In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Anytime Fitness franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for an Anytime Fitness franchise, based on Item 7 of the company’s 2019 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Anytime Fitness franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned Anytime Fitness outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Anytime Fitness’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- average number of members for Anytime Fitness centers that were open for at least 12 months as of February 28, 2019
- projected enrollment fees; membership fees; vending revenues; personal training revenues; rent; personal training expenses; royalties; processing/credit card fees; bad debts; utilities; insurance; proximity card costs; advertising funds; local advertising; vending product costs; maintenance; base technology fee; Healthy Contribution fees; conference fee; miscellaneous expenses; manager salary and payroll costs; and income before depreciation, interest, taxes, and debt expense for Anytime Fitness centers with 500 members, 1,150 members, and the average number of members
Section I – Background Information
14 Things You Need to Know About the Anytime Fitness Franchise
Announces Global Partnership With Special Olympics
1. At the beginning of April 2019, Anytime Fitness announced a global partnership with Special Olympics. Anytime Fitness will encourage the owners and staff members at nearly 5,000 gyms to voluntarily coach, train, and support Special Olympics athletes worldwide.
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2. Chuck Runyon, co-founder and CEO of Anytime Fitness, said, “Anytime Fitness and Special Olympics share a common belief that exercise can be beneficial, in all sorts of ways, to virtually anyone. Regardless of fitness level, ability or location, Anytime Fitness and Special Olympics are inclusive organizations that open their doors to others, meeting people wherever they are along their fitness journey, helping them get to a healthier place – Anytime, Anywhere, Anyone.”
3. With over 6 million athletes participating in 100,000 competitions every year, there are opportunities nearly every day for Anytime Fitness gyms in 40 countries to support local Special Olympics athletes. The many ways Anytime Fitness gym owners and staff members can support Special Olympics include:
- Inviting Special Olympics athletes to train in Anytime Fitness gyms;
- Sponsoring and/or coaching local teams;
- Encouraging individuals with and without intellectual disabilities to participate together in “Unified” group training sessions at Anytime Fitness gyms;
- Organizing fundraisers for Special Olympics athletes or teams;
- Coordinating cheer squads for local athletes and teams;
- Leading athletes and their fans in warm-up exercises at Special Olympics events; and
- Hosting hydration, flexing, and stretching stations at Special Olympics events.
4. Kelli Seely, chief marketing and development officer for the Special Olympics, said, “We are thrilled to be embarking on a global partnership with Anytime Fitness. Anytime Fitness’ commitment to inclusion is truly inspiring. By partnering with their gyms in communities around the world, we hope to not only provide opportunities to improve the health and fitness of Special Olympics athletes, but to also create ‘unified’ moments where athletes with and without disabilities can learn from and challenge one another to be their best.”
Expanding Into Germany
5. In early April 2019, Anytime Fitness announced that the brand was expanding into Germany and that the country’s first gym would be opening soon. A European-based master franchising team plans to open a corporate gym later this year, while simultaneously seeking franchisees to open additional gyms beginning in 2020. The master franchising team will combine the fitness industry expertise of Stefan Tilk with the branding and marketing expertise of Ashish Sensarma.
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6. Tilk’s extensive fitness industry experience includes nine years as the CEO of Fitness First Germany, where his major focus was to constantly evolve the product and service proposition for its members in a fast-changing market. Prior to that, Tilk worked in senior management roles at companies such as TUI/Deutsche Bahn and Bertelsmann, focusing on transforming businesses.
7. According to Tilk, “Anytime Fitness has improved lives on six continents and we’re confident our gyms will be successful in Germany as well. There are many reasons why Anytime Fitness has been the fastest-growing gym chain in the world for 11 consecutive years – and why the business model has flourished in more than 30 countries. Benefits and programming for Anytime Fitness members are constantly evolving and expanding. And Anytime Fitness franchisees truly love what they do. Getting to know your members on a personal level and helping them learn to lead healthier, happier lives is a very satisfying way to spend your workday.”
8. Sensarma is a veteran apparel executive in the branded retail and digital space, with expertise in franchising. Proficient at driving profitable growth, Sensarma also possesses a global understanding of consumer aspirations, having led the global growth of brands like Mexx, Vilebrequin, and Wolford.
9. Sensarma said, “A very large portion of the German population wants to lead healthy lifestyles but do not get the right type of support to make important changes. Our plan is to bring Anytime Fitness to them in a welcoming and supportive environment, strongly focusing on coaching to make the difference. For our franchisees, there will be opportunities to relate closely with their gym members while running successful small businesses.”
