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 2020 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 2020 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 2017, 2018, and 2019, based on Item 20 of the company’s 2020 FDD

• Section V – Presentation and analysis of UFC Gym’s financial performance representations, based on Item 19 of the company’s 2020 FDD, including information on the:

• 2019 average, median, high, and low gross revenue, royalty, marketing fund contribution, and revenue for the 11 affiliate-owned UFC Gym Signature Models and the 2 franchisee-owned UFC Gym Signature Models that were open and operating for the full Measurement Period (January 1, 2019 to December 31, 2019)

Section I – Background Information

23 Things You Need to Know About the UFC Gym Franchise

Selects ABC Fitness Solutions as Exclusive Club Management Technology Provider

1.  In early December 2020, UFC Gym announced that it had chosen ABC Fitness Solutions as the exclusive club management technology provider to power the expansion of UFC Gym’s brand and services for its corporate-owned clubs and franchises. ABC Fitness Solutions, a leading provider of software and related services for the fitness industry, will support UFC Gym in delivering comprehensive reporting for business insights, revenue-cycle management, and operational efficiencies. The club management technology is designed to enhance consumer engagement while seamlessly integrating with UFC Gym’s new digital membership offerings.

2.  Adam Sedlack, president of UFC Gym, said, “UFC Gym is one of the fast-growing fitness brands and we need a robust club management solution to grow with us. ABC Fitness Solutions will keep up with the speed of our developments and support the franchise infrastructure that can ensure we stay a fitness industry leader.”

3.  ABC Fitness Solutions will provide holistic and modular club management technology and services that scale to UFC Gym’s growing operations in the United States. It will enable UFC Gym to manage and elevate the overall member experience through account management, billing, and member services. That integration is especially important now as UFC Gym increases new offerings through its corporate clubs, as well as its independently-owned and operated franchise clubs.

4.  ABC Fitness Solutions, with its deep industry knowledge and decades of fitness experience, offers the most proven club management solution in the fitness marketplace. Its comprehensive solution has six modules that make up holistic club management: Member Acquisition, Member Management, Member Engagement, Club Administration, Reporting and Analytics, and Revenue-Cycle Management.

5.  The announcement marks the latest major business development by ABC Fitness Solutions, which over the past several months has strengthened its standing in the market, acquiring the GymSales sales automation solution and adding digital member engagement through Trainerize, as well as partnering with security access control provider Openpath.

Promotes Adam Sedlak to Chief Executive Officer

6.  In mid-February 2021, UFC Gym announced the promotion of Adam Sedlack to chief executive officer while the brand’s former CEO, Mark Mastrov, will move on as executive chairman. A fitness industry veteran, Sedlack possesses nearly three decades of experience in health club industry leadership roles and, specifically, spent about 12 of those years as UFC Gym’s president. Alongside Mastrov, Sedlack joined UFC Gym as co-founder in 2008 and helped build the concept from the ground up.

7.  In 2020 alone, despite a turbulent year for the fitness industry, Sedlack’s leadership paved the way for UFC Gym to expand across 10 company-owned locations and 15 additional franchise locations worldwide, laying the blueprint for growth in 2021 with the brand’s first openings in Japan, China, Thailand, Israel, Netherlands, Germany, Tajikistan, Uzbekistan, and Kazakhstan slated for later this year.

8.  Furthermore, UFC Gym invested in the future of health and wellness by launching its UFC Fit model in Puyallup, Washington in January. The model features a group fitness studio, weight room, robust cardio equipment, Olympic size swimming pool, sauna room, full-service locker room, post-workout treatment area, and indoor basketball court.

9.  According to Adam Sedlak, CEO of UFC Gym, “I’ve shadowed Mark’s iconic leadership since 1994 and watched as the UFC Gym business model reshaped our industry and set the tone for the future of fitness. Over the years, we’ve built an incredible team and, in the wake of the pandemic, our dedicated corporate employees, franchisees, field leaders and fitness enthusiasts stood together through the toughest of times under a common goal, to make the world a better place through health and wellness.”

10.  Sedlak continued, “Being a part of UFC Gym’s foundational story from the start has been an honor and I am humbled to step up to this extended leadership position. Looking ahead, UFC Gym’s position in the fitness industry has never been better and 2021 will be our biggest year yet. Overall, I am very grateful to guide this team that represents UFC Gym’s goal in bringing purpose to fitness through work ethic and passion to create a legacy.”

11.  In his new role, Sedlack will propel the brand’s extensive development further, doubling UFC Gym’s corporate footprint in the new year, starting with the brand’s debut in Las Vegas, Nevada in March. Fueling the brand’s continued expansion is its unique offer to guests as a one-stop-shop for any and all fitness needs including studio-quality group fitness classes such as Les Mills BodyPump, HIIT, water aerobics, Zumba, and MMA-inspired group fitness classes such as boxing, kickboxing conditioning, and Brazilian Jiu-Jitsu.

