiple revenue streams in addition to the predictable monthly income from basic membership; personal training services, sales at the juice bar, group fitness and other services are among the revenue sources.

Retro Fitness franchises can be found in retail strip centers, urban and downtown sites and industrial sites.

Fitness App, Rewards Programs Keep Members Connected

Members can take advantage of the Retro fitness app, through which they can check into their clubs, track their workouts, connect to third-party apps and devices, take part in challenges, access social media, set goals, get deals from Retro, and track and redeem Retro Rewards points.

The Retro Rewards Program enables members to earn points from activities they already do: check in, buy a smoothie, post about their clubs on Facebook, and refer their friends to Retro Fitness. Points can be redeemed for prizes that can range from smoothies to vacation getaways.

Section II – Estimated Costs

• Please click here for detailed estimates of Retro 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