In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Snap Fitness franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Snap Fitness franchise, based on Item 7 of the company’s 2020 FDD
- Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Snap Fitness franchise, based on Items 5 and 6 of the company’s 2020 FDD
- Section IV – Number of franchised and company-owned Snap Fitness outlets at the start of the year and the end of the year for 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD
- Section V – Presentation and analysis of Snap Fitness’ financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:
- projected annual operating revenue (annual membership operating revenue, ancillary revenue, personal training revenue), operating expenses (occupancy, personal training commissions, continuing fee, web hosting fee, national marketing fee, payment processing fee/access/ongoing membership fees, Myzone, utilities/TV/phone/Internet, ancillary revenue COGS, insurance, office supplies, repairs and maintenance, miscellaneous, advertising and marketing), gross annual operating cash flow (before owner salary, wages, debt repayment, and taxes), wages and payroll expenses, and membership sales commissions for Modernized Clubs (i.e. franchised Snap Fitness clubs that have been in operation for a period of at least 12 months and were either constructed or modernized consistent with Snap Fitness’ current standards and requirements no later than December, 2019), based on 400 members, 581 members, and 895 members
- average number of members and memberships for the top 30%, middle 40%, bottom 30%, top 70%, and all Modernized Clubs and all Stripe Model Clubs (i.e. franchised Snap Fitness clubs that were not yet modernized consistent with Snap Fitness’ current standards and requirements), separately stated
- average, median, high, and low personal training revenue for Modernized Clubs and Stripe Model Clubs, separately stated
Section I – Background Information
18 Things You Need to Know About the Snap Fitness Franchise
Poised for Continued International Expansion in 2020
1. In mid-January 2020, Snap Fitness said that it was positioned to continue its international growth and brand development in 2020. Snap Fitness celebrated the new year with its 100th club opening in Europe and the launch of a new state-of-the-art club design with bespoke lighting and the latest fitness technology in the United Kingdom and Ireland. Additional key markets for expansion in 2020 include Australia, New Zealand, Mexico, Turkey, and the United Arab Emirates.
2. Allison McElroy, chief global development officer of Snap Fitness’ parent company, Lift Brands, said, “Whether we are expanding in current partner countries or entering new markets, communities are embracing our 24/7 model that provides fitness opportunities for everyone. New gyms are in development across the world, and our international expansion is a priority in 2020.”
3. Snap Fitness’ growth exploded in 2019, including the first-ever club opening in Taiwan. The brand also experienced significant growth of 46 percent in the Asia Pacific region and an overall membership increase of nine percent.
4. Weldon Spangler, then-CEO of Lift Brands, added, “Snap Fitness transcends trends by offering consistency in a market that is crowded and fast-moving. The Snap Fitness advantage is to continually innovate our gyms and make fitness accessible to everyone at any time. Our success provides more people opportunities to find success in their fitness goals.”
Selects Glofox as Software Partner for U.S. and International Franchise Network
5. In early August 2020, Glofox, the gym management software platform, announced that Lift Brands, owner of Snap Fitness and 9Round International Franchise, had selected Glofox as a software partner for its U.S. and international franchise network in over 20 countries. Glofox will replace Fitware, a legacy member management system developed by Lift Brands, in 2,000 locations in North America and internationally.
6. Glofox will enable Snap Fitness and 9Round franchisees to improve their members’ experience with a customized mobile app for members and staff. The platform will enable Lift Brands to take payments in all international markets including the US, UK, Australia, Turkey, and Japan. Glofox will also support each location with modern membership management technology and communications tools. The software will integrate with fitness tracking and other tools within the Lift Brands technology ecosystem.
7. Glofox technology will form part of a series of initiatives that Snap Fitness locations are taking to reopen their gyms globally in a safe and frictionless way with the ability to manage capacity by scheduling open gym times, checking in using a barcode scanner and no human touch, and running online classes to enable members to work out from home while staying connected to the brand.
8. Conor O’ Loughlin, CEO of Glofox, said, “We are delighted to welcome Lift Brands to the Glofox family. We are committed to partnering with them on their international expansion and in delivering a unique and consistent member experience to their customers in North America and overseas.”
9. Ty Menzies, the new of CEO of Lift Brands, added, “We’re excited about modernizing our entire technology stack, delivering the best experience to our members and to our staff worldwide, and maintaining visibility and control as we scale the business. As the industry recovers from COVID-19, we plan to lead the way by staying engaged with our members and empowering our franchisees to be successful.”
Brings Free At-Home Workouts to All Gym Junkies
10. In mid-March 2020, Snap Fitness announced a partnership with FitnessOnDemand to offer free 90-day global access to the market-leading virtual fitness platform for all those looking to “stay fit, stay healthy and stay home” amidst growing coronavirus concern and recommended social distancing efforts.
11. Snap Fitness is committed to providing members with safe and hygienic clubs to exercise in where local government permits, and teams have been briefed on what actions they need to take, per government guidance, to reduce the risk of the virus spreading.
