FDD Talk: UFC Gym 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 UFC Gym franchise opportunity, including relevant news updates

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

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

• 2018 average, median, high, and low gross revenue, royalty, marketing fund contribution, and revenue for the 11 affiliate-owned UFC Gym Signature Models and the 3 franchisee-owned UFC Gym Signature Models that were open and operating for the full Measurement Period (January 1, 2018 to December 31, 2018)

• 2018 average, median, high, and low gross revenue, royalty, marketing fund contribution, and revenue for the 3 affiliate-owned UFC Gym Core Models and the 77 franchisee-owned UFC Gym Core Models that were open and operating for the full Measurement Period

Section I – Background Information

18 Things You Need to Know About the UFC Gym Franchise

Continues Expansion in China with Series of Historic Milestones

1.  Near the end of June 2019, UFC Gym announced a series of historic milestones that will continue to drive the company’s ambitious growth plans in China. The first milestone marks a culmination of more than a year of planning and construction, as UFC celebrated the grand opening of the UFC Performance Institute Shanghai, the world’s largest, state-of-the-art MMA training and development facility.

2.  Nearly three times as large as the original UFC Performance Institute in Las Vegas, the 93,000 square-foot facility in Shanghai will serve as a training hub to develop and support the next generation of MMA athletes from mainland China and the greater Asia-Pacific region.

3.  UFC will also utilize the building as its headquarters in Asia, housing UFC employees and UFC Performance Institute staff, including experts in the fields of MMA, strength and conditioning, sports science, physical therapy, and nutrition. Additional features will include hospitality suites, dining, retail services, and a fan experience area.

4.  The grand opening of UFC Performance Institute Shanghai came as UFC prepared for a historic live event in China this past August that marked a series of “firsts” for the company. On Saturday, August 31, UFC made its debut in Shenzhen – the company’s third live event in Mainland China in three years.

5.  UFC Fight Night: Andrade vs. Zhang, presented by AirAsia, was held at Universiade Sports Centre and featured the first-ever UFC championship fight held in China, as well as the first-ever Chinese athlete to compete for a UFC title.

Partners with NormaTec to Provide Members Access to World-Class Recovery Technology

6.  In late October 2019, UFC Gym announced its partnership with NormaTec, the industry leader in compression recovery technology. By adding NormaTec’s PULSE 2.0 Series Recovery Systems, UFC Gym is expanding its world-class training resources, and furthering its mission to bring world-class training to more athletes. NormaTec’s technology will be made accessible in select UFC Gym locations throughout the world that offer recovery facilities.

7.  The NormaTec partnership offers UFC Gym members access to recovery systems on-site. NormaTec’s technology will be implemented as part of UFC Gym’s Train Different philosophy, designed for people of all ages to meet fitness goals quickly in a supportive, motivational, community-based gym that incorporates various martial arts disciplines with state-of-the-art equipment and top-notch coaching.

8.  Adam Sedlack, president of UFC Gym, said, “A critical piece to any successful fitness program is recovery. UFC Gym is excited to provide access to the same recovery benefits enjoyed by professional athletes by bringing NormaTec to our clubs. We strive to empower members to achieve their fitness goals and to support our rapidly growing franchise community through access to the best tools on the market. We’re proud to further that mission with NormaTec.”

9.  NormaTec Recovery Systems are currently used by 97% of pro teams in the US, as well as elite athletes and fitness enthusiasts across a broad range of sports. The PULSE 2.0 Series uses compressed air to massage limbs, mobilize fluid, and increase circulation, helping athletes recover after workouts and reduce pain and soreness. The systems are also used as a high-tech warm up.

10.  Gilad Jacobs, CEO of NormaTec, added, “UFC Gyms have a fresh and empowering approach to training that is yielding incredible results. We are proud to be working with UFC Gym to roll out some of their professional level training methods that are inspired by routines used by UFC athletes, and to help them provide better access to the benefits of recovery with NormaTec’s technology.”

First Location Celebrates 10th Anniversary

11.  In late January 2020, UFC Gym welcomed fitness enthusiasts and athletes to attend an event in celebration of the 10-year anniversary of UFC Gym Concord, the first-ever UFC Gym, on January 25.

12.  The celebration included an appearance by UFC President Dana White, and meet-and-greet opportunities with UFC Hall of Famers Forrest Griffin and BJ Penn, along with former UFC lightweight champion Frankie Edgar and former UFC flyweight title challenger Jessica Eye.

13.  During the anniversary celebration, guests also had the opportunity to take part in a variety of MMA-inspired fitness classes, including Boxing Conditioning with Frankie Edgar and a HIIT-style Daily Ultimate Training with Jessica Eye.

