Planet Fitness Franchise in 2024: Costs, Fee & FDD
Explore the comprehensive financials and franchise opportunities of Planet Fitness. Discover why this leading fitness brand, with strong growth and low failure rates, might be the right investment for you.
Table of Contents:
Planet Fitness, founded in 1992 by Michael and Marc Grondahl in Dover, New Hampshire, has grown into one of the most recognized names in the fitness industry. The brothers, along with CEO Chris Rondeau, aimed to create a gym environment that was welcoming and non-intimidating for the average person, and they succeeded in doing so. Planet Fitness has carved out a niche for itself with its Judgement Free Zone® philosophy, making fitness accessible to everyone, regardless of their experience level or fitness goals.
The core offering of Planet Fitness revolves around its affordable gym memberships, which provide access to a variety of cardio and strength-training equipment, as well as fitness classes. Ancillary services include personal training, hydromassage, and tanning, appealing to a wide demographic, from first-time gym-goers to seasoned fitness enthusiasts. Their core market is value-conscious customers who seek a no-frills yet supportive environment to achieve their fitness goals.
As of now, Planet Fitness boasts over 2,300 locations across the United States and several other countries, including Canada, Australia, and the Dominican Republic. With millions of members worldwide, it’s clear that Planet Fitness’s approach to fitness resonates on a global scale. The brand has positioned itself as one of the largest and fastest-growing franchisors in the fitness world, serving a diverse daily customer base.
The support system for Planet Fitness franchisees is robust, offering extensive training programs and ongoing assistance. New franchisees receive training on operational procedures, marketing strategies, and member services to ensure they can run their locations effectively. Additionally, the franchise provides continuous support through regional workshops, conferences, and a dedicated franchise support team, ensuring that franchisees are never left to navigate the complexities of the business alone. This commitment to support is a key factor in Planet Fitness’s success and appeal to potential investors.
Planet Fitness Franchise Insights
- Planet Fitness’s median gross sales in 2023 reached $1,805,835, reflecting a healthy 6% growth from the previous year, indicating strong and consistent revenue potential for franchisees.
- With a 3-year failure rate of just 2% compared to the industry average of 9%, Planet Fitness demonstrates a significantly lower risk, making it an attractive investment opportunity in the fitness sector.
- Planet Fitness serves over 17 million members worldwide, making it one of the largest fitness franchises by membership in the industry.
Planet Fitness Franchise Key indicators
Growth YOY (%)
6%
vs industry 5%
Total U.S. Franchised Units
2,201
3-Year Failure Rate
2%
vs industry 9%
Sales-to-Investment ratio
0.5:1
How much does it cost to open a Planet Fitness franchise?
Understanding the potential investment size and capital requirements is crucial when considering opening a Planet Fitness franchise. These financial commitments, including initial franchise fees, equipment costs, and ongoing operational expenses, impact the feasibility and profitability of the venture. Thoroughly evaluating these factors ensures that potential franchisees are prepared for the financial responsibilities and can make informed decisions about their ability to sustain and grow the business, ultimately contributing to long-term success.
Min & Max Investment
Opening a Planet Fitness franchise involves several key costs, which are outlined in Item 7 of the Franchise Disclosure Document (FDD). You can see a breakdown of the costs to open a Planet Fitness below from the most recent Item 7 below:
| Type of Expenditure | Minimum Investment | Maximum Investment |
|---|---|---|
| Initial Franchise Fee | $0 | $20,000 |
| Site Selection Costs | $0 | $10,000 |
| Construction Development Plan Review Fee | $0 | $4,000 |
| Leasehold Improvements | $1,250,000 | $2,142,000 |
| Fitness Equipment | $43,000 | $1,059,000 |
| Non-Fitness Equipment | $77,000 | $1,037,000 |
| Pre-Sale/Grand Opening Marketing | $40,000 | $112,000 |
| Exterior Signs | $12,000 | $39,000 |
| Computer System, Point of Sale System, and other Supplies | $3,000 | $13,000 |
| Insurance | $15,000 | $35,000 |
| Real Estate Lease Deposits | $0 | $87,000 |
| Other Deposits | $0 | $46,000 |
| Professional Fees | $2,000 | $25,000 |
| Out-of-Pocket Initial Training Expenses | $1,500 | $7,500 |
| Licenses/Bonds | $100 | $5,000 |
| Additional Funds - three months | $61,000 | $517,000 |
| Total | $1,504,600 | $5,158,500 |
Item 7 in the Franchise Disclosure Document (FDD) is the “Estimated Initial Investment” section. It outlines the total costs a franchisee can expect to incur when starting a franchise, including the initial franchise fee, equipment, inventory, real estate, and other startup expenses. This section is crucial because it provides potential franchisees with a detailed understanding of the financial commitment required, helping them assess affordability and plan their investment strategy effectively.
