In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Gold’s Gym franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Gold’s Gym 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 Gold’s Gym franchise, based on Items 5 and 6 of the company’s 2019 FDD
- Section IV – Number of franchised and company-owned Gold’s Gym 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 Gold’s Gym’s financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:
- 2018, 2017, 2016, and 2015 average, median, high, and low gross revenue for the company units, franchised units, and all Gold’s Gym units that had operated for at least two full years as of December 31 of the given year
- 2018 average, median, high, and low gross revenue for the top quartile, 2nd quartile, 3rd quartile, and 4th quartile of company units, franchised units, and all Gold’s Gym units that had operated for at least two full years as of December 31, 2018
- 2018 average gross revenue, payroll costs, occupancy costs, other costs, and EBITDA for the 130 Gold’s Gym company units that had operated for at least two full years as of December 31, 2018
Section I – Background Information
24 Things You Need to Know About the Gold’s Gym Franchise
Parent Company Decides to Maintain Ownership and Reinvest in Company
1. At the end of February 2019, TRT Holdings, Inc., the majority shareholder of Gold’s Gym since 2004, said that it had chosen to retain ownership of the company and reinvest in the iconic brand. It also brought back former chief information officer Adam Zeitsiff in a new role as president and CEO, effective immediately. TRT had announced in July of 2018 that it would explore a possible sale of the company.
2. According to Blake Rowling, president of TRT Holdings, “As we worked through the exploratory process of selling the brand, we continued to see growth opportunities for Gold’s Gym in a number of areas within the fitness industry. After carefully considering our options, we felt that we would be leaving too much value on the table by selling the company today.”
3. As president and CEO, Zeitsiff, who held the position of CIO for Gold’s Gym from 2016 to 2018, will continue to focus the company on industry-leading digital innovation, franchising, and growth. “Adam’s entrepreneurial background, hands-on leadership style, passion for the fitness industry and proven ability to execute on accelerated growth plans makes him the perfect fit to lead the brand’s evolution going forward,” Rowling said.
4. As CIO, Zeitsiff spearheaded digital innovations such as the development and launch of GOLD’S AMP, the first digital personal training app from a brick-and-mortar gym.
5. Zeitstiff added, “I am passionate about our iconic brand and about leading this team of talented, committed and caring people. We have a strong vision for the future of this company and will be laser-focused on partnering with our global franchise community to continue to grow the brand and expand our worldwide prominence in the fitness industry.”
Finalizes Master Franchise Agreement for Australia and New Zealand
6. In mid-August 2019, Gold’s Gym announced that it had entered into a new master franchise agreement for brand development in Australia and New Zealand with Australian investment group Colour Capital. Colour Capital’s development commitment entails a minimum of 30 new locations in Australia and a minimum of 10 new locations in New Zealand.
7. In addition to the development of new units, through this deal Colour Capital will acquire the master rights to Gold’s Gym’s six directly-franchised gyms currently open and operating in Australia: Fyshwick, Mandurah, Miranda, North Sydney, Port Kennedy, and Rockingham. New Zealand is an entirely new territory for the Gold’s Gym brand.
8. According to Adam Zeitsiff, president and CEO of Gold’s Gym, “Through this partnership with Colour Capital, we now have the opportunity to not only grow Gold’s Gym’s Australian presence exponentially, but to expand into the exciting New Zealand market as well. We look forward to working closely with Matt Hope and his team to deliver to these wonderful countries the best of what our global brand has to offer.”
9. Founded in 2005 and based in the Sunshine Coast, Colour Capital specializes in franchise growth and management. While Colour Capital’s franchising portfolio is extensive across other verticals, this deal with Gold’s Gym marks the investor’s inaugural entry to the fitness industry.
10. Matt Hope, CEO of Colour Capital, said, “As we researched options for expanding our portfolio by stepping into the health and wellness space, we immediately recognized an opportunity in the fitness markets of Australia and New Zealand that only the legendary Gold’s Gym brand can fulfill. In the months since we began working with Gold’s Gym, we’ve already seen what an invaluable resource this experienced team’s support will be to us, and we are excited to continue our efforts with them as we work to grow the brand’s presence in these two countries.”
Names 2019 Winners of Its Annual 12-Week Challenge
11. In mid-June 2019, Gold’s Gym announced that it had chosen 30 national winners of the Gold’s Gym Challenge, its signature 12-week body transformation challenge offered exclusively to Gold’s Gym members. Gold’s Gym Challenge winners received $100,000 in cash prizes for their incredible and inspiring results.
12. Starting in January, thousands of participants from across the country competed in five age categories ranging from 18 to 60+ as part of their Gold’s Gym Challenge journeys. Over the course of 12 weeks, participants worked to make changes in their lives, improving their physical fitness and overall health while reaching new levels of inner and outer strength.
13. Participants shared their success stories at the local level, with local finalists advancing to the national level. A panel of experts selected the national age group winners, plus two overall winners (one male and one female), using criteria such as fitness results achieved, total weight lost, muscle tone gained, personal testimonials, and overall physical transformations. The 30 national Gold’s Gym Challenge winners lost a combined total of 924 pounds and 403 inches.
14. Adam Zeitsiff, president and CEO of Gold’s Gym, said, “Year after year, we are consistently in awe of the drive and devotion Gold’s Gym members show during the Gold’s Gym Challenge, and we congratulate the thousands of participants on their amazing achievements. We thank those who participated and know they will inspire others to become healthier and stronger versions of themselves.”
