RETROFITNESS

Item 7 in the 2025 FDD pegs total investment at $2,037,316 to $3,241,991, dwarfing the modest $29,000 franchise fee—a red flag for such a capital-intensive fitness model requiring prime real estate and equipment from brands like Matrix. Ongoing fees bite hard: 5% royalty (minimum $1,000/month), 2% ad fund (minimum $400/month), plus $1,820/month in fixed costs for technology, bookkeeping, and call center services. Item 19 reveals average gross revenue of $1,185,808 and median of $976,731 across 81 franchise locations (down 6% from 86 in 2023), with 22 projected new units offering some optimism amid 5 terminations and 3 transfers. SBA records show 33 loans averaging $963,452, indicating franchisees lean on debt to launch.

System health metrics raise cautions: the -6% contraction suggests saturation or operational challenges in the discount gym space, compounded by litigation over franchise breaches, post-termination disputes, and state sales law violations. While reciprocal access drives retention, the revenue median lags the average, implying a few outliers skew performance—meaning most owners gross under $1M before hefty fees erode margins. For budget-conscious investors, the low entry fee tempts, but the $2M+ buildout and fee stack demand proven local demand; this isn't a quick-return play in a maturing, competitive sector.