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FDD Talk 2018: Blink Fitness Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

Published on June 10, 2018 by Franchise Chatter Leave a Comment
in FDD Talk: Fitness Franchises, Fitness Franchises, Franchise Earnings



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

  • Section I – Background information on the Blink Fitness franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Blink Fitness franchise, based on Item 7 of the company’s 2018 FDD
  • Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Blink Fitness franchise, based on Items 5 and 6 of the company’s 2018 FDD
  • Section IV – Number of franchised and company-owned Blink Fitness outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD
  • Section V – Presentation and analysis of Blink Fitness’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
  • average and median year-end membership, gross sales, personnel costs, supplies and maintenance, utilities, other club expenses, EBITDAR, rent and occupancy costs, and EBITDA (plus royalties, technology and support services fee, brand fund, and local marketing) for the 49 Blink Fitness gyms that were open and operating for at least 1 full year as of December 31, 2017
  • average and median year-end membership, gross sales, personnel costs, supplies and maintenance, utilities, other club expenses, EBITDAR, rent and occupancy costs, and EBITDA (plus royalties, technology and support services fee, brand fund, and local marketing) for the 39 Blink Fitness gyms that also had been open and operating for at least 2 full years (but less than 3 full years) as of December 31, 2017
  • average and median year-end membership, gross sales, personnel costs, supplies and maintenance, utilities, other club expenses, EBITDAR, rent and occupancy costs, and EBITDA (plus royalties, technology and support services fee, brand fund, and local marketing) for the 34 Blink Fitness gyms that also had been open and operating for at least 3 full years (but less than 4 full years) as of December 31, 2017
  • average and median year-end membership, gross sales, personnel costs, supplies and maintenance, utilities, other club expenses, EBITDAR, rent and occupancy costs, and EBITDA (plus royalties, technology and support services fee, brand fund, and local marketing) for the 23 Blink Fitness gyms that also had been open and operating for at least 4 full years as of December 31, 2017

Section I – Background Information

12 Things You Need to Know About the Blink Fitness Franchise

Celebrates a Year of Successful Growth

1.  Blink Fitness started off 2018 on a high note as the brand celebrated a year of strong growth in 2017. In addition to continuing its expansion in New York and New Jersey, Blink Fitness opened locations in two new markets, Philadelphia and Los Angeles. Blink Fitness has plans to continue its growth in the U.S. throughout 2018, with more than 25 locations slated to open by the end of the year. Blink Fitness expects to have a total of 90 gyms by year’s end – the majority of which will be company-owned, along with the first wave of franchisee-owned gyms.

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2.  At the beginning of the year, Blink Fitness said that it had 64 gyms open in four states. Additionally, the brand signed development deals for an additional 45 gyms. Blink Fitness entered Pennsylvania and California with the opening of gyms in Philadelphia and Los Angeles. The brand signed development deals to bring Blink Fitness to Massachusetts, Virginia, Upstate New York, Georgia, and parts of the Midwest, including Michigan and Illinois.

3.  Todd Magazine, then-president of Blink Fitness, said, “It has been an incredible year in terms of growth both on the company-owned and franchise side. Becoming a bi-coastal brand and signing franchise deals across the Midwest, South and Northeast were two giant steps toward reaching our five-year goal of 300 locations nationwide. We are thrilled with the progress we have made in the past year and feel that we have even better things coming in 2018.”

New Executive Team Promotions

4.  Near the end of May 2018, Blink Fitness announced the promotion of former president Todd Magazine to chief executive officer and former vice president of operations David Collignon to senior vice president of operations. Magazine joined Equinox, Blink Fitness’s parent company, in 2012 as executive vice president of new business.

5.  A year later, Magazine transitioned exclusively to the Blink brand, serving as executive vice president and general manager before serving as president prior to this most recent promotion. Under Magazine’s leadership, Blink has grown from four to 70 locations in six years.


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6.  Harvey Spavek, executive chairman and managing partner of Equinox Holdings, Inc., said, “Todd’s vision and tenacity have propelled Blink Fitness into a thriving bi-coastal, multi-state brand. He has simultaneously established the brand as a highly differentiated player and transformed Blink into an autonomous, profitable business. Under his leadership, we look forward to a future of sustained, strong performance and continued growth.”

7.  Collignon has been with Blink Fitness since 2016 as vice president of operations and is credited with transforming the brand’s operations team. With the new promotion, Collignon’s responsibilities will be expanded to include franchise operations. When asked about Collignon, Magazine said, “Under David’s leadership, the business has seen a significant reduction in member attrition, as well as staff turnover. He also helped turbo charge Blink’s personal training and retail businesses, both of which grew exponentially over the past year.”

Development Deal with Two-Time NBA Champion Draymond Green

8.  At the end of January 2018, Blink Fitness and Golden State Warriors forward Draymond Green announced a franchise development deal to bring at least 20 gyms to Michigan and Illinois. The announcement marks Blink’s first venture into the Great Lakes area. The development agreements were signed by Green and Tom Shumaker, an experienced finance professional. While no locations were formally announced, Green and Shumaker have been actively evaluating Detroit and its surrounding suburbs, Grand Rapids, Lansing, Ann Arbor, and parts of the Chicagoland region.

9.  To celebrate the new partnership, Blink Fitness released a video that showed Green serving as the president of Blink Fitness for a day in place of Blink’s Todd Magazine. Green said, “I’m really excited about bringing Blink gyms to Michigan and Chicago. I think about where I grew up and the people I grew up with. We didn’t have anything like Blink. Everyone wants a cool place to get fit and workout. But lots of communities don’t have any options. The places are either terrible or too expensive. We’re going to change that. This is not an endorsement deal for me. I’m going to invest my money and my time to partner with Blink to bring an amazing gym experience to these communities.”