10. Anytime Fitness was founded in 2002 by Chuck Runyon, Dave Mortensen, and Jeff Klinger in Minnesota. Runyon, Mortensen, and Klinger had first met in the early 1990s while working for a fitness club in St. Paul, Minnesota. In 1995, the trio became business partners for the first time when they purchased and ran Southview Athletic Club for the next six years. After successfully growing the Southview Athletic Club, the business partners sold the gym in 2001.
11. While Runyon, Mortensen, and Klinger ran Southview Athletic Club, they also worked for a consulting firm focused on improving under-performing athletic clubs across the United States. It was during this time that the trio developed the idea for Anytime Fitness. Franchising began not long after Anytime Fitness was founded and Eric Keller, a former employee of Southview Athletic Club, became the first Anytime Fitness franchisee later in 2002.
12. The Anytime Fitness concept was a hit and by 2008, the company was approaching 700 franchisees in the U.S. and Canada. A year later, the company opened its 1,000th location in Wake Village, Texas. Over the next few years, Anytime Fitness continued to rapidly expand domestically and internationally.
13. As of 2018, Anytime Fitness had over 4,200 gym locations and 3 million clients in more than 32 countries. Each location is open 24 hours a day, 365 days a year. There are now Anytime Fitness locations in all 50 states, Canada, Mexico, Australia, New Zealand, United Kingdom, Ireland, Grand Cayman, Poland, the Netherlands, Spain, Qatar, India, Italy, Chile, Japan, Singapore, Malaysia, and the Philippines.
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14. Anytime Fitness ranked No. 20 on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Anytime Fitness franchise costs, based on Item 7 of the company’s 2019 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Anytime Fitness’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 2,090
- Outlets at the End of the Year: 2,231
- Net Change: +141
- Outlets at the Start of the Year: 2,231
- Outlets at the End of the Year: 2,355
- Net Change: +124
- Outlets at the Start of the Year: 2,355
- Outlets at the End of the Year: 2,423
- Net Change: +68
- Outlets at the Start of the Year: 33
- Outlets at the End of the Year: 33
- Net Change: 0
- Outlets at the Start of the Year: 33
- Outlets at the End of the Year: 33
- Net Change: 0
- Outlets at the Start of the Year: 33
- Outlets at the End of the Year: 28
- Net Change: -5
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- The franchises offered are for the operation of fitness centers designed to operate under the trademark Anytime Fitness or Anytime Fitness Express.
- The franchisor began offering Anytime Fitness franchises in October 2002. It began offering Anytime Fitness Express franchises in October 2006.
- As of the issuance date of the latest FDD, Anytime Fitness requires you to staff your standard Anytime Fitness center or Anytime Fitness Express center for a minimum number of hours per week and it requires you to offer small and/or large group training and personal training services to your members, both of which may be done by you or by qualified staff that you hire.
- Anytime Fitness may also require you to use a telephone answering service during the time your Anytime Fitness center is not staffed.
- Through an affiliate, Anytime Fitness has developed an access and security system that allows members to have access to an Anytime Fitness center 24 hours a day, automated tanning and vending services, and reciprocal benefits between centers. In limited cases, Anytime Fitness may allow your center to not be accessible 24 hours a day.
- The center will be an Anytime Fitness center unless Anytime Fitness designates it as an Anytime Fitness Express center. Generally, an Anytime Fitness Express center will be a center located in an area having fewer than 7,000 people living within a 3-mile radius of the center.
- Anytime Fitness centers will typically have 4,000 to 6,000 square feet, while Anytime Fitness Express centers will typically have 1,500 to 4,000 square feet.
Part 1 – Statements of Annual Projected Revenues and Earnings for an Anytime Fitness Center
- The following are statements of projected annual revenues and earnings for a franchised Anytime Fitness center.
- These projections are for an Anytime Fitness center that has been in operation for at least 12 months. They assume that at the end of the first year you have a fixed number of memberships, and, even though most of the clubs continue to increase their memberships after the first year, that you remain at that level for the entire year, adding as many new members as the number of members that leave. (During the first year, it will take you time to build your member base.)
- Anytime Fitness has listed below three projections, one based on a center having 500 members, one based on 860 members, and one based on 1,150 members.
- They are based on revenue information provided to Anytime Fitness by its proprietary software and designated billing processor for its franchisees in the United States in 2018.
- Of the 2,235 Anytime Fitness clubs open for at least 12 months as of February 28, 2019, the number of members for these clubs ranged from 145 to 3,418. As measured on February 28, 2019, the clubs open at least 12 months had an average member count of 860; the member count on this date ranged from 136 to 3,402 and the median was 776.
