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Muscle-Building Workout and Diet

The Snap Fitness Franchise has an appealing
business model you invest a couple of hundred thousand dollars, sit back and money rolls
in as happy people pay to join your club. Could it be that easy? How much can you actually
earn owning a Snap Fitness? And what are the risks. We’ll take a look today on Franchise
City. The cost to open a snap fitness franchise
is between $153,980 to $529,899, depending on the size of club and a number of other
local variables. You’ll pay a fee of $569 every month to Snap Fitness, a National marketing
fee of $275 per month, local marketing fund is $200 month, a member services fee of $1
per member, a membership processing fee of $5.90 for each new agreement and 61 cents
each month. There are a few other fees we wont go into here, but we will give you the
total amount that Snap Fitness earns from it’s franchisees – stay tuned. The fitness franchise model is seductive.
It’s supposedly a passive model where you can keep your job, hire someone to run the
club while you just sit back and make money. But let me ask you this. What happens if you
can’t find someone good to run your club. And finding the right fit can be challenging
because they need to have a very specific skillset of sales and fitness. It’s hard enough
these days to retain quality people even in non-skilled labor situations with unemployment
the lowest it’s been in a while. So bear in mind that if you can’t find anyone, or you
keep losing your key manager, you will absolutely need to take a more active role in your club
so be prepared to do so. If you are being told how easy it is to run a fitness club
and it’s completely passive, well it might be, and it might not be. Hope for the best,
prepare for the worst and if your job or other business does not allow some flexibility you
may want to reconsider. Here are the numbers estimating what you can
earn owning a Snap Fitness taken directly from their disclosure documents. They break
down the earnings into 3 tiers, 400 members, 617 members and 935 members. So at 400 members
you will end up with about $33K a year, at 617 members $110,000 a year and at 935 members
$221,000 a year. And for sure your club is going to have 935 members right? Just because
you are so awesome. And $200k a year in a passive situation that’s amazing. But before
you put down the deposit on your Lamborghini did you read the fine print? These amounts
are before owners salary, before paying wages, before debt repayment and taxes. Now we can
see here that the average number of members for a Snap Fitness location is 543 members
with 418 memberships. So that is the average across the board. If we track back the value
on 617 members and multiply by 543 members that leaves us with total Gross annual operating
cash flow of $97,099 which we now have to pay employee wages, our loans if we have them,
taxes, and then if there is something left over pay ourselves a salary. Now a quick note
on wages, keep in mind certain states have additional requirements for cpr trained staff
to be present at all times. You need to check your state laws to determine what your wages
will be. There isnt much margin here so additional staffing can make any profit disappear. Also note that these revenue figures included
personal training revenue, and not all clubs have that. Their own FDD states
Personal training revenue varies widely by club depending on the ability to find qualified
and motivated personal trainers, types of services and management of the personal training
programs. In other words, it might be a challenge to find trainers. In which case you will need
to back this revenue number out from your Gross annual cash flow. So even if you have
a club that is higher than the average at 617 members, your $110,000 becomes $71,433,
now you have to pay your staff, taxes, and everything else, whatever is left you get
to keep. But compared with other franchises how do
these numbers stack up? Well we often poke fun at Subway, which has the 2nd lowest earnings
on the QSR50 at just over $400,000 a year. The only franchise lower than Subway is Baskin
Robbins. But even at a whopping 935 members, much higher than the average, you are going
to be making the same as an average Subway. Now keep in mind this is a passive investment,
so you need to look at it differently than a owner operated franchise, but there are
many franchises that provide average unit volumes over 1 million dollars a year. Some
over 6 million dollars a year for a lower investment than Snap. But with these you need
to work full time on the business and these companies are very selective choosing franchisees. Another concern within their FDD is stores
closing. Over the past 3 years Snap Fitness franchise locations have been closing they
started in 2016 with 930 stores, ended up in 2018 with only 898 clubs. Now keep in mind
this is a net number, so if they sold stores they are included here. There is no growth
in this company. Company owned franchises also closing a total of 85 stores in the past
3 years. I took a look at where the stores have been closing, pretty much across the
board, several in Florida, several in Illinois, Michigan, Minnesota, and Wisconsin. Now when
smart people call us to buy their franchise we set up calls with these people who closed
stores to find out what happened. The franchisor only wants you to speak with the top producers
but you need to hear both sides of the story to make a good decision. In 2017 there was a Nationwide class action
lawsuit by franchisees against Snap Fitness alleging breach of contract, unjust enrichment,
violation of the Ohio Consumer Sales Practices Act, and violation of the Ohio Prepaid Entertainment
Contract Act. Snap Fitness agreed to pay $2.9 million to a settlement fund and will pay
up to $350,000 in attorneys fees and is responsible for all costs associated with the class administration
of the settlement fund. There was also a lawsuit alleging fraudulent misrepresentation, breach
of contract, interference with contractual and prospective contractual relations, fraud,
and violation of the Minnesota Franchises Act that ended up with Snap Fitness having
to pay $305,453.63 in damages, fees and expenses. Some potential concerns from previous owners
on the Unhappy franchisee website state Dont believe the sales pitch that you can run a
successful snap while also working full time somewhere else. This would only work if you
are able to pay a full time, sales oriented manager.
Also, you most likely will NOT breakeven within the first 6 months. It could take 12-18 months
or more. Make sure you have the financial resources to subsidize your business for the
long haul. These were my two biggest mistakes. I didn�t
have the time, energy or finances to keep my business going. Another comment lists reasons why locations
are closing 1. Inaccurate representation of potential
financial success by corporate 2. Factual statistics about financial health of current
franchisees not available 3. Weak business model 4. Inadequate support provided to franchisees
by corporate 5. No contract memberships become a liability
in time 6. Billing, software and technical equipment continually have issues 7. Requires
turnover of staff to keep costs low. Revolving door employees. 8. Return on investment, if
any, is scant and unjustified for the amount of risk 9. CORPORATE IS MAKING HUGE PROFITS
WHILE FRANCHISEES ARE WIPING OUT. Now we looked at the FDD and Snap Fitness
earned over 14 million dollars on goods and services sold to franchisees which was about
20% of their total revenue of over $73 million. So is snap fitness franchise a good investment.
Now I’m going to say something that may surprise you. In your situation, Snap Fitness might
be the best option. There are people who are happy with their Snap Fitness investment.
First time buyers dont understand that until you consider your own operational skills,
your risk tolerance, your local demographic, market needs, and many other factors you cant
make a good decision. That is why smart buyers contact franchise city as our process identifies
your skills and weaknesses, compares your franchise choice with other brands that might
be better suited and more profitable, looks at your market demand and ultimately determines
the best fit for your specific situation – and its free to qualified buyers. You can learn
more by clicking above. Please like and subscribe, hit the bell for updates thank you for watching.

7 thoughts on “Snap Fitness Franchise – is a Good Investment?

  1. Great video!

    Paying a full- time manager can affect the bottom line big time. Fortunately I was able to make a profit in my franchise in less than 60 days! Phew. Franchises can be scary decisions, and you've got to do your research and be able to execute!

  2. If I wanted to buy me a franchise, I would definitely connect with you. I have done business in my life, but I have missed a lot of information before signing the deal. It was pure luck the deals were small and not corporate. I really enjoy your videos and thank you for sharing

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