In this FDD Talk 2017 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 2017 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Planet Fitness franchise, based on Items 5 and 6 of the company’s 2017 FDD
- Section IV – Presentation and analysis of Planet Fitness’s financial performance representations, based on Item 19 of the company’s 2017 FDD, including information on the:
- 2016 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, 2016
- 2016 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, 2016
- 2016 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, 2016
- 2016 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, 2016
- 2016 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, 2016
Section I – Background Information
10 Things You Need to Know About the Planet Fitness Franchise
Recipient of Engage for Good’s 2017 Gold Halo Award
1. In early June, Planet Fitness announced that it had received Engage for Good’s 2017 Gold Halo Award in the social services category. The award recognizes Planet Fitness’s impact with its pro-kindness, anti-bullying initiative, The Judgement Free Generation™. The Halo Awards are given to organizations in North America that have taken action to positively affect their communities through social and cause marketing initiatives.
2. Chris Rondeau, CEO of Planet Fitness, said that through the company’s Judgement Free Zone, Planet Fitness has “witnessed the amazing things that can be accomplished when people feel accepted and like they belong.” Rondeau also said that Planet Fitness hopes to extend its “philosophy of kindness and inclusion” to youth in its gyms’ local communities in order to empower the first Judgement Free Generation of youth.
New Ad Campaign to Kick Off 2017
3. At the start of 2017, Planet Fitness revealed its new ad campaign, “The World Judges, We Don’t. At Planet Fitness, Be Free.” The campaign debuted in the U.S. during ABC’s Dick Clark’s New Year’s Rockin’ Eve with Ryan Seacrest. It was the second year in a row that Planet Fitness was the presenting sponsor of Times Square’s iconic New Year’s Eve celebration in New York City.
4. Jessica Correa, Senior Vice President of Marketing for Planet Fitness, says the new campaign showcases the brand’s evolution and reinforces Planet Fitness’s promise to let members do things their way and be free. The campaign was created with ad agency Hill Holliday and shows that Planet Fitness is a refuge from not only other gyms but society as a whole and that it is a place where you can be yourself without fear of being judged.
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5. From April 15 to 22, Planet Fitness partnered with HydroMassage to offer members and non-members a free massage at participating Planet Fitness locations in the U.S. In order to take advantage of the free massage, customers needed to get a coupon from PlanetFitness.com and present it at their local Planet Fitness. According to Ms. Correa, the company wanted to reward everyone after doing their taxes with “an opportunity to recharge, re-center, and reemerge as refreshed as possible.”
6. In celebration of Mother’s Day and the spring season, Planet Fitness offered a special discount on memberships — a $5 enrollment fee and then $10 a month with no commitment. The promotion was available from May 1 to 12 at all U.S. and Canada locations. Planet Fitness saw the offer as a way for people to jumpstart their fitness without feeling the pinch financially.
7. Planet Fitness was founded in 1992 by brothers Michael and Marc Grondahl in Dover, New Hampshire. The two acquired a financially struggling gym and offered dramatically reduced membership prices to compete against better known brands. A year later, the Grondahls hired Chris Rondeau, the company’s current CEO, to work the front desk.
8. With Rondeau’s help, the Grondahls recognized that there was a greater opportunity to serve a much larger segment of the population if they changed the gym environment, both in attitude and format, by creating a non-intimidating, low-cost model. This was when Planet Fitness first became known as the “Judgement Free Zone,” which continues to serve as the company’s slogan.
9. In 2003, Planet Fitness opened its first franchised location in Florida. Today, there are over 1,000 gyms in the U.S. and Canada.
Entrepreneur’s Franchise 500
10. Planet Fitness has ranked on Entrepreneur’s annual Franchise 500 list almost every year in the last decade, except in 2007, 2008, and 2014. The brand’s highest rank was No. 32 in 2017, while its lowest rank was No. 157 in 2010.
Section II – Estimated Costs
- Please click here for detailed estimates of Planet Fitness franchise costs, based on Item 7 of the company’s 2017 FDD (updated).
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Planet Fitness’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2017 FDD.
Section IV – Financial Performance Representations (Item 19, 2017 FDD) and Analysis
Part 1 – EFT Revenue
- The following chart shows average annual gross EFT revenue for Planet Fitness’s corporate and franchised clubs that have been open and operating for at least 12 months as of December 31, 2016. The clubs were segregated into three groups, or thirds, based on annual gross EFT revenue (i.e. bottom third, middle third, and upper third).
- Gross EFT revenue is revenue from recurring monthly and annual membership fees that are collected from club members via EFT. This does not include any prepaid membership fees, revenue from retail sales, or other sources of revenue, and excludes returns.
Corporate and Franchised
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