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

• Section I – Background information on the Retro Fitness franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Retro 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 Retro Fitness franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Retro 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 Retro Fitness’ financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• fiscal year 2018 average gross sales for the 138 Retro Fitness franchised outlets that were open to the public for the entire period commencing on January 1, 2018 and ending on December 31, 2018

• fiscal year 2018 average gross revenue per square foot for the 138 Retro Fitness franchised outlets that were open to the public for the entire period commencing on January 1, 2018 and ending on December 31, 2018

• average number of members as of February 28, 2019 for the 138 Retro Fitness franchised outlets that were open to the public for the entire period commencing on January 1, 2018 and ending on December 31, 2018

• 2017 average earnings before interest, taxes, depreciation, and amortization for the 98 Retro Fitness franchised outlets that were officially open to the public and in operation for the entire 2017 calendar year (not including Outlets in pre-sales during this period), and submitted copies of their 2017 tax returns to Retro Fitness

• 2017 average earnings before interest, taxes, depreciation, and amortization as a percentage of total revenue for the 98 Retro Fitness franchised outlets that were officially open to the public and in operation for the entire 2017 calendar year (not including Outlets in pre-sales during this period), and submitted copies of their 2017 tax returns to Retro Fitness

• 2017 average payroll expenses for the 98 Retro Fitness franchised outlets that were officially open to the public and in operation for the entire 2017 calendar year (not including Outlets in pre-sales during this period), and submitted copies of their 2017 tax returns to Retro Fitness

• 2017 average rent expenses for the 98 Retro Fitness franchised outlets that were officially open to the public and in operation for the entire 2017 calendar year (not including Outlets in pre-sales during this period), and submitted copies of their 2017 tax returns to Retro Fitness

Section I – Background Information

15 Things You Need to Know About the Retro Fitness Franchise

Appoints Former Starbucks Executive as New CEO

1.  At the end of July 2019, Retro Fitness announced the appointment of Andrew Alfano as CEO. With more than 25 years in retail and franchising, he has built leading teams to drive customer experience, product innovation, and brand expansion. Alfano joins Retro Fitness at a pivotal time in its growth and development.

2.  Alfano is stepping into his new role at Retro Fitness after having successfully served as president and COO of The Learning Experience, a leading franchise academy of early education. During his tenure, the company more than doubled its center count, achieved record revenue, and began plans for European expansion.

3.  Prior to The Learning Experience, Alfano led major markets as senior vice president for Starbucks Coffee Company, where he was accountable for over $3.5 billion in revenue. Under his leadership, the international coffee brand saw record growth and revenue in high-profile markets such as Chicago, Boston, and the flagship market of New York. He was also an instrumental member of the team that helped lead the U.S. business out of the company’s downturn in 2008.

4.  According to Alfano, “I love to build brands. Retro Fitness has all the characteristics of what I love – a compelling value proposition, strong franchisee base and a brand following with consumers ripe for growth and expansion. By offering members everything they love about a big box gym and bundling it with personalized group classes, niche workout experiences and personal training, Retro Fitness has great potential for its next phase of growth.”

5.  Ted Kovas, chairman of Retro Fitness, said, “Andrew joins Retro Fitness during a pivotal time in the company’s maturity. With his vast leadership experience and proven track record in rapid growth and brand building, he’s exactly what we need to take Retro into the future.”

Continues to Expand in East Coast States

6.  Near the end of February 2019, Retro Fitness announced that it had several new franchisees: local entrepreneurs Joe and Shawna Liotine for Tampa, Florida and Jim Sparling for Central, New Jersey, totaling four new franchise agreements. The anticipated business development indicates that Retro Fitness and its franchisees will infuse more than $1 million into their respective markets through local investments. Once complete, each new gym will employ at least 25 people.

7.  Eric Casaburi, CEO (at the time of the press release) and founder of Retro Fitness, said, “We’ve seen the brand do well in these prime expansion markets, and we are thrilled to see the impact of our unique fitness offering reach even more people. The Retro Fitness business model continues to attract existing entrepreneurs and first-time business owners because of the comprehensive business model that gives franchisees the ability to set their Retro Fitness clubs apart from the rest in the industry.”

8.  Joe Liotine (Tampa, FL) has a strong fitness background, working as a general manager for Lifetime Fitness gyms in various markets around the United States over the last two decades. Joe decided to leverage that experience to open his first franchised club with Retro Fitness in Citrus Park. He and his wife Shawna will develop two more clubs over the next three years. The U.S. Marine Veteran recognized Retro Fitness as the best franchise platform in the fitness industry and loved the fact that it caters to many different needs.