- The first example, for a 500-member club, is intended to give you an idea of the revenues, expenses, and projected income of a club that performs well below the average, but is still profitable.
- Of the 2,235 Anytime Fitness clubs open for at least 12 months as of February 28, 2019, 1,909 (85%) had an average of over 500 members, as measured on February 28, 2019.
- The 860-member example will give you an idea of the revenues, expenses, and income of a club that is able to maintain, throughout the year, the average number of members of the Anytime Fitness clubs that were open for at least 12 months, as measured on February 28, 2019.
- Of the 2,235 Anytime Fitness clubs open for at least 12 months as of February 28, 2019, 887 (40%) had an average of over 860 members, as measured on February 28, 2019.
- The 1,150-member example gives you an idea of the revenues, expenses, and profitability of a high-achieving club.
- Of the 2,235 Anytime Fitness clubs open for at least 12 months as of February 28, 2019, 391 (17%) had an average of over 1,150 members, as measured on February 28, 2019.
Revenue, Expense, and Profit Assumptions for Anytime Fitness Clubs
- Enrollment fee revenues/cost of proximity cards: Anytime Fitness assumed, based on data reported to it by its designated processor, that 45% of your members will be replaced through attrition (which is in line with the industry average). The average enrollment fee is $49.
- Membership revenues: Based on reports from Anytime Fitness’s designated processor, the average monthly membership fees paid under each membership agreement to Anytime Fitness franchisees was $36.55 per member and the median monthly membership fees paid was $36.08 in the 12 months ended on February 1, 2019, for clubs that were open for 12 months or more as of February 28, 2019. These clubs had an average of 678 members who joined as monthly members and a median of 621 members who joined as monthly members.
- The average “pay per visit” member fees paid to Anytime Fitness franchisees was $8.05 per member per month and the median “pay per visit” member fees paid to Anytime Fitness franchisees was $6.56 per member per month in the 12 months ending on February 1, 2019, for clubs that were open for 12 months or more as of February 28, 2019. These clubs had an average “pay per visit” member count of 182 members and a median “pay per visit” member count of 131 members in the 12 months ending on February 28, 2019.
- Vending revenues: The projected amounts for vending revenue reflect the per membership revenues that Anytime Fitness’s corporate-owned clubs receive from vending.
- Personal training revenues: Anytime Fitness franchisees typically collect a percentage of what the members pay for these services. Anytime Fitness has projected training revenues equal to $106.91 per member per year.
- Compensation models for trainers vary widely. In the 500 and 860 member models, Anytime Fitness projected that personal training expenses, including compensation to your personal trainer, equal 60% of your personal training revenues.
- Once personal training revenues reach a certain level, some clubs have added a Member Experience Manager to oversee the personal training program. Therefore, in the 1,150 member model, Anytime Fitness assumed you have this additional expense and therefore projected personal training expenses at 70% of personal training revenue.
- Rent: The assumption is for 5,100 square feet of space, with the gross rent paid being $18.74 per square foot per year.
- Processing and credit card fees: 5% of membership fees and 1.5% on enrollment fees and personal training fees
- Bad debts: 3.3% of membership fees
- Utilities: $4.26 per square foot, and includes gas, electric, water, cable, Internet, and telephone
- Advertising Funds: $600 per month to the General Advertising Fund
- Local Advertising: $10,000 per year (minimum). Anytime Fintess’s projection assumes your spending on local advertising increases by 1.5% of your revenue as you have more members.
- Healthy Contribution: Of the 27% of members that participate in the Healthy Contributions program, the average total fees per club for that period was $0.18 for each member participating in a Healthy Contributions program.
- Miscellaneous Expenses: This line item includes janitorial services, legal and accounting fees, cell phone, supplies, licenses, one registration to the Annual Conference and minimum travel expenses to attend that conference, and other similar items.
- Salaries (500-member club): Assumes that the franchisee acts as the manager of the center and does not receive a separate salary. Assumes zero employees.
- Salaries (860-member club): A manager is hired to oversee club operations and is paid $2,000 a month, plus commissions and limited benefits, so that with payroll costs, the total cost for a manager will be $35,000 per year. Assumes that you would pay for staffing equivalent to 1.5 times a single manager.
- Salaries (1,150-member club): Manager receives a salary of $2,000 a month, plus commissions and benefits. Assumes that you would pay for staffing equivalent to 1.5 times a single manager.
- Some states or municipalities may require that you have an employee on premises whenever your center is open, and Anytime Fitness has a minimum staffed hours policy that requires you, or a staff person, to be in the center for at least 30 hours per week.