12.  Additionally, UFC Gym’s premium position in the fitness industry has attracted top-tier athletes like Alex Rodriguez and many iconic UFC fighters to join in the rapid development as pioneers in their own markets.

13.  Mark Mastrov, executive chairman of UFC Gym, added, “Starting UFC Gym over a decade ago, our goal was to offer a unique, premium, and wholistic fitness experience to members at an affordable price that couldn’t be found elsewhere. Beginning this journey, I knew I needed a fortified team by my side and, after working alongside Adam at 24 Hour Fitness for 17 years, he was instantly one of the first people who came to mind. It’s incredible to see how far this brand has come, even despite obstacles seen throughout the past year. Adam has been a true pillar of that success for our brand and it’s a pleasure to continue working alongside him in his new role.”

14.  Beyond development in 2021, UFC Gym will elevate the member experience through partnerships alongside ABC Financials, a customer relationship management provider; MyZone, the group fitness digital technology system; Club Connect, a top-rated gym software; and FORTË, the live streaming workout platform. UFC Gym will also officially roll out Recovery to all new company-owned and operated locations, complementing member workouts through cryotherapy, compression, percussion massage, and more.

Partners with Augie’s Quest to Cure ALS

15.  In early January 2020, UFC Gym announced that members across the United States were aiming to raise more than $250,000 during the post-New Year’s resolution period fitness surge in support of Augie’s Quest to Cure ALS, a non-profit committed to changing the experience of people living with amyotrophic lateral sclerosis (ALS) by fast-tracking cutting-edge research to advance effective treatments and an ultimate cure.

16.  The fundraising campaign ran from January 11 through February 8 at participating UFC Gym locations throughout the United States. The launch was marked with an appearance by Augie’s Quest co-founders, Augie and Lynne Nieto, at UFC Gym Torrance on January 11.

17.  UFC Gym’s decision to partner with Augie’s Quest supports the brand’s mission to “Empower the Fighting Spirit” in all members, from the fight for improved individual health and fitness, to bringing the community together to fight against ALS. There is also a close connection in the fitness community. Augie Nieto, a fitness industry pioneer and founder of Life Fitness, was diagnosed with ALS in 2005 and has since made it his mission to find a cure for the disease that affects far too many people today, robbing them of their muscles and every benefit that exercise provides.

18.  During the campaign, UFC Gym raised money by hosting a New Year’s resolution 4-week weight loss challenge, “The Shred to End ALS.” The weight loss challenge included three personal training sessions. A portion of proceeds from “The Shred to End ALS” was donated to Augie’s Quest.

19.  In addition, UFC Gym staff challenged members and each other to donate at least $1 when they took one of UFC Gym’s unique MMA-inspired fitness classes. All donations went to Augie’s Quest in support of initiatives including the fast-track of cure-driven drugs, like the promising AT-1501. This drug just successfully completed Phase 1 Clinical Trials and has now moved to Phase 2, marking the first time a non-profit has progressed a drug so far, from inception to clinical trials.

Company History

20.  UFC Gym was founded in 2009 by Mark Mastrov, who also started 24 Hour Fitness, and Adam Sedlak, in collaboration with Ultimate Fighting Championship (UFC) in the East Bay, California area. This was the first time that UFC – an American mixed martial arts (MMA) production company and sports brand from Las Vegas – extended its brand beyond the MMA community.

21.  The techniques used by UFC Gym are based on the training programs implemented by professional UFC fighters. The various training programs offered by UFC Gym include boxing, Muay Thai, Brazilian Jiu-Jitsu, kickboxing, and functional strength training. There are also youth programs for boxing, Jiu-jitsu, and wrestling.

22.  UFC Gym launched its franchising program in 2013. Today, there are UFC Gym locations around the United States as well as international gyms in Australia, Bahrain, Canada, Chile, China, Egypt, Germany, Japan, India, Mexico, Oman, Pakistan, the Philippines, Russia, Singapore, Taiwan, United Arab Emirates, the United Kingdom, and Vietnam.

Entrepreneur’s Franchise 500

23.  UFC Gym did not rank on Entrepreneur’s 2021 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 2020 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 2020 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

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

2019

• Outlets at the Start of the Year:  85
• Outlets at the End of the Year:  86
• Net Change:  +1

Company-Owned

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

2019

• Outlets at the Start of the Year:  14
• Outlets at the End of the Year:  14
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2020 FDD) and Analysis

• This Item 19 sets forth certain historical data submitted by franchised and company-owned UFC Gym Signature facilities from January 1, 2019 to December 31, 2019 (the “Measurement Period”). The franchisor has excluded all Gyms that have not been open and operating for the full Measurement Period.

• 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.

• 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.

• This Item does not include financial information related to Class by UFC Gym Models or UFC Gym Core Models.

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

Part 1 – Affiliate-Owned UFC Gym Signature Models (January 1, 2019 to December 31, 2019)

• 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.

High