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 2019 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 2019 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 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD
- Section V – Presentation and analysis of Planet Fitness’ financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018 average 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, 2018
- 2018 average 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, 2018
- 2018 average 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, 2018
- 2018 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, 2018
- 2018 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, 2018
Section I – Background Information
18 Things You Need to Know About the Planet Fitness Franchise
Appoints New Chief Marketing Officer
1. In November 2019, Planet Fitness named Jeremy Tucker as its new chief marketing officer. In his new role, Tucker will be responsible for overseeing the company’s national and local marketing, branding, creative development and media, digital and social media, brand partnerships and sponsorships, communications, and corporate social responsibility. He will report directly to Chris Rondeau, chief executive officer of Planet Fitness.
2. According to Rondeau, “We are excited to welcome Jeremy to the Planet Fitness family and to further strengthen our marketing efforts. Jeremy brings nearly 20 years of experience across large-scale, global industries to our brand. His successful track record of driving quantifiable and long-term business results through actionable consumer engagement will be a significant asset as we continue to enhance our national and local marketing synergies and reinforce the attractiveness of the Planet Fitness brand and concept.”
3. Prior to joining Planet Fitness, Tucker was vice president, marketing communications and media for Nissan North America where he served as the U.S. head of marketing and a key member of the executive leadership team. Previously, he served as vice president, strategic marketing for The Walt Disney Company where he oversaw marketing strategy across a market-leading portfolio of entertainment franchises. Prior to that, he held a number of marketing leadership positions at PepsiCo where he was responsible for national brand innovation, digital and social media strategy, and breakthrough brand partnerships.
4. Tucker added, “I am thrilled to join Planet Fitness at such an exciting time in its history and to have the opportunity to further elevate this highly relatable and recognizable brand that so many consumers love. It’s clear that the Company has a substantial runway ahead and I’m eager to partner with Chris and the leadership team to help fuel the brand’s next phase of growth.”
Expands Global Footprint to Australia
5. In early November 2019, Planet Fitness announced that it was expanding to Australia. The first gyms will be located in Tuggerah and Gosford in the Central Coast of New South Wales, and a location in Casula is expected to open in 2020.
6. Planet Fitness has signed an Area Development Agreement with Bravo Fit Holdings Pty Ltd. (“Bravo”), which will bring a minimum of 35 Planet Fitness locations to Australia over the next several years. Bravo is a joint venture among U.S. franchisees, Bravo Fit, LLC and PF Growth Partners, LLC, and leading Australian fitness operator, Dallas Rosekelly’s Galactic Fitness Pty.
7. Ray Miolla, chief development officer of Planet Fitness, said, “We are excited to announce our plans to expand the Planet Fitness brand into Australia. Australia represents a unique opportunity to grow in a market that combines a favorable operational environment, consumer affinity for US brands, a desirable competitive landscape and an opportunity to develop a large fleet of clubs.”
Reaches $5 Million Fundraising Milestone Benefiting Boys & Girls Club of America
8. Near the end of October 2019, Planet Fitness announced that together with its franchisees, partners, and members, it has raised more than $5 million since 2016 for its nonprofit partner, Boys & Girls Clubs of America. This fundraising effort is made possible through Planet Fitness’ philanthropic initiative, The Judgement Free Generation, which aims to prevent bullying and promote kindness among youth.
9. Jim Clark, president and CEO of Boys & Girls Clubs of America, said, “We are committed to creating spaces of kindness, inclusion and acceptance throughout every single one of our Clubs. We sincerely appreciate Planet Fitness’ continued support and partnership in this mission.”
10. From September 1-30, Planet Fitness raised $1 million thanks to generous donations from its members, franchisees, and partners. During the campaign, members were invited to make donations at the front desk of Planet Fitness clubs and online.
11. Funds raised support Judgement Free Generation programs, such as anti-bullying and pro-kindness trainings for Boys & Girls Club professionals and youth; as well as scholarships for Boys & Girls Club teen leaders who embody the values of kindness and acceptance. Since 2016, the company and its franchisees have also built more than 25 judgement-free mini fitness centers in Boys & Girls Clubs in select locations across the U.S.
12. Studies show that about 1 in 5 students ages 12-18 have experienced bullying nationwide (information from the National Center for Education Statistics), with the most commonly-reported types of bullying including verbal harassment (79 percent), social harassment (50 percent), physical bullying (29 percent), and cyberbullying (25 percent). Together, Planet Fitness and Boys & Girls Clubs of America are addressing this important issue and are committed to continue making headway in fostering safe, inclusive environments for today’s youth.
13. Chris Rondeau, CEO of Planet Fitness, added, “One young person being bullied is too many. As the home of the Judgement Free Zone, Planet Fitness is committed to supporting this cause and helping to shape a judgement free generation.”
14. Planet Fitness was founded in 1992 by Marc and Michael Grondahl in Dover, New Hampshire. The Grondahls acquired a struggling gym and turned things around by offering lower prices to compete against better-known fitness brands. This low-cost business model focuses on the needs of occasional or first-time health club members, rather than more experienced members. A year after starting Planet Fitness, the Grondahls hired current CEO Chris Rondeau, who was still in college at the time, to run the gym’s front desk.
15. From the start, the Grondahls wanted to create an inclusive, non-intimidating gym and in 1997, Planet Fitness officially unveiled its “Judgement Free Zone” philosophy as a way to make first-time gym users feel comfortable joining and starting their fitness journey. Planet Fitness still maintains this Judgement Free Zone attitude today.
16. Over the next few years, Planet Fitness grew and in 2003, the company opened its first franchise in Altamonte Springs, Florida. Planet Fitness continued its expansion over the next decade and by 2012, there were 500 Planet Fitness gyms open. The following year, in 2013, Chris Rondeau, who has remained with the company since the beginning, was appointed CEO.
17. In 2014, the first international Planet Fitness location opened in Toronto, Ontario, Canada. Today, there are Planet Fitness gyms across the U.S., Canada, Mexico, Panama, and the Dominican Republic.
Entrepreneur’s Franchise 500
18. Planet Fitness ranked No. 7 on Entrepreneur’s 2019 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 2019 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Planet Fitness’ 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: 1,053
- Outlets at the End of the Year: 1,233
- Net Change: +180
- Outlets at the Start of the Year: 1,233
- Outlets at the End of the Year: 1,421
- Net Change: +188
- Outlets at the Start of the Year: 1,421
- Outlets at the End of the Year: 1,616
- Net Change: +195
- Outlets at the Start of the Year: 56
- Outlets at the End of the Year: 56
- Net Change: 0
- Outlets at the Start of the Year: 56
- Outlets at the End of the Year: 60
- Net Change: +4
- Outlets at the Start of the Year: 60
- Outlets at the End of the Year: 74
- Net Change: +14
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
Part 1 – EFT Revenue
- The following chart shows Average Annual Gross EFT revenue for Planet Fitness’ corporate and franchised clubs that have been open and operating for at least 12 months as of December 31, 2018.
- 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 on recurring monthly and annual membership fees that are automatically collected from club members. This does not include any prepaid membership fees, revenue from retail sales or other sources of revenue, and it excludes returns.
Corporate and Franchised
- In thousands; represents electronic funds presented for draft for the 12 months of calendar year 2018.
Bottom Third (492 Clubs)