In this FDD Talk 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 2018 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 2018 FDD
- Section IV – Number of franchised and company-owned Planet 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 Planet Fitness’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:
- 2017 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, 2017
- 2017 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, 2017
- 2017 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, 2017
- 2017 average membership sales (EFT); other membership sales; total net revenue; payroll costs; marketing expenses; imputed 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, 2017
- 2017 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, 2017
Section I – Background Information
15 Things You Need to Know About the Planet Fitness Franchise
Appoints New Chief Development Officer
1. At the beginning of June 2018, Planet Fitness announced the appointment of Ray Miolla as chief development officer. In his new role, Miolla will be responsible for driving strategic initiatives to fuel Planet Fitness’s overall system-wide growth, overseeing market analysis, planning and development, real estate, construction and design, and franchise sales.
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2. Miolla comes to Planet Fitness with more than 20 years of real estate and development experience in domestic and international franchising from global brands like Gap, Burger King, and Jamba Juice.
3. Most recently, he served as senior vice president, global real estate, store development and franchise services at Gap, Inc. responsible for all brands including Gap, Banana Republic, Old Navy, Athleta, and outlet stores. While at Gap, Inc., Mr. Miolla opened over 150 new stores annually worldwide and grew the franchise business from the ground up to more than 400 locations in over 40 countries.
4. Chris Rondeau, CEO of Planet Fitness, said, “Ray is a proven leader and brand builder, with a strong track record of delivering exceptional results for global brands that spans over two decades. We are excited to have someone with Ray’s deep development and franchise experience on board, to further enhance our management team and support our continued growth and momentum.”
Set to Open Largest Planet Fitness in the Midwest
5. At the end of February 2018, Planet Fitness announced plans to open its 14th location in the Greater Cincinnati market. Owned and operated by Planet Fitness Midwest, the $11 million development will be built at the intersection of Marburg Avenue and Vandecar Way in Oakley and has a projected opening date by the end of the year.
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6. The new project marks Planet Fitness’s continued expansion in the Midwest and is the 30th gym for the brand in the region. At 33,000 sq. feet, the Oakley location will be the largest Planet Fitness in the area and is set to include more than $1 million in equipment featuring 120 pieces of state-of-the-art cardio machines and strength equipment.
7. The club will also feature PF Black Card amenities (PF Black Card amenities vary by location) such as HydroMassage beds, massage chairs, platinum level tanning beds, a Total Body Enhancement booth, fully equipped locker rooms with luxury rain showers, and more. Additionally, new fitness classes will be taught by a certified trainer through the PE@PF® program – free with any Planet Fitness membership.
8. Franchisee Mike Hamilton said, “We’re excited to build our largest Planet Fitness location in the Greater Cincinnati market. Oakley is an area we felt was in need of a high-quality, affordable fitness facility. With memberships starting at $10 and amenities such as HydroMassage beds, massage chairs and free fitness training for all members, we’re confident that Planet Fitness will be a desired fitness option for Oakley residents.”
Continues Global Expansion With New Location in Mexico
9. Over the past few years, Planet Fitness has been opening international locations in Canada, Puerto Rico, the Dominican Republic, and Panama. The brand plans to continue its global expansion and at the beginning of 2018, Planet Fitness announced that it was opening its first club in Mexico in the city of Monterrey. The new location opened in the Santa Catarina area this past spring.
10. According to Chris Rondeau, CEO of Planet Fitness, “We are excited to announce our entrance into Mexico as we continue to extend our footprint and expand our brand internationally. We continue to see an increasing global enthusiasm for our brand and we look forward to entering this new market and introducing the Santa Catarina community to the Judgement Free Zone.”
11. Planet Fitness was started in 1992 by Michael Grondahl and his brother Marc in Dover, New Hampshire. The brothers had acquired a financially struggling gym and offered dramatically reduced membership fees to compete against larger and better-known gym brands. Their idea paid off and the first location was a success.
12. In 1993, the Grondahls hired Chris Rondeau – who eventually rose to the top of the company and is currently CEO of Planet Fitness – to work the front desk. 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.
13. They came up with a non-intimidating, low-cost model centered around what they call the “Judgement Free Zone.” Since then, Planet Fitness has been known as the gym franchise where everyone is welcome to workout at their own pace without intimidation from seasoned gym patrons.
14. Planet Fitness opened its first franchised location in 2003 in Florida and it has since become one of the largest gym franchises in the U.S. and Canada.
Entrepreneur’s Franchise 500
15. Planet Fitness ranked No. 21 on Entrepreneur’s 2018 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Planet 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 Planet 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
- Outlets at the Start of the Year: 863
- Outlets at the End of the Year: 1,066
- Net Change: +203
- Outlets at the Start of the Year: 1,066
- Outlets at the End of the Year: 1,255
- Net Change: +189
- Outlets at the Start of the Year: 1,255
- Outlets at the End of the Year: 1,456
- Net Change: +201
- Outlets at the Start of the Year: 55
- Outlets at the End of the Year: 58
- Net Change: +3
- Outlets at the Start of the Year: 58
- Outlets at the End of the Year: 58
- Net Change: 0
- Outlets at the Start of the Year: 58
- Outlets at the End of the Year: 62
- Net Change: +4
Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis
Part 1 – EFT Revenue
- Gross EFT revenue is revenue on 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, excludes returns, and is calculated on a cash basis.
- EFT is the electronic transfer of funds (including without limitation from a credit card, debit card, or bank account) and payment by check or any other means (including without limitation any other current or future form of pre-authorized payment).
- The following charts show average annual gross EFT revenue for Planet Fitness’s 56 corporate and 1,229 franchised clubs in the United States and its territories that have been open and operating for at least 12 months as of December 31, 2017.
- Of the clubs that were open and operating in the United States and its territories at the beginning of January 1, 2017, 6 were excluded because they ceased operations during the year, and 8 Puerto Rico clubs were excluded because they were not in operation all 12 months. All of the clubs that were excluded because they ceased operation had been in operation for more than 12 months.
- The remaining clubs were segregated into three groups, or thirds, based on annual gross EFT revenue (i.e. bottom third, middle third, and upper third).
- The earnings claim figures in the following three charts do not reflect the cost of sales, operating expenses, or other costs or expenses that must be deducted from the gross revenue or gross sales figures to obtain your net income or profit.
- In thousands; represents electronic funds presented for draft for the 12 months of calendar year 2017.
Bottom Third (410 Clubs)