Are you a fitness lover with some money to invest?

Fitness advice

Are you a fitness lover with some money to invest?

written by Dr. Basudev Tewari | July 27, 2021

If you have some investable surplus and researching for a good business opportunity, please read on…

Why invest in the gym business?

Simply because this is the business of the future. The industry is growing very fast and people are getting even more fitness and health conscious, after Covid (almost 27% industry growth rate in India). Just compare the number of successful gyms today vs that 10 years ago!

Also, active personal management of an investor is not required, if given to any capable management, like FitNet. There is almost no administrative headache in that case and it frees up the valuable time for the investor.

Also Kolkata is at the budding stage of the fitness industry, considering the growth of the gym and fitness industries in cities like Delhi, Mumbai, Pune, Bangalore, Chandigarh etc.

What are the financial benefits of a mid size gym franchise like any FitNet gyms?

Financial benefits of setting up a successful gym business are:

Just invest once. You won’t require further money later, in almost all cases.
Extremely cash rich business, no credit problem.
Very little working capital required.
Break even from the first month is very much possible.
ROI may be variable but 30 to 40% is extremely easy to achieve.
Earning back the whole investment in just 1 year is possible.

Why choose FitNet and not any other company?

Because of the following reasons :

FitNet is the largest gym chain in Eastern India and successfully runs and manages gyms (owned and franchisees).
FitNet has the best management structure and a perfect team setup to run gyms.
FitNet cost for a franchise is 10 times cheaper than the standard international players.
FitNet has an extra edge in marketing and brand positioning as the best, mid size, profitable gym as well as fitness management company.
FitNet has easily survived the 2 lockdowns and bounced back with good profitability after opening up gyms, post lockdown.
The successful gym chain has a medical foundation, which entails more trust from clients as well as investors.
Very strong brand presence in digital platforms like Google, YouTube, Facebook, Instagram etc. (way more than any other players in the industry)

What are the advantages of FitNet management and its team?

The chief advantages are:

- Owner and director is a well known doctor and consultant in the weight loss niche
- Has a proper management system consisting of the following hierarchy :
  1. CEO and General Manager at the top
  2. An extremely able central team, under top management, consisting of :
    - HR Manager
    - Sales Head
    - Admin Manager
    - Service Engineer
    - Social Media Manager
    - Vigilance Manager
    - Strategy Manager
    - Roaming Manager
    - Accountant

A digital marketing team of 7 guys, working from home

1. Every branch or gym consists of the following manpower :
  - Branch Manager
  - Front desk staff – 1 or 2
  - Floor Trainers
  - Personal Trainers
  - Housekeeping staff
We arrange frequent sales meetings (online – daily and offline – twice a month) and trainer and technical meetings (normally once a month).
Besides, our central team (HR, GM, admin, VM etc.) visits the individual branches from time to time to check problems and solve them for smooth functioning of business.
Technical problems of gym equipment are solved very quickly by the Service Engineer and his team.
Frequent outdoor branding and marketing activities, like banners, posters, leaflets, academics, events, outdoor activities etc.
Extremely disciplined corporate structure and very fast resolution of the staff issues.
Extreme importance is given to technology like :
1. Using CCTV for continuous monitoring
2. Strictly biometry enabled door access
3. Fully software based operations and billing system
4. Extremely transparent accounting system, verified and monitored by a well known CA firm
5. Collection of multiple data and use of CRM and data analytics to improve profitability.
6. Heavy use of SEO, social media, Facebook / Instagram / YouTube / Google ads for digital marketing and branding.
7. Data and technology driven strategy formulation and implementation

How much investment is required to set up a standard franchise gym? How is the money utilized initially and later?

Approx. 22 to 25 lakhs is required, a one time investment only.
Initially 25% of the investment is to be given during the signing of the MOU.
Rest of the amount has to be given within the following month in a maximum of 2 installments.
Equipment orders advance and interior design advance is paid from the initial amount.
Almost 12 to 14 lakhs will be used for purchase of all the equipment (mostly from 3 to 4 vendors and suppliers).
Almost 5 to 7 lakhs will be used by interior designer. Approx. 1 month is required to develop a raw place into a proper gym setup.
Approx. 2 lakhs will be the cost of exterior designing, initial branding and marketing. This is required for a new gym to make an impact on a virgin zone.
Approx. 1 lakh is required for the IT setup, consisting of CCTV, biometry, computer, printer, Wi-Fi etc.
1 Lakh is charged as the franchise consultation fee for setting up the whole business.
Rest of the money can be kept as a reserve as an emergency fund.

What will be the charge taken by FitNet to manage the gym on a day to day basis?

This can be done in the following 2 ways :

Royalty method : A royalty of 5% of the gross sales amount till break even level (i.e. where break even means sale = expense). Beyond break even level, an extra 10% of the gross sales (total 15% of the income over expenditure)
Profit sharing method : Net profit sharing in the ratio of 2/3rd to 1/3rd between franchisee and FitNet respectively

Who will manage the gym (FitNet or Franchisee) and how can the transparency of the business be ensured?

We recommend allowing FitNet to manage the gym, owing to the team, experience management and expertise (as already mentioned).

However, the franchisee, if confident of managing the whole business, should always go ahead and manage his own business. In that case too, FitNet can still be the advisor and do all the hand holding, required for the business to run smoothly and profitably.

All the operations should be based on system and technology (with equal access to both FitNet and franchisee) and all the instruments of monitoring and vigilance should be available to both the parties.

What will happen in cases of business loss or a lockdown type scenario? Will FitNet bear the liabilities too?

In the case of the royalty sharing method, FitNet will NOT share any loss or liability. However, in the second case of profit sharing, FitNet has to bear 1/3rd of the loss or liability, subject to agreement.

But as per our experience, loss making in such business is highly improbable, rare and short lived. The smooth and profitable running of all the existing branches, despite the two lockdowns, is a testimonial to that.