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

by Franchise Chatter on September 19, 2016

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

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Snap Fitness 247 Franchise Photo

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

  • Section I – Background information on the Snap Fitness franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Snap Fitness franchise, based on Item 7 of the company’s 2016 FDD
  • Section III – Presentation and analysis of Snap Fitness’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:
  • average number of members and memberships for the 975 Snap Fitness clubs (103 corporate and 872 franchised) that operated for a full 24 months as of December 31, 2015
  • historic member ramp-up (member levels for the 6th month and 12th month of operations) of the 80 clubs (64 franchised and 16 corporate) that opened in 2013 and 2014
  • personal training revenue for the 311 clubs that operated for a full 24 months as of December 31, 2015 and reported a minimum monthly average of $1,000 in personal training revenue (the level Snap Fitness management estimates represents an active personal training program)
  • projected revenues, expenses, and cash flow for a Snap Fitness club based on 450 members, 725 members, and 1,000 members
  • historic club transfer performance (the average percentage change in memberships and total revenue year-over-year for the 130 club transfers in 2013 and 2014, from the first month of club purchase)

Section I – Background Information

Peter Taunton jumped on the fitness bandwagon a bit late in the game, but he had a particular vision in mind that he thought lots of people would find appealing. Instead of all the crazy equipment, high prices, and megaplex approaches, why not pare things down to the bare essentials? After all, there must be lots of people out there who just want some space for a basic workout without all the fuss and the high prices that tend to go along with it.

In 2003, he launched Snap Fitness, a fitness franchise offering small workout spaces without all the bells and whistles of large establishments, including no locker rooms. The idea is to get in, do your workout, and get out. In addition, the privately-owned chain headquartered in Chanhassen, Minnesota is available whenever someone wants their workout, as most locations are open 24/7, with keycard access.

Turns out enough people agreed with him that franchising started the very next year and took off from there. The number of locations has held steady for several years just under the 1,500 mark, currently standing at 1,448 (of which 415 are located outside the U.S. and 103 are company-owned).

Here’s how Snap Fitness keeps the sweat running in the highly competitive fitness industry:

Coming Soon to the UK

This past April, Snap Fitness announced it has inked a deal with MSG Life Limited that will result in 30 locations opening across the UK.

International Versus Domestic Growth

Although as previously mentioned, the overall number of Snap Fitness locations has held steady for several years, there has been a surprising amount of flux inside the overall number. What growth has taken place in the last five years has been on the international scene.

The number of locations outside the U.S. in 2012 was just 228 but now stands at 415. Meanwhile, 2012 was the peak number for domestic locations at 1,023, a number that has declined slightly each year to its current 930.

Meet Someone New?

Snap Fitness recently announced the launch of what would have been a first in the fitness industry – its own branded dating app. Snap Together was billed as an app that uses algorithms to pair up fellow Snap Fitness members based on their profiles, based not only on dating-related questions but also an array of fitness questions. It would also include, of course, uploading your own gym selfie.

The new app was announced on April 1, which meant it was in fact an April Fool’s Day joke, and one that was very well executed!

A Forceful Founder

In 2010, Peter Taunton was named “Entrepreneur of the Year” by Ernst & Young for his successful innovation, financial performance, and personal commitment not only to his business but also the community. What he brought to the fitness arena were three not-so-secret weapons: Making fitness fast, convenient, and affordable.

The NASCAR Connection

Snap Fitness goes for a particular demographic, one that fits well with the NASCAR auto-racing fan base. The chain’s star driver is Landon Cassill.

Section II – Estimated Costs

  • Please click here for detailed estimates of Snap 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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