Company History

14.  UFC Gym was founded in 2009 by Mark Mastrov, who also started 24 Hour Fitness, in collaboration with Ultimate Fighting Championship (UFC) in the East Bay, California area. This was the first major brand extension of UFC, which is an American mixed martial arts (MMA) production company and sports brand based in Las Vegas, Nevada.

15.  It was originally founded in the early 1990s by Art Davie, Bob Meyrowitz, Campbell McLaren, David Isaacs, John Milius, and Rorion Gracie. UFC Gym was started as a way to offer everyday people the opportunity to train like UFC fighters.

16.  UFC Gym franchise locations work to emulate the training programs and settings that real UFC fighters experience. The UFC Gym often features state-of-the-art fitness equipment and even a large UFC octagon. The gym offers various training classes, including functional strength training, boxing, Muay Thai, Brazilian Jiu-Jitsu, and kickboxing. The UFC Gym franchise even offers youth boxing, Jiu-Jitsu, and wrestling classes, among others.

17.  UFC Gym has been franchising since 2013 and there are now locations in the United States, Australia, Bahrain, Canada, Chile, Egypt, India, Mexico, Oman, Philippines, Singapore, Taiwan, Vietnam, United Kingdom, and the United Arab Emirates.

Entrepreneur’s Franchise 500

18.  UFC Gym ranked No. 499 on Entrepreneur’s 2020 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of UFC 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 UFC 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

Franchised

2016

• Outlets at the Start of the Year:  106
• Outlets at the End of the Year:  103
• Net Change:  -3

2017

• Outlets at the Start of the Year:  103
• Outlets at the End of the Year:  98
• Net Change:  -5

2018

• Outlets at the Start of the Year:  97
• Outlets at the End of the Year:  85
• Net Change:  -12

Company-Owned

2016

• Outlets at the Start of the Year:  15
• Outlets at the End of the Year:  17
• Net Change:  +2

2017

• Outlets at the Start of the Year:  17
• Outlets at the End of the Year:  13
• Net Change:  -4

2018

• Outlets at the Start of the Year:  13
• Outlets at the End of the Year:  14
• Net Change:  +1

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

• Currently, UFC Gym offers three franchise models for sale: Class UFC Gym, UFC Gym Core, and UFC Gym Signature.

• Class UFC Gym facilities are boutique fitness studios focusing on class-based sales and programming with no octagon, limited fitness equipment, a bag rack, and a functional fitness space.

• Class UFC Gym facilities are typically between 2,500 to 3,500 square feet in size and will generally offer class-based physical fitness consisting of boxing and high intensity interval training and will typically utilize a bag rack, turf, functional training equipment, rowers, and bikes.

• UFC Gym Core facilities are mid-size fitness centers offering traditional fitness class programming, including boxing, kickboxing and D.U.T., mixed martial arts training, youth classes, private coaching, and Brazilian Jiu-Jitsu.

• UFC Gym Core facilities are typically between 6,000 to 10,000 square feet in size, utilizing a weight room, bag rack, octagon, turf traditional gym, and full-service locker rooms.

• UFC Gym Signature facilities are big box fitness centers offering a complete line of fitness offerings that include the same offerings as UFC Gym Core, but also include a café, pro shop, sauna, kids club, and a group fitness room.

• UFC Gym Signature facilities are typically 18,000 to 40,000 square feet or larger.

• This Item 19 sets forth certain historical data submitted by UFC Gym franchisees and company-owned Gyms from January 1, 2018, to December 31, 2018 (the “Measurement Period”). The franchisor has excluded all Gyms that have not been open and operating for the full Measurement Period.

• This Item does not include financial information related to Class UFC Gym models.

• The franchisor has not audited this information, nor independently verified this information.

• Gross Revenue is defined as all revenues and receipts of every kind derived from operating the Gym, but excludes any refunds, rebates, discounts and credits of a similar nature, given, paid or returned in the ordinary course of business.

• Royalty is defined as 4% of Gross Sales as charged for all UFC Gyms.

• Marketing Fund Contributions are defined as 2% of Gross Sales as charged for all UFC Gyms.

• Revenue is defined as Gross Sales, less Royalty and Marketing Fund Contributions.

Part 1 – Affiliate-Owned UFC Gym Signature Models

• The table below presents the Average and Median Gross Revenue, Royalty and Marketing Fees, and Revenue of 11 affiliate-owned Signature UFC Gyms that were open and operating for the full Measurement Period.

• The square footage of the Gyms presented in this Part 1 range from 27,456 to 45,388 square feet.

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