9.  Jim Sparling (Central, NJ) is a lifetime entrepreneur having successfully developed and operated businesses in real estate and construction. Looking to diversify and enter into the fitness world, he is now in the process of opening his first Retro Fitness club with plans to develop more in the coming years.

Donates 300 New York Yankees Tickets to New York City Schools

10.  In early September 2019, Retro Fitness donated over 300 New York Yankees tickets to three New York City schools in District 11 as part of the fitness franchise’s commitment to giving back to communities. Over 300 seventh and eighth graders, along with school chaperones and parents, from Bronx Green Middle School, Bronx Park Middle School, and Pelham Academy were headed to Yankee Stadium thanks to Retro Fitness. On September 17 and 18, these lucky students watched the New York Yankees as they battled late in the season.

11.  Andrew Alfano, CEO of Retro Fitness, said, “Retro Fitness is about making a difference, whether it be in the lives of our 400,000 members or in the communities we work and live. This is a stressful time of the year for kids, and if for just one evening we can help make a difference, we consider it not just a privilege, but a responsibility we all have to give back.”

12.  Renee Rinaldi, principal at Bronx Park Middle School, added, “Sports have a transformative power for students, keeping them motivated and focused in and out of the classroom. Thank you to Retro Fitness for providing our students access to this quintessential New York experience.”

Company History

13.  Retro Fitness was founded in 2004 by Eric Casaburi in Colts Neck, New Jersey. Casaburi was always into fitness and was driven from a young age. He opened his first business, a small gym, in 1997 when he was only 23 years old. This small gym grew to two additional locations, and Casaburi decided to turn his gyms into a franchise.

14.  After developing the Retro Fitness concept, Casaburi converted his first three gyms into Retro Fitness gyms. Following the rebranding, Casaburi also changed his business model and turned Retro Fitness into a low-cost gym membership brand, only charging members about $19 per month. Today, there are Retro Fitness locations across the United States.

Entrepreneur’s Franchise 500

15.  Retro Fitness ranked No. 402 on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Retro 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 Retro 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

Franchised

2016

• Outlets at the Start of the Year:  144
• Outlets at the End of the Year:  153
• Net Change:  +9

2017

• Outlets at the Start of the Year:  153
• Outlets at the End of the Year:  145
• Net Change:  -8

2018

• Outlets at the Start of the Year:  145
• Outlets at the End of the Year:  147
• Net Change:  +2

Company-Owned

2016

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2017

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

• This is a historic financial performance representation. The representation only relates to the subset of Outlets identified below and does not relate to the performance of all of the System’s existing Outlets.

• All information reported in this Item 19 pertains to franchisee-owned Retro Fitness Outlets and reflects the membership, sales numbers, rent expenses, payroll expenses, and EBITDA reported by franchisees.

• Retro Fitness franchisees are required to report sales and membership data to ABC Financial. Retro Fitness franchisees are also required to provide the franchisor with a copy of their federal tax returns, which contain their payroll expenses, rent expenses, and EBITDA.

• As such, the figures below are derived from reports generated from computer data reported to ABC Financial by Retro Fitness franchisees, maintained by ABC Financial, and reported to Retro Fitness, and data as reported by franchisees to Retro Fitness in the franchisees’ 2017 federal tax returns. Retro Fitness has not undertaken any independent investigation to verify the amounts reported.

Part 1 – Average Gross Sales Information for Retro Fitness Franchised Outlets

• As of December 31, 2018, there were 147 franchised Retro Fitness Outlets open and in operation (each, a “Franchised Outlet”).

• Of those 147 Franchised Outlets, 138 were open to the public for the entire period commencing on January 1, 2018 and ending on December 31, 2018. All 138 of these Franchised Outlets were included in the results displayed in Tables A, B, and C below (the “ABC Outlets”).

• Table A provides information on the average gross sales for the ABC Outlets for the period from March 1, 2018 through February 28, 2019.

• Table B provides information on the average revenue per square foot for the ABC Outlets for the period from March 1, 2018 through February 28, 2019.

• Table C provides information on the average membership of the ABC Outlets as of February 28, 2019.

Table A – Average Gross Sales of ABC Outlets Reported to ABC Financial from March 1, 2018 through February 28, 2019

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