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Company History

10.  Blink Fitness was founded in 2011 by Equinox Fitness (started by the Errico family in 1991), a luxury fitness company which operates several other fitness brands including Equinox, PURE Yoga, and SoulCycle. Equinox launched Blink as a separate fitness company focused on a value-driven membership model.

11.  Before Equinox started franchising the Blink Fitness concept in 2015, Blink locations were primarily located in New York and New Jersey. After franchising began, Blink Fitness initially targeted markets in Maryland, parts of New Jersey, Upstate New York, Virginia, Washington, parts of Long Island, and Washington D.C. Today, nearly every state in the U.S. is available for Blink Fitness franchising; target markets include Dallas, Denver, Austin, San Antonio, Houston, Atlanta, Charlotte, San Diego, Portland, Seattle, Orlando, Tampa, Fort Lauderdale, and Miami.

Entrepreneur’s Franchise 500

12.  Blink Fitness did not rank on Entrepreneur’s 2018 Franchise 500 list.

Section II – Estimated Costs

  • Please click here for detailed estimates of Blink Fitness franchise costs, based on Item 7 of the company’s 2018 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

  • Please click here for detailed information on Blink Fitness’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2015

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  0
  • Net Change:  0

2016

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  0
  • Net Change:  0

2017

  • Outlets at the Start of the Year:  0
  • Outlets at the End of the Year:  0
  • Net Change:  0

Company-Owned

2015

  • Outlets at the Start of the Year:  35
  • Outlets at the End of the Year:  41
  • Net Change:  +6

2016

  • Outlets at the Start of the Year:  41
  • Outlets at the End of the Year:  51
  • Net Change:  +10

2017

  • Outlets at the Start of the Year:  51
  • Outlets at the End of the Year:  63
  • Net Change:  +12

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

  • This financial performance representation discloses historical information regarding the average and median end-of-year membership numbers, annual Gross Sales, annual expenses, annual EBITDAR, annual rent and occupancy costs, and annual EBITDA (all terms defined below) for 49 Blink Fitness Gyms operated by the franchisor’s parent company, Blink Holdings, in the States of New York (41) and New Jersey (8) that were open and operating for at least 1 full year as of December 31, 2017.
  • Of these 49 Blink Fitness Gyms that were open and operating for at least one full year as of December 31, 2017, 39 of them (80%) also had been open and operating for at least 2 full years (but less than 3 full years) as of December 31, 2017; 34 of them (69%) also had been open and operating for at least 3 full years (but less than 4 full years) as of December 31, 2017; and 23 of them (47%) also had been open and operating for at least 4 full years as of December 31, 2017.
  • As of December 31, 2017, Blink Holdings also operated an additional 14 Blink Fitness Gyms (a total of 63 Blink Fitness Gyms were open and operating as of that date). However, of the additional 14 Blink Fitness Gyms, the performance of 12 Blink Fitness Gyms is not included below because they had not been open and operating for at least 1 full year as of December 31, 2017.
  • The franchisor excluded the performance of the remaining 2 Blink Fitness Gyms, which were developed and opened as part of test development projects and therefore did not incur the costs and expenses of the typical Blink Fitness Gym for which the franchisor is offering franchises in the disclosure document.
  • No franchised Blink Fitness Gyms were in operation as of December 31, 2017.
  • The 49 affiliate-owned Blink Fitness Gyms included in this financial performance representation are substantially similar to the Blink Fitness Gyms for which the franchisor is offering franchises in the disclosure document, and their services and products are the same as those to be offered and sold by franchised Blink Fitness Gyms.
  • These affiliate-owned Blink Fitness Gyms reflect the standard Blink Fitness Gym prototypes and a wide range of demographics and business conditions found in the urban and suburban markets in which they currently operate and, as a result, these affiliate-owned Blink Fitness Gyms may incur higher operating expenses than Blink Fitness Gyms located in other markets.
  • All 49 affiliate-owned Blink Fitness Gyms included in this financial performance representation are located in the greater New York City metropolitan area (including 8 Blink Fitness Gyms in New Jersey), which may have higher population densities, labor costs, and rent expense than other markets across the United States in which you are interested in developing a Blink Fitness Gym.
  • The information in the tables below shows both the historical average and the historical median end-of-year membership numbers, annual Gross Sales, annual expenses, annual EBITDAR, annual rent and occupancy costs, and annual EBITDA of all 49 affiliated Blink Fitness Gyms during their first full 12 months of operation, of 39 of those affiliated Blink Fitness Gyms during their 2nd full 12 months of operation, of 34 of those affiliated Blink Fitness Gyms during their 3rd full 12 months of operation, and of 23 of those Blink Fitness Gyms during their 4th full 12 months of operation.
  • The beginning and ending dates of the 12 months of operation represented for each Blink Fitness Gym differ because each Blink Fitness Gym opened on a different date.
  • If a Blink Fitness Gym opened on the 1st through the 15th day of a calendar month, its 1st full month of operation for purposes of this financial performance representation began on the 1st day of the month during which it actually opened.
  • If a Blink Fitness Gym opened on the 16th through the last day of a calendar month, its 1st full month of operation for purposes of this financial performance representation began on the 1st day of the month following the month during which it actually opened.
  • For example, the first full 12 months of operation for a Blink Fitness Gym opened on February 7 would, for purposes of this financial performance representation, begin on February 1 and run through January 31 of the following year. The first full 12 months of operation for a Blink Fitness Gym opened on February 25 would, for purposes of this financial performance representation, begin on March 1 and run through February 28 of the following year.

Average Year-End Results for Blink Fitness Gyms Open at Least 12 Months

Year 1



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