At $3,000,000, the investment required to open a new Crunch Fitness is one of the highest among all fitness franchises. Yet, this shouldn’t necessarily put you off: what’s more interesting is how much profits you can make with this business.
The good news is that Crunch Fitness is a very profitable business: we found that the average Crunch Fitness gym has a turnover of $1,864,000 per year and reaches 34% EBITDA margin, impressive!
Does it justify the hefty price tag of $3,000,000? In this article we are looking at Crunch Fitness from the perspective of its Franchise Disclosure Document to find out whether you should invest in this franchise. Let’s find out!
|Revenue per square foot||[franchise_value_revenue_per_sq_ft]|
|Sales to investment ratio||0.9x|
|Minimum net worth||$2,000,000|
|Minimum liquid capital||$400,000|
What is Crunch Fitness?
Crunch Fitness is an American fitness studio chain based in New York City.
The chain was founded by Doug Levine in 1989 in NYC’s Greenwich Village and began as a fitness studio in a small basement.
Crunch Fitness has two brands, Crunch Fitness and Crunch Signature:
- Crunch Fitness is the standard format: it offers group classes, advanced HIIT classes, and traditional gym services instead
- Crunch Signature Clubs are mainly premium, full-service clubs with monthly memberships located in major metropolitan areas and offering a wide array of services, classes, and amenities. There are only 28 Crunch Signature gyms in the world.
The chain started selling franchises in 2010, and today it has over 400 gyms in the US, Canada, Spain, Portugal, Costa Rica, and Australia. Of these, 92% are franchised owned.
Crunch Fitness franchises pros and cons
- Quality training program: The chain offers its franchisees an extensive training program to equip them with the necessary resources to establish and run successful clubs. Its on-the-job and classroom training covers the business concept, training, sales, and hiring of the best staff.
- Flexible membership options: Crunch Fitness has designed a variety of flexible membership options to enable members to get the most out of their subscriptions. These include equipment, online nutrition, one free personal training session, proprietary group fitness classes, small group training, streaming workout videos, indoor cycling, multi-club access, unlimited guest privileges, tanning, and Hydro Massage.
- Third-party financing: The brand assists franchisees with financing assistance for start-up and development costs through third-party lenders.
- Exclusive territory protection: The franchisor provides its franchisee with an exclusive development market through a protected territory. It does not establish other franchises or operate competing channels in the designated areas.
- Public relations and marketing: Crunch Fitness has an experienced marketing team to help its franchisees with their public relations and create awareness for their local studios. Franchisees can leverage the brand’s popularity, national media, social media, regional advertising, fun and quirky promotional campaigns, and advertising tools to attract customers and improve their sales.
- Not a home-based or mobile business: A crunch Fitness franchise cannot be operated from home or a vehicle. Franchisees must establish an office space, retail facility, or warehouse.
- Not a part-time business: The business cannot run on a part-time basis. Franchise owners must follow the franchisor’s operating hours.
- Competition: The franchise faces stiff competition from other fitness chains such as Anytime Fitness, Gold’s Gym and Planet Fitness.
How much does a Crunch Fitness franchise cost?
On average, you may need to invest around $3,092,000 to open a Crunch Fitness health club.
The investment amount is an average that depends on the model you choose from the two types of health clubs offered by Crunch Fitness.
According to the latest Franchise Disclosure Document, you would need to invest twice as much for a Crunch Fitness Model ($668,000 – $3,488,000) vs. a Crunch Sport Model ($1,226,000 – $6,986,000).
Crunch Fitness startup costs
The investment covers all the necessary startup costs you may need to start a gym. From construction costs to initial operation costs, the investment covers it all.
More specifically, in addition to the initial franchise fee ($25,000 – $50,000), the investment pays for:
- Formation Costs: site selection, training fees, lease deposits, security deposits, leasehold improvements, fitness equipment, furniture, sign, technology system, permits, business licenses, etc.
- Initial Marketing: grand opening marketing expenses
- Operating Costs: opening inventory, utility deposits, insurance, and working capital for first 3 months, etc.
|Type of cost||Low||High|
|Initial Franchise Fee||$25,000||$50,000|
What is the turnover of a Crunch Fitness franchise?
On average, a Crunch Fitness franchise has a turnover of $1,864,000 per year.
This is average annual turnover of 222 franchised Crunch Fitness health clubs operating in 2021.
The turnover of a Crunch Fitness gym varies a lot, depending on factors like the club’s location, its size, competition, etc. For example, the age of a fitness club also impacts turnover.
Logically, you would expect older gyms to generates more sales vs. recently opened gyms as they benefit from organic growth, recommendations and customer awareness overall. Yet surprisingly, Crunch Fitness gyms opened between 25 to 36 months ago had the highest average turnover (vs. older gyms opened more than 37 months ago for example).
How profitable is a Crunch Fitness franchise?
On average, Crunch Fitness clubs make $618,909 in profits per year. That represents a 33.9% profit margin (EBITDA margin).
According to our own fitness benchmarks, Crunch Fitness is more profitable vs. other fitness franchises. In comparison, Anytime Fitness and Planet Fitness have a 16.5% and 28.5% EBITDA margin respectively.
Although the staff costs are high (26% sales vs 25% industry average), the high EBITDA margin is due to very low rent costs (9% vs 22%).
Note that this EBITDA margin does not represent the net profit you would earn as a franchise owner. Indeed, you may need to deduct tax, interest, and other similar costs to calculate the net profit.
|Profit and loss||Amount||% revenue|
Should you invest in a Crunch Fitness franchise?
Crunch Fitness is a very profitable franchise vs. other fitness brands: with a 34% EBITDA margin, it’s one of the most profitable fitness franchises.
But does it mean you should go ahead and buy out the franchise? Not necessarily. What’s important instead is to compare the profits to the initial upfront investment ($3,092,000 on average as we just saw).
Assuming a 15-20% net profit margin (in light of a 34% EBITDA margin), we found Crunch Fitness has a payback period of 8 to 12 years which is good for fitness clubs.
In other words, you would need to wait 8 to 12 years to be able to repay all creditors and investors (as well as your own investment) before you can finally reap the profits.
Therefore, we do consider Crunch Fitness is a great option if you want to get into the fitness franchise industry.
How does it compare vs. other Fitness franchises?
|Franchise||Net worth ($)||Liquid capital ($)||Investment ($)||Revenue ($)||Payback (years)|
|Burn Boot Camp||https://sharpsheets.io/blog/burn-boot-camp-franchises-costs-profits/||300,000||150,000||314,846||400,526||$76||5.2|
|The Camp Transformation Center||https://sharpsheets.io/blog/camp-transformation-center-franchise-costs-profits/||100,000||75,000||287,000||495,067||$99||3.9|
|Fit Body Boot Camp||https://sharpsheets.io/blog/fit-body-boot-camp-franchise-costs-profits/||100,000||65,000||198,350||167,364||$61||7.9|
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