FDD Talk 2016: The Sky Zone Indoor Trampoline Park 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 Sky Zone Indoor Trampoline Park franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Sky Zone Indoor Trampoline Park franchise, based on Item 7 of the company’s 2016 FDD

• Section III – Presentation and analysis of Sky Zone Indoor Trampoline Park’s financial performance representations, based on Item 19 of the company’s 2016 FDD, including information on the:

• 2015 average open jump revenue; event revenue; non-jumping revenue; total revenue; cost of goods sold; advertising and promotion – ad fund; advertising and promotion – all other; amortization and depreciation; CenterEdge expense; cleaning, building/facility supplies; credit card fees expense; insurance expense – general liability; insurance expense – other; interest expense; labor (management labor including payroll taxes); labor (non-management labor including payroll taxes); owner compensation/management fees; office expense; party expense; rent expense; replacement parts/court maintenance; royalties; utilities expense (including telephone); other expenses; total expenses; operating income; EBITDA; and EBITDA + owner’s compensation for the 69 franchisee-owned Sky Zone Indoor Trampoline Parks that were open from January 1, 2015 through December 31, 2015

Section I – Background Information

Backyard trampolines have become a pretty ubiquitous form of entertainment for many households. Now imagine taking a whole bunch of those trampolines and connecting them together into a veritable arena of “bounceability” – a kind of trampoline court – and that essentially describes a Sky Zone Indoor Trampoline Park. In short, it’s awesome.

Rick Platt is the entrepreneur who came up with the idea. What he really wanted to do back in 2004 was establish a whole new sport with professional athletes. His idea didn’t come to fruition, but he did find out very quickly that all kinds of people were interested in bouncing on his specialized trampoline courts.

The first location was established in Las Vegas and saw no fewer than 10,000 visitors in its first year. Rick’s son, Jeff, opened up a second facility in St. Louis that started turning a profit in a mere six weeks, which is pretty incredible. That was in 2006. Currently, Jeff serves as the company’s CEO.

Most parks get at least a thousand visitors every day. The company recommends that people purchase tickets online that reserve their space in advance for a set time.

Sky Zone started franchising in 2009, with total current locations numbering at least 142, of which 20 are located outside the U.S. Here’s how Sky Zone keeps on bouncing higher and higher in the fun fitness segment:

Dodgeball, Anyone?

Okay, so most everyone has memories of playing dodgeball as a kid, whether those memories are good or bad. Now imagine playing dodgeball on a trampoline court. Awesome, right?

Sky Zone runs the Ultimate Dodgeball Championship, and 2016 marks the fifth year of the competition. The eight teams who do the best will share $50,000 in cash prizes, with the first place team taking home $20,000 and second place receiving $10,000. That is some high-stakes dodgeball.

Star Power

There’s nothing like an unexpected visit from celebrities to give your brand a boost. Mariah Carey and Nick Cannon (amicably divorced) showed up at a Sky Zone park with their kids for Father’s Day.

Making Fitness Fun

Most people who visit Sky Zone are really just looking for a good time, but now more and more people are discovering that it can also be a great path to better fitness and overall health. You can burn as many as 1,000 calories during an hour of jumping because it actually ends up making use of pretty much all major muscle groups in your body. And the great thing is that it’s low-impact as well, which is good news for your joints and bones.

Patented Design

It was no small task to properly engineer this kind of trampoline court, and the government agrees, having awarded the company with U.S. Patent #5,624,122.

International Expansion

Sky Zone will be opening its first UK location in Cheshire Oaks in late summer 2016. Saudi Arabia now has two locations, one in Riyadh and the other in Aziz Mall in Jeddah. Other international locations are situated in Canada, Mexico, and Australia.

Section II – Estimated Costs

• Please click here for detailed estimates of Sky Zone Indoor Trampoline Park franchise costs, based on Item 7 of the company’s 2016 FDD (updated).

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