How to Franchise: Gold’s Gym
Hello there! My 2nd post for my Fitness Franchises series is none other than Gold’s Gym. This is one of the oldest fitness centers that’s still up and running (successfully mind you). Some of my other blog entries will be more detailed than others. Depending on the content I can find from the company’s website and my research.
For more than 50 years, Gold’s Gym has been the world’s trusted fitness authority. From humble beginnings as a small gym in Venice, California, Gold’s Gym has grown into a global icon with 700+ locations serving 3 million people each day across 6 continents.
Gold’s Gym History
The first Gold’s Gym opened in fall 1965 in Venice Beach, California. Dubbed “the Mecca of bodybuilding”, it was frequented by Arnold Schwarzenegger and Dave Draper and featured in the 1977 movie Pumping Iron. The movie brought attention not only to the gym itself, but also to the world of bodybuilding and physique in general. To this day, it is considered a landmark in the bodybuilding subculture, and has achieved cult status. In 1970, Joe Gold sold the chain.
INITIAL INVESTMENT
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $32,000 | $40,000 |
| Travel and Living Expenses During Training | $4,000 | $7,000 |
| 3 Months’ Rent | $26,250 | $367,500 |
| Security Deposit for Lease | $9,000 | $225,000 |
| Leasehold Improvements and Construction Costs (assuming no pool) | $1,750,000 | $2,800,000 |
| Selectorized Equipment and Free Weights | $125,000 | $500,000 |
| Cardiovascular Equipment | $150,000 | $500,000 |
| Signage | $35,000 | $85,000 |
| Initial Inventory, Other Equipment and Supplies | $12,000 | $56,000 |
| Computer System and Gym Management System | $20,000 | $35,000 |
| Advertising and Marketing | $25,000 | $170,000 |
| Miscellaneous Opening Costs | $10,000 | $65,000 |
| Additional Funds – 3 Months | $20,000 | $150,000 |
| TOTAL ESTIMATED INITIAL INVESTMENT* | $2,218,250 | $5,000,500 |
*The estimated initial investment range is for a new 35,000 square foot Gold’s Gym Facility, excluding real estate purchase costs and assuming no pool.
FRANCHISE FEES
| Type of Fee | Amount |
|---|---|
| Royalty | Greater of 5% of Facility’s Gross Revenue each month or $2,000 per month. |
| Marketing Contribution | Greater of 2% of Facility’s Gross Revenue per month or $1,000 per month |
| Cooperative Contributions | Amount that the Cooperative determines, up to 3% of Gross Revenue. |
| Marketing Spending Requirement Shortfall | Difference between Marketing Spending Requirement and amount the franchisee spent. |
| Studio Program Training Fee | Academy (if field-based training Gold’s Fit/Burn is $2,500 for 5 to 10 trainees, or $4,000 if 11 to 20 trainees, and Gold’s Cycle is $2,500 for 5 or more attendees); plus instructor travel expenses). |
| Gold’s AMP Program Monthly Platform Fee (Premium Partner Option) | $99 per month (subject to increase) |
| Gold’s AMP Program Monthly Member Fee (Premium Partner Option) | $5.00 per month per Gold’s AMP member |
| Relocation Expenses | Actual out-of-pocket costs and expenses incurred by Gold’s Gym in inspecting the proposed new site. |
| Convention Registration Fees | Currently under $500, but could increase if the franchisor’s costs increase |
| Fee for Ongoing Training | Currently $500 per person per session, but could increase if the franchisor’s costs increase |
| Transfer Fee | $2,500 for non-control transfer and $10,000 for control transfers. |
| Successor Franchise Fee | 50% of initial franchise fee then charged for new Gold’s Gym Facility franchises (currently would be $20,000) |
| Management Fee | 3% of Gross Revenue, plus direct out-of-pocket costs and expenses. |
| Costs and Attorneys’ Fees | Will vary under circumstances. |
| Indemnification | Will vary under circumstances. |
| Administrative Fee and Interest | $100 administrative fee and interest at 1.5% per month or highest interest rate the law allows, whichever is less. |
| Follow-up Inspection Fee | Approximately $300 to $500 per evaluation, but could increase if franchisor’s costs increase. |
| Supplier Testing Fees | Approximately $500 to $5,000 |
| Insurance Costs | Premiums plus the franchisor’s costs and expenses. |
| Audit Expenses | Cost of audit. |
| Liquidated Damages Upon Royalty Franchise Agreement Termination | If the Franchise Agreement terminates for any reason other than the franchisee’s termination for the franchisor’s uncured breach, then in addition to other amounts the franchisee owes the franchisor, the franchisee must pay the franchisor the defined “Termination Damages.” |
The above information has been taken from the FDD of Gold’s Gym. Year of FDD: 2018
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