Gold’s Gym: an Expensive Franchise Making $1.6M In Revenue

Founded in 1965, Gold’s Gym is undeniably one of most recognisable fitness franchise brand in the US today. Yet with 600 locations out of which 164 are franchised-owned, it’s not the most affordable fitness franchise either.

Indeed, you would need to invest a total of $4 million to set up a new location, far more than most other fitness franchises (the average is $1.6 million).

So is this worth the profits? Is Gold’s Gym a profitable franchise?

In this article we are looking at Gold’s Gym and its latest Franchise Disclosure Document to find out how much it really costs, how much profits you can make and whether you should invest in one. Let’s dive in!

Key stats

Franchise fee$40,000
Royalty fee5.0%
Marketing fee2% to 5%
Investment (mid-point)$2,563,000
Revenue$1,419,000 per year
Revenue per square foot[franchise_value_revenue_per_sq_ft]
Sales to investment ration.a.
Payback period[franchise_value_investment_payback]
Minimum net worth$1,000,000
Minimum liquid capital$400,000

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What is Gold’s Gym?

Gold’s Gym is an international chain of co-ed fitness centers headquartered in Dallas, United States.

The chain was founded by Joe Gold in 1965 in Venice Beach, California.

Its studios offer a variety of cardio and strength training equipment as well as group exercise programs, resistance training equipment, personal training and locker room services, a kids’ club, and a “pro shop” selling clothing, drinks, accessories, supplements and nutritional products.

Gold’s Gym began franchising in 1980 and now has more than 600 studios in the US.

Gold’s Gym franchises pros and cons

The Pros:

  • Real estate and site selection: The franchisor has a real estate team to help its franchisees with the site selection, design and construction of their studios. Also, it helps franchisees with vendor programs and equipment selection.
  • Franchise support: Gold’s Gym has a solid franchise system and professional network to help franchisees run a successful studio. Franchisees get access to proven infrastructure and growth tips as well as ongoing franchise support, security and safety procedures and periodic performance reviews.
  • Marketing and media planning: The brand utilizes robust marketing and advertising strategies to attract new members and drive up sales. Franchisees benefit from national media, social media and local studio public relations tools.
  • Digital training program: Gold’s Gym provides its franchisees with an intensive and in-person training curriculum and education. Franchisees get the best training about the franchisor’s systems and equipment use, how to hire the right staff and how to carry out a successful launch of their studios.
  • Third-party financing: Gold’s Gym helps franchisees get financing through partnerships with third-party lenders. Franchisees get funded for franchise fees, inventory, equipment and payroll.
  • Territory granted: The franchisor allows its franchisees to operate their fitness clubs in a designated area defined in the franchise agreement. It does not allow any other franchises to operate in the protected area.
  • Express Club Model: The brand has designed a simple and convenient club to help franchisees boost their earning potential. Franchisees get access to a smaller, more accessible space that caters to modern fitness members’ needs.

The cons:

  • No absentee ownership: A Gold’s Gym does not present a passive investment opportunity. The franchisor requires franchisees to fully participate in the decision-making and day-to-day operations of their studios.
  • Not a part-time business: The franchise is not a side or part-time business. Franchisees must adhere to the brand’s official working hours.
  • Not a home-based business: The business cannot be operated from home or a mobile unit. Franchisees need to establish their office space, retail facility, or warehouse to operate from.
  • Competition: Main competitors include Anytime Fitness, Club Pilates and 24 Hour Fitness.

How much does a Gold’s Gym franchise cost?

On average, you would need to invest around $4,044,000 to open a Gold’s Gym franchise.

As the investment amount is an average, it may change depending on the fitness club’s size and location. Generally, this investment ranges between $2,260,500 and $5,827,250 (Franchise Disclosure Document 2021).

Gold’s Gym startup costs

The initial investment covers all the startup costs you may need to start a gym business.

In addition to the $40,000 initial franchise fee you must pay to the franchisor, you would also have to pay for:

  • Formation Costs: training expenses, leasehold improvements, construction, gym equipment, furniture, signage, permits, business licenses, computer system, gym management system, etc.
  • Initial Marketing: grand opening marketing 
  • Operating Costs: rent, insurance, initial inventory and supplies, and working capital for first 3 months, etc.
Type of costLowHigh
Initial Franchise Fee$40,000$40,000
Formation Costs$2,111,000$4,965,000
Initial Marketing$25,000$170,000
Operating Costs$84,500$652,250
Source: Franchise Disclosure Document 2021

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How much revenue does a Gold’s Gym make?

On average, a Gold’s Gym franchise makes $1,638,000 in revenue per year.

When it comes to revenue per square foot, Gold’s Gym franchises makes $47 revenue per square foot per year vs. $80 on average for fitness franchises.

How profitable is a Gold’s Gym franchise?

We estimate that a Gold’s Gym franchise makes about $347,000 in profits per year. That’s a 21% EBITDA margin.

This profit margin is on the lower end compared to similar franchises (~30% industry average for fitness franchises).

Note that Gold’s Gym only provides royalty and marketing fee data for its franchised gyms in its FDD. Instead we made assumptions and used fitness franchise benchmarks for other costs to calculate EBITDA as shown below:

Profit and lossAmount% revenueNotes
Staff$(458,640)28%industry average
Rent$(504,504)31%industry average
Royalty fee$(81,900)5%as per FDD
Marketing$(81,900)5%as per FDD
Other Opex$(163,800)10%industry average

Should you invest in a Gold’s Gym franchise?

The problem with investing in a Gold Gym’s franchise is that the upfront cost, as in the investment you would have to fund as a franchisee (either from investors or a loan from a bank) is disproportionate compared to the profits you can generate with this business. Remember: you would need to fund as a franchisee $4,044,000 on average to open a new Gold’s Gym franchise.

Indeed, the average Gold’s Gym franchise has a payback of 16 years, much longer than the average for fitness club franchises (8 years as per our own fitness benchmarks).

This means you would need to wait 16 years on average to recoup your original investment and repay all creditors (banks) and investors.

As such, we don’t consider Gold’s Gym as being a great investment if you look deeper in the financials. Yet, that shouldn’t put you off completely: your decision to choose a franchise should not rely entirely on financials. Instead, you should also consider factors like competition, brand name, territory protection, etc.

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How does it compare vs. other fitness franchises?

FranchiseNet worth ($)Liquid capital ($)Investment ($)Revenue ($)Payback (years)
Anytime Fitness,000175,000510,165338,810$6810.0
Planet Fitness,000,0001,500,0003,273,3001,564,877$8013.9
Orangetheory Fitness,000,000300,0001,381,432805,251$24411.4
Club Pilates,000100,000287,000544,703$3633.5
Pure Barre,000100,000335,812259,534$1738.6
Snap Fitness,000250,000783,328194,124$3726.9
Burn Boot Camp,000150,000314,846400,526$765.2
Crunch Fitness,000,000400,0003,092,0001,863,627$4811.1
Stretch Zone,000150,000161,027357,632$2863.0
Workout Anytime,000175,0001,519,450511,628$4910.0
Fitness Together,00080,000292,013400,000n.a.4.9
The Camp Transformation Center,00075,000287,000495,067$993.9
Retro Fitness,500,000300,0001,681,341998,459$667.0
F45 Training,000100,000457,650632,902$2534.8
Gold's Gym,000,000400,0004,043,8751,638,000$4716.5
Fit Body Boot Camp,00065,000198,350167,364$617.9

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