15. National Male Overall Winner Kwabena Miller, 44, of Knoxville, Tennessee, wasn’t feeling satisfied with his health when he decided it was time to work toward total wellness. At the end of the 12 weeks, Miller had lost 52.2 pounds, 14% of his body fat, and a total of 19.58 inches.
16. According to Miller, “Never have I ever accomplished so much in a short period of time to improve my health and quality of life. I was a nice-size man, but I was on blood pressure meds. Now I work out with a purpose. Twelve weeks later, I am 52 pounds lighter, no more blood pressure meds. I sincerely thank Gold’s Gym for helping me to start living my best life in 12 weeks.”
17. National Female Overall Winner Christine Breitenbach, 54, of Fishkill, New York, joined the Challenge to end a cycle of excuses and start a healthy lifestyle. Breitenbach lost 30 pounds, 2.3% of her body fat, and a total of 16.5 inches.
18. Breitenbach added, “There was always an excuse as to why the day, the week or month isn’t a good time to eat healthy or exercise. There will be no ‘start’ for me again. I am on the journey to better health and fitness, and there is no turning back now! I am so grateful to Gold’s Gym for giving me the push I need to be on my way to a happier and healthier me!”
19. Gold’s Gym was founded in 1965 by Joe Gold in Venice Beach, California. Gold was a former Merchant Marine with a passion for fitness who saw an opportunity to cater to the burgeoning bodybuilding community in what was known as Muscle Beach, just south of the Santa Monica Pier.
20. Although Gold’s Gym was popular, it was struggling financially. Gold sold the gym to Bud Danits, who ran it for nearly two years. Danits nearly closed the gym and was planning on turning it into an antiques store (he was actually an antiques dealer), but decided to sell it to Ken Sprague, who is widely credited with turning the Gold’s Gym brand into the iconic fitness brand it is today.
21. Sprague sponsored bodybuilding competitions and began selling Gold’s Gym merchandise. It didn’t take long for Sprague to turn things around and Gold’s Gym’s popularity picked up as the bodybuilding movement of the 1970s gained momentum. Gold’s Gym became a bodybuilding mecca and was frequented by Arnold Schwarzenegger and Dave Draper. By the end of the decade, Gold’s Gym had become the most famous gym in the world.
22. In 1979, Sprague sold Gold’s Gym to Peter Grymkowski (a Mr. World bodybuilding champion) and his partners. Grymkowski and his associates moved the gym to a bigger location and also began franchising in the 1980s.
23. In 1999, Gold’s Gym was sold once again, this time to private equity firm Brockway Moran & Partners, who would only run the company for a few more years before selling to Robert Rowling’s TRT Holdings in 2004 for approximately $158 million. TRT Holdings continues to privately own Gold’s Gym and has invested heavily in the long-term development of the brand to ensure the Gold’s Gym legacy continues for decades to come. Today, there are Gold’s Gym locations across nearly every continent, except for Antarctica.
Entrepreneur’s Franchise 500
24. Gold’s Gym did not rank on Entrepreneur’s 2019 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Gold’s Gym 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 Gold’s Gym’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: 255
- Outlets at the End of the Year: 243
- Net Change: -12
- Outlets at the Start of the Year: 243
- Outlets at the End of the Year: 200
- Net Change: -43
- Outlets at the Start of the Year: 200
- Outlets at the End of the Year: 191
- Net Change: -9
- Outlets at the Start of the Year: 150
- Outlets at the End of the Year: 148
- Net Change: -2
- Outlets at the Start of the Year: 148
- Outlets at the End of the Year: 147
- Net Change: -1
- Outlets at the Start of the Year: 147
- Outlets at the End of the Year: 144
- Net Change: -3
Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis
- The franchisor provides two types of financial performance representations in this Item 19. The first reflects information on Gross Revenue for the 2015, 2016, 2017, and 2018 calendar years, and the second reflects more detailed revenue and expense information for 2018 for certain of the franchisor’s affiliates’ Gold’s Gym Facilities.
- All of the Gold’s Gym Facilities whose results are reflected in this Item 19 are full-amenity Gold’s Gym Facilities and none are Gold’s Gym Express Facilities.
- In this Item 19, “Gross Revenue” means all revenue (without discounts except as otherwise described in this paragraph) received or otherwise derived from operating the Facility, whether from cash, check, credit and debit card, barter, exchange, trade credit, or other credit transactions, and regardless of collection or when the Facility actually provides the products or services in exchange for that revenue. “Gross Revenue” excludes (a) sales taxes, use taxes, and other similar taxes that a Facility adds to the sales price, collects from the customer, and pays to the appropriate taxing authority; and (b) any bona fide refunds and credits that the Facility actually provides to customers.
- The franchisor derived the figures for Company Units based on their internal unaudited financial statements. It derived the figures for Franchised Units based solely on the information that the franchisees gave to it.
Part 1 – Statement of Average Gross Revenue for the 12-Month Periods Ended December 31 of 2018, 2017, 2016, and 2015 ($ in thousands)
- For purposes of the Gross Revenue disclosures in this section, for each year in the charts below, the franchisor looked at the total number of Gold’s Gym Facilities operating as of December 31, then excluded those Facilities that had not operated for at least two full years as of December 31 (to eliminate start-up volatility).
December 31, 2018