FDD Talk 2018: 9Round Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

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

• Section I – Background information on the 9Round franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a 9Round 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 9Round franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned 9Round 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 9Round’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• average number of members as of December 31, 2017 for the top third, middle third, and bottom third of the 373 franchised 9Round Centers that were in operation for the full 12-month period ending December 31, 2017

• average number of members as of December 31, 2017 for the top third, middle third, and bottom third of the 7 affiliate-owned 9Round Centers that were in operation for the full 12-month period ending December 31, 2017

• average number of members as of December 31, 2017 for the top third, middle third, and bottom third of the 380 franchised and affiliate owned 9Round Centers that were in operation for the full 12-month period ending December 31, 2017

Section I – Background Information

15 Things You Need to Know About the 9Round Franchise

Celebrates 10th Year Anniversary

1.  This year marks the 10th anniversary of 9Round and the brand is celebrating its continued growth since the first gym opened in July 2008. Shannon Hudson, co-founder and CEO of 9 Round, said, “Heather [Hudson’s wife] and I began our path to success ten years ago with only one 9Round location in Greenville, South Carolina and $1.72 in our bank account. Today, 9Round has become a global sensation and achieved more than $16 million in annual revenue last year alone. We always knew the 9Round concept was something special and it’s so rewarding to see people around the world embrace our brand.”

2.  In a press release celebrating the brand’s milestone birthday, the company highlighted its recent achievements, including opening 253 new clubs since January 2017. Additionally, 9Round has consistently ranked on the Inc. 5000 list, Entrepreneur’s Franchise 500 list, as well as Entrepreneur’s annual lists of the Fastest-Growing Franchises, Top Global Franchises, and Top Franchise Brands.

3.  9Round is seeing continued growth in 2018, as the company anticipates a 37 percent increase in new locations and a 32 percent increase in annual revenue. Hudson added, “It’s exciting to share our success with all of our franchisees because without them, we wouldn’t be where we are today. With their support and positive energy, we plan to continue to reach new markets and evolve the 9Round brand in 2018.”

Launches New Health and Fitness App

4.  Around the end of May 2018, 9Round launched its new health and fitness app, which was designed to strengthen the brand’s relationship with members by keeping them constantly connected inside and outside of the club. Members will now be able to keep track of their workouts, monitor fitness goals, invite a friend to work out, get fitness and nutrition tips, and plan meals, all on 9Round’s app. Members will also be able to connect the app to 9Round’s heart rate technology, 9Round PULSE, to record and track their workout stats.

5.  Shannon Hudson, co-founder and CEO of 9Round, said, “With the app, 9Round will be able to play a significant role in improving the everyday lifestyle of its members. The app makes it easier for our members to be connected to our brand even when they aren’t in the club, allowing 9Round to provide continuous support.”

6.  The app can also be used by non-members. Members are able to review their workout results and set fitness goals, while non-members can search for and book a free workout closest to them, as well as shop the 9Round store. The brand hopes that by catering to both groups, the app will enhance current members’ experience and motivate prospective members to try the workout and become involved in the 9Round lifestyle.

7.  Heather Hudson, co-founder and COO of 9Round, adds, “In today’s busy world, it’s so easy to get lost in everyday activities and lose sight of your fitness goals, which is why keeping 9Round connected to its members at all times is an important extension of our mission. We want to be able to help our members reach their fitness goals no matter where they are or what they’re doing.”

Launches Own Line of Supplements

8.  At the beginning of 2018, 9Round officially launched its own line of nutritional supplements available for purchase by both members and non-members at any 9Round location. 9Round members enjoy the added convenience of purchasing the supplements online through 9Round’s Member Portal.

9.  Shannon Hudson, co-founder and CEO of 9Round, said, “At 9Round, we strive to help our members get the most out of their workouts – from having a trainer always present every session to providing online nutritional guidance. Developing our own line of supplements was the next logical step in our company’s expansion.”

10.  The new supplements include:

• 9Round Pre-Workout – Designed to boost workout performance and endurance, this product opens blood vessels to increase blood flow.

• 9Round Energy – Rich in antioxidants, 9Round Energy supports a healthy metabolism by sustaining the body’s energy throughout the day.

• 9Round Protein – This nutritious protein powder is available in two delicious flavors – vanilla and chocolate ice cream – and contains 22 grams of protein per serving. Also low in sugar, 9Round Protein can be added to smoothies or baking recipes.

• 9Round Women’s Support – When taken as directed, this all-natural supplement reduces cravings and bloating, and helps balance hormones.

• 9Round Bar – This instant meal is perfect for those always on the go. The tasty protein bar is full of fiber and satisfies hungry appetites. As an added benefit, it only contains six grams of sugar.

Company History

11.  9Round was founded in 2008 by Shannon Hudson – a retired kickboxer who obtained the title of IKF Light Middleweight Kickboxing Champion of the World – and his wife Heather in Greenville, South Carolina. After retiring from kickboxing, Hudson wanted to offer high-level personal training – similar to what he received as a professional athlete – to the public.

12.  9Round’s technique uses boxing and kickboxing training to provide a full body workout in only 30 minutes. Clients move between 9 different workout stations, every three minutes, while being supervised by a personal trainer.

13.  Hudson used his previous business experience from owning three karate schools to open 9Round with his wife. Within the first month, the Hudsons signed up 100 members with no marketing material or signage on the building. The success of the first 9Round gym inspired the Hudsons to keep pushing and they started franchising the concept in 2009.

14.  Today, 9Round has locations across the United States, Canada, Mexico, Costa Rica, Australia, New Zealand, the United Kingdom, Japan, Saudi Arabia, Jordan, Lebanon, United Arab Emirates, and Turkey.

Entrepreneur’s Franchise 500

15.  9Round ranked No. 197 on Entrepreneur’s 2018 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of 9Round 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 9Round’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:  170
• Outlets at the End of the Year:  270
• Net Change:  +100

2016

• Outlets at the Start of the Year:  270
• Outlets at the End of the Year:  385
• Net Change:  +115

2017

• Outlets at the Start of the Year:  385
• Outlets at the End of the Year:  490
• Net Change:  +105

Company-Owned

2015

• Outlets at the Start of the Year:  2
• Outlets at the End of the Year:  4
• Net Change:  +2

2016

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  6
• Net Change:  +2

2017

• Outlets at the Start of the Year:  6
• Outlets at the End of the Year:  7
• Net Change:  +1

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

Historic Membership Numbers as of December 31, 2017 for the 380 9Round Centers in Operation for the Full 12 Months of 2017

• As of December 31, 2017, there were 614 9Round Centers operating in 41 states and 13 countries. Of these 614 Centers, 497 were in the United States. In the United States, 7 Centers are operated by the franchisor’s affiliates and 490 are franchised locations.

• Of these 497 U.S. Centers, 380 (373 franchised and 7 affiliate-owned) were in operation for the full 12-month period ending December 31, 2017.

Part 1 – 373 Franchised Centers

• The chart below reflects historical membership information concerning the 373 Franchised Centers that were open and operating for at least the full 12-month period ending December 31, 2017.

Centers With Top 33% Membership Counts (124 Centers)