12. With the industry’s most diverse fitness video library of powerhouse brands including Sweat Factor by Mike Donvanik, Nora Tobin, SH1FT, Daily Burn, and many more, FitnessOnDemand virtual workouts are designed to optimize space and offer unparalleled variety, creating an ideal fitness experience for any environment. The general public can take advantage of custom content that was specifically curated to facilitate at-home workouts, all with little to no equipment and no studio required.
13. Weldon Spangler, CEO of Lift Brands, parent company of Snap Fitness and FitnessOnDemand, said, “We know that exercise and movement are contributing factors to a person’s mental wellness and ultimately, a well-balanced life. As people are asked to practice social distancing and amidst gym and business closures – for many, working out at home provides not only a way to stay fit, but also a way to stay well, both body and mind. We want to provide help where we can as responsible members of our local communities and corporate citizens of the globe. This is about making sure everyone is healthy and safe while we weather this storm together.”
14. Snap Fitness was founded in 2003 by Peter Taunton, who had previously run several America’s Fitness Centers around Minnesota before starting his own fitness franchise. Taunton wanted to create a place that was affordable and open to patrons 24 hours a day, 7 days a week. Additionally, Taunton made sure that his fitness centers only had essential gym equipment and weren’t stuffed with other things that patrons hardly used.
15. Taunton started franchising the Snap Fitness concept in 2004 and the brand expanded quickly. By 2008, there were over 918 locations with 400,000 members across 46 states. A few years later, in 2012, Snap Fitness signed its first international master franchise agreements in India, Egypt, and Mexico.
16. Taunton started Lift Brands in 2014 to serve as the parent company of Snap Fitness as well as 9Round, Kosama, Fitness on Demand, and STEELE 365. At the beginning of 2019, Peter Taunton stepped down as CEO of Snap Fitness and Lift Brands, and transitioned to the advisory position of non-executive chairman of Lift Brands’ board of directors.
17. Today, Snap Fitness has locations in 48 states in the U.S., as well as Australia, Belgium, Canada, Egypt, Georgia, Hong Kong, India, Indonesia, Ireland, Mexico, The Netherlands, New Zealand, Philippines, Spain, Taiwan, Turkey, United Arab Emirates, and United Kingdom.
Entrepreneur’s Franchise 500
18. Snap Fitness ranked No. 469 on Entrepreneur’s 2020 Franchise 500 list.
Section II – Estimated Costs
- Please click here for detailed estimates of Snap Fitness franchise costs, based on Item 7 of the company’s 2020 FDD.
Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees
- Please click here for detailed information on Snap Fitness’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2020 FDD.
Section IV – Number of Franchised and Company-Owned Outlets
- Outlets at the Start of the Year: 933
- Outlets at the End of the Year: 899
- Net Change: -34
- Outlets at the Start of the Year: 898
- Outlets at the End of the Year: 861
- Net Change: -37
- Outlets at the Start of the Year: 861
- Outlets at the End of the Year: 792
- Net Change: -69
- Outlets at the Start of the Year: 61
- Outlets at the End of the Year: 34
- Net Change: -27
- Outlets at the Start of the Year: 35
- Outlets at the End of the Year: 19
- Net Change: -16
- Outlets at the Start of the Year: 19
- Outlets at the End of the Year: 17
- Net Change: -2
Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis
Part 1 – Projected Annual Cash Flows
- The following chart is a projected annual cash flow statement for a franchised Snap Fitness club that has been in operation for a period of at least 12 months and has been constructed or modernized consistent with Snap Fitness’ current standards and requirements.
- The projection below assumes that at the end of the first year you have a fixed number of members and that you remain at that level for the entire year, adding as many new members as the number of members that leave.
- The chart below includes three projections based on different numbers of members. One projection is based on a club with 400 members, one projection is based on a club with 581 members, and the final projection is based on a club with 895 members.
- Snap Fitness based the revenue and certain expense projections on the experience of its 405 franchised Snap Fitness clubs that have been in operation for a period of at least 12 months and were either constructed or modernized consistent with Snap Fitness’ current standards and requirements no later than December, 2019 (the “Modernized Clubs”).
- The revenue and expense information for the Modernized Clubs is as reported to Snap Fitness by its franchisees through its designated billing provider. Snap Fitness has not independently audited or verified this information.
- Because franchisees are not required to report all expense information to Snap Fitness, the franchisor relied on the historical experience of its corporate-owned Snap Fitness clubs in connection with certain expense estimates.
- In preparing these projections, Snap Fitness assumed that general market conditions will remain stable.
- As described further below, during the time period of January 1, 2019 to December 31, 2019 (the “Measurement Period”) the average number of members for the 405 Modernized Clubs was 581 members (449 memberships).
- The first projection in the chart below represents a club with 400 members, which is below the average number of members for Snap Fitness’ existing Modernized Clubs. The second projection in the chart below represents a club operating with 581 members, which is the average number of members for Snap Fitness’ existing Modernized Clubs. The third projection in the chart below represents a club with 895 members, which reflects the average number of members for Snap Fitness’ top 30% of Modernized Clubs.
400 Members (Approximately 309 Memberships)
Annual Operating Revenue