Franchise Costs: Detailed Estimates of Gold’s Gym Franchise Costs (2016 FDD)

Detailed Estimates of Gold’s Gym Franchise Costs Based on Item 7 (Estimated Initial Investment) of Gold’s Gym’s 2016 Franchise Disclosure Document

Based on new 35,000 square foot Gold’s Gym Facility

1.  Initial Franchise Fee:  $32,000 to $40,000

2.  Travel and Living Expenses During Training:  $4,000 to $7,000

• This includes amounts for your personnel’s lodging, transportation, and meals while they attend the franchisor’s management training program. The estimates are for 2 to 5 individuals attending the franchisor’s management training program for 5 days and 4 nights. It also includes fees if more than 2 people from the Facility attend training.

3.  3 Months’ Rent:  $26,250 to $367,500

• The figures in the table reflect the franchisor’s estimate for a newly-constructed 35,000 square foot Gold’s Gym Facility. The Site may be in a rural or metropolitan area as long as the franchisor thinks there is a sufficient market in the area for the Facility’s services.

• Rent can range from 25 cents per square foot per month for suitable warehouse space to $3.50 per square foot per month for prime space in a major metropolitan area.

4.  Security Deposit for Lease:  $9,000 to $225,000

5.  Leasehold Improvements and Construction Costs (assuming no pool):  $1,750,000 to $2,800,000

• Leasehold improvements, including floor covering for aerobics and other areas, wall treatment, ceilings, painting, and electrical, carpentry, and similar work, can range from $50 to $80 per square foot for a 35,000 square foot Gold’s Gym Facility.

• This figure also covers the cost for remodeling, decorating, fixtures, and other fixed assets.

• You must dedicate at least 2/3 of the total square footage to workout areas.

• Depending on the lease terms, your landlord might cover some of these costs.

• This estimate assumes that the Facility will not have a pool. Although not required, the franchisor recommends that new Gold’s Gym Facilities install a pool. A typical pool will require 3,325 square feet of floor space (which includes 3,000 square feet for the pool and 325 square feet for pool equipment). If you elect to install a pool, the franchisor estimates that you will incur $215,000 to $285,000 in costs, which will be payable to outside suppliers.

6.  Selectorized Equipment and Free Weights:  $125,000 to $500,000

• Costs for selectorized equipment and free weights in a typical Gold’s Gym Facility range from $5 to $20 per square foot.

7.  Cardiovascular Equipment:  $150,000 to $500,000

• Cardiovascular equipment costs approximately $1,000 to $3,000 for a standard bicycle, $5,000 for an upright bicycle with a built-in television, $4,000 to $10,000 for a treadmill, $2,000 to $6,000 for a stair climber machine, and $3,000 to $7,000 for an elliptical machine.

• The franchisor recommends that each Gold’s Gym Facility have at least 50 pieces of cardiovascular equipment.

• Your costs could vary from these estimates if you decide to lease, rather than purchase, this equipment.

• If you already operate a health club on the site that you are converting to a Gold’s Gym Facility, you probably will spend less.

8.  Signage:  $35,000 to $85,000

• These figures cover amounts for both exterior and interior signage.

9.  Initial Inventory, Other Equipment, and Supplies:  $12,000 to $56,000

• An initial supply of printed materials, a desk, record books, and writing supplies will cost approximately $4,000 to $10,000. The range shown also includes approximately $5,000 to $40,000 of initial inventories of vitamins, supplements, and sportswear (including branded Gold’s Gym merchandise).

• You should not assume that you can buy inventories or other supplies on credit.

10.  Computer System and Gym Management System:  $20,000 to $35,000

• These figures cover amounts for a typical computer system and Gym Management System, including the first three months of ongoing fees payable to Jonas, which typically is represented as a percentage of the revenue that the supplier would collect from your Facility’s members.

11.  Advertising and Marketing:  $25,000 to $170,000

• The Franchise Agreement does not require you to advertise the Facility’s grand opening, but the franchisor strongly recommends that you do so. Depending on the medium chosen, this advertising can cost up to $50,000 or more. This figure includes amounts for some grand opening advertising and marketing, along with your Local Marketing during the Facility’s first few months of operation.

12.  Miscellaneous Opening Costs:  $10,000 to $65,000

• This figure includes amounts for business licenses; legal and accounting expenses; utility costs ($300 to $800 per month, plus deposits); workers’ compensation, public liability, and other insurance ($5,000 to $25,000, depending in part on gross membership sales during the year and the number of employees you have); and other prepaid expenses.

• This figure also includes the extension fee if the franchisor extends the Opening Deadline.

13.  Additional Funds – 3 Months:  $20,000 to $150,000

• This item estimates your initial start-up expenses (other than the items identified separately in the table) for your Facility’s first 3 months of operation, including miscellaneous supplies, inventory and equipment, laundry and janitorial services, payroll costs (but not any draw or salary for you), and other miscellaneous costs.

14.  Total Estimated Initial Investment (excluding real estate purchase costs and assuming no pool):  $2,218,250 to $5,000,500

• The franchisor relied on its, its predecessor’s, and its affiliates’ experience in operating Gold’s Gym Facilities since 1980, to compile the estimate for additional funds and other estimates in this Item.

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