Required Capital
To open a Planet Fitness franchise, the required capital involves both the initial investment costs and a net worth requirement set by the franchise. Let’s take a closer look below:
- Initial Investment The total estimated initial investment for a Planet Fitness franchise typically ranges from $1.5 million to $5.16 million. This estimate includes the franchise fee, construction costs, equipment, initial inventory, and additional funds for initial operating expenses. Assuming that you will finance your franchise investment, you should plan to have 20% of the total investment amount in the form of equity (cash) for the investment.
- Liquid Assets Requirement Planet Fitness generally requires franchisees to have a minimum of $1,500,000 in liquid assets. This ensures that the franchisee has the financial flexibility to handle the initial startup phase and any unexpected expenses.
- Net Worth Requirement Franchisees are typically expected to have a net worth of at least $3,000,000. This requirement helps ensure that the franchisee has the financial stability and resources necessary to successfully operate a Planet Fitness location.
How much does a Planet Fitness franchise owner make?
Calculating the salary of a Planet Fitness franchise owner involves analyzing gross sales to determine total revenue, assessing operational efficiency to understand profit margins, and accounting for franchisor fees and additional expenses such as rent, utilities, and payroll. Effective management of these factors can significantly impact the profitability and financial success of a Planet Fitness franchise owner. This comprehensive financial analysis helps estimate net profits, from which the owner’s salary can be derived. A clear understanding of these factors ensures accurate salary projections and financial planning for sustainable business operations.
Planet Fitness Revenue & Gross Sales
In 2023, Planet Fitness franchises achieved a median gross sales of $1,805,835, reflecting a 6% increase from the previous year’s $1,699,500. This impressive growth highlights the brand’s rising popularity and the strong financial prospects it offers to potential franchisees
Which key factors impact the average revenue performance of Planet Fitness franchisees?
The growth in U.S. franchisee median gross sales revenue for Planet Fitness from 2022 to 2023 can likely be attributed to several factors. First, the brand’s continued expansion and increase in membership, driven by its affordable pricing and appealing Judgement Free Zone® environment, have attracted a broader customer base. Additionally, the post-pandemic shift toward health and wellness has boosted gym memberships as more people prioritize fitness. Planet Fitness’s strategic marketing campaigns and enhancements in member services, such as the popularity of the Black Card® membership, have also contributed to higher sales. These factors, combined with the brand’s strong market presence and consistent consumer demand, have driven the positive revenue performance.
Planet Fitness Franchise Operational Costs
When opening a Planet Fitness franchise, there are several key ongoing operational costs you should consider:
- Rent and Lease Costs The cost of leasing a suitable location is one of the most significant ongoing expenses, especially given the size requirements for a gym.
- Staff Salaries and Benefits You’ll need to budget for the salaries and benefits of your staff, including managers, trainers, and front desk personnel.
- Utilities and Maintenance Monthly utilities like electricity, water, and HVAC, along with ongoing maintenance of equipment and the facility, are essential to keep the gym running smoothly.
- Marketing and Advertising Fees Planet Fitness requires franchisees to contribute to local and national marketing funds, which help drive brand awareness and attract members.
- Equipment Leasing or Financing If you’ve financed your equipment, you’ll have ongoing payments, or if you leased, you’ll need to budget for those lease payments.
- Insurance Comprehensive insurance coverage, including liability, property, and workers’ compensation insurance, is a necessary ongoing cost.
- Supplies and Consumables Regular purchases of cleaning supplies, toiletries, and other consumables are essential to maintain a clean and welcoming gym environment.
These costs are crucial to consider as they directly impact the profitability and sustainability of your franchise.
Planet Fitness Franchise Fees
When considering the ongoing operational costs for a Planet Fitness franchise, it’s essential to understand the various fees you’ll encounter. Here’s a breakdown of the key fees and their implications:
- Royalty Fee around 7%-8% of the total gross monthly and annual membership fees, collected via EFT Dues Draft. This fee is paid on a monthly and annual basis and is a typical ongoing expense for franchisees, helping to fund brand support and corporate services.
- Interest Fee 10% (annualized) or the highest contract rate of interest permitted by law, whichever is lower. This fee is charged as necessary, usually applied to overdue payments or financing agreements.
- Join Fee 20% of the regular monthly membership fee or 5% of the total price of a prepaid membership, collected monthly. This fee applies to all new memberships, providing consistent revenue from new member sign-ups.
- Administrative Fees These vary depending on the circumstances and are related to the administration of certain commercial partnerships. The amount of this fee can fluctuate based on specific agreements or partnerships.
- Refresher Training Workshops $500 to $1,500, depending on the circumstances, and is payable for any required or requested training. The cost varies based on the number of participants and the training duration, ensuring your staff stays well-trained and up-to-date.
It’s important to note that there might be additional fees associated with running a Planet Fitness franchise, which could include marketing contributions, equipment maintenance, and other operational expenses. Understanding these costs is crucial for effective financial planning and maintaining the profitability of your franchise.
Planet Fitness Franchise Earnings
Based on the data from 2023, the median gross sales for a Planet Fitness franchise reached $1,805,835, showing a strong year-over-year increase of 6%. For an owner-operator, the estimated earnings from these gross sales amounted to $270,875. This suggests a healthy profit margin, making it a potentially lucrative opportunity for hands-on franchisees who actively manage their locations.
For those opting for a semi-absentee model, where the franchisee may not be as involved in the day-to-day operations, the earnings are slightly lower but still robust at $216,700. This difference reflects the added costs associated with hiring management staff to handle operations, but it also indicates that Planet Fitness franchises can generate significant returns even with less direct involvement from the owner. Overall, these figures highlight the franchise’s potential for consistent revenue and earnings growth.
How to Open a Planet Fitness Franchise
Becoming a Planet Fitness franchisee involves several key steps, starting from the initial inquiry to the opening of your gym. Here’s an overview of the process:
- Initial Inquiry You or your franchise specialist submits an initial inquiry basic information about your interest and background. You should also conduct thorough research on the franchise, including seeing all of the information available on the Vetted Biz franchise intelligence platform, including access to the most recent Franchise Disclosure Document (FDD).
- Application and Financial Review Once your application is received, Planet Fitness will conduct a thorough review of your financial status, including your net worth and liquid assets, to ensure you meet their requirements. This stage also includes a background check.
- Franchise Disclosure Document (FDD) If you pass the initial review, you will be provided with a Franchise Disclosure Document. This document contains detailed information about the franchise, including fees, obligations, and financial performance, which you will need to review carefully.
- Discovery Day You will be invited to a Discovery Day at Planet Fitness headquarters. This is an opportunity to meet the corporate team, ask questions, and learn more about the company’s culture and expectations.
- Approval and Site Selection After a successful Discovery Day and final approval, you will begin the process of selecting a suitable location for your gym. Planet Fitness will assist you in this critical step, ensuring the location meets their criteria for success.
- Lease Negotiation and Build-Out Once a site is chosen, you will negotiate a lease agreement and begin the build-out of your gym. Planet Fitness provides support during this phase to ensure your facility meets their brand standards.
- Training and Pre-Opening Preparation You and your management team will undergo extensive training on operations, marketing, and member services. This training is designed to prepare you for the successful launch and management of your franchise.
- Grand Opening After completing the build-out and training, you’ll officially open your Planet Fitness location. The franchise provides ongoing support to help you navigate the initial phases of operation and drive membership growth.
Pros & Cons
Pros
Strong Brand Recognition: Planet Fitness is a well-established brand with a large and loyal customer base, offering a sense of security in the franchise’s potential for success.
Affordable Membership Model: The low-cost membership model attracts a broad demographic, ensuring a steady stream of members and consistent revenue.
Judgement Free Zone® Philosophy: The welcoming and non-intimidating environment appeals to first-time gym-goers and those who may feel uncomfortable in traditional gyms, tapping into an underserved market.
Growth Potential: With the fitness industry’s ongoing emphasis on health and wellness, there is a strong potential for continued growth and profitability in the Planet Fitness model.
Cons
High Initial Investment: The initial costs, including build-out and equipment, can be significant, requiring a substantial financial commitment upfront.
Competitive Market: The fitness industry is highly competitive, with numerous gym options available, which means maintaining and growing your membership base can be challenging.
Operational Demands: Running a successful gym requires consistent management and oversight, particularly to maintain customer satisfaction and equipment quality, which can be demanding for franchisees.
Market Saturation: In some areas, the market may be saturated with Planet Fitness locations or similar low-cost gyms, potentially limiting the growth of new franchises.
