Retro Fitness Franchises: Sales, Costs & Profits (2023)

With 89 gyms in the US in 2023, Retro Fitness is a popular fitness brand among franchisees. Yet, it’s not the most affordable either: you would need to invest on average $1.7 million to set up a new Retro Fitness gym.

Is this worth the profits? Well we do think so: one Retro Fitness gym generates $1 million in revenue per year. In addition, we found it would take on average 7 years to recoup your investment, not bad.

So if you’re considering opening a Retro Fitness franchise, you may want to read this guide. In this article we are looking at the latest Franchise Disclosure Document to find out how much profits you can make with a Retro Fitness, and whether you should invest in one. Let’s find out!

Key figures

Franchise fee$29,000
Royalty fee5% to 7%
Marketing fee2.0%
Investment (mid-point)$1,878,000
Revenue$1,098,000 per year
Revenue per square foot[franchise_value_revenue_per_sq_ft]
Sales to investment ratio-
Payback period*[franchise_value_investment_payback]
Minimum net worth$1,500,000
Minimum liquid capital$300,000
Source: FDD 2022

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What is Retro Fitness?

Retro Fitness is a full-service gym franchise founded in 2004 by Eric Casaburi. 

The fitness club store provides a full range of fitness services, including small-group strength training, personal training, conditioning and team workouts. 

The chain is headquartered in West Palm Beach, Florida and has been franchising since 2006

Today, Retro Fitness has 89 locations worldwide all of which are franchises based in the US. 

Retro Fitness franchises pros and cons

Pros

  • Recurring revenue from multiple income streams: franchisees benefit from multiple income streams, including the recurring monthly membership fee, smoothie bar, personal training and merchandise sales. 
  • High value, low price franchise opportunity: fitness clubs are designed to maximize space and profit without compromising the quality of services. The franchisor uses a simple business model with an affordable real estate plan. 
  • Third-party financing: the franchisor partners with strategic third-party sources to help franchisees get affordable equipment and cover the franchise fee, trade fixtures, accounts receivables and inventory. 
  • Comprehensive assistance: the franchisor’s competent staff helps with everything from site selection to design layout, price negotiation and field operations. 
  • Training & ongoing support: the franchisor trains aspiring gym owners on the business basics to help them operate a successful franchise. The corporate management team conducts performance analysis and business reviews to provide constant feedback.  
  • Dedicated marketing team: the brand’s dedicated marketing staff is on standby to help with marketing, advertising, and social media planning. Franchisees can use the brand’s marketing channels, such as national media, social media, ad templates and regional advertising to acquire and retain clients. 

Cons

  • Not a part-time business: a Retro Fitness franchise can’t be run as a side business. 
  • No absentee ownership: franchisees must devote their time and effort to running the business within the stipulated operating hours. 
  • Can’t operate from home/as a mobile unit: franchisees must operate from physical locations. 
  • Minimum employee requirement: 20-25 employees are required to start and operate a Retro Fitness franchise. 
  • Competition: Competitors include Planet Fitness, 24 Hour Fitness and Anytime Fitness to name a few

How much does a Retro Fitness franchise cost?

You have to invest around $1,681,341 to open a Retro Fitness franchise outlet.

This is an average; indeed, it varies based on many factors, such as the location of your outlet, its size, market conditions, and other factors.

In addition to the initial franchise fee of $29,000, which you must pay to the franchisor, you would also pay for the leasehold improvements, furniture and fixtures, signage, equipment, licences and permits, etc.

Retro Fitness startup costs

Here’s the full breakdown of costs:

ExpenseAmount
Initial franchise fee$29,000
Leasehold improvements$900,000 – $1,200,000
Signage and graphics$35,000 – $45,000
Equipment and furnishings$100,000 – $150,000
Licenses and permits$500 – $30,000
Additional Funds $90,000 – $270,000
Other$119,966 – $364,216
Total$1,274,466 – $2,088,216

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What is the turnover of a Retro Fitness gym?

On average, a Retro Fitness franchise makes $998,000 in sales per year.

This is the average sales per franchised fitness outlet for 90 of the 92 franchised fitness outlets that were open for all of 2021.

Even though the average revenue per gym is around $1 million, the top 10% most successful Retro Fitness gyms had an annual turnover of over $2.1 million in 2021.

Interestingly, a Retro Fitness gym has a $66 revenue per square foot on average, in line with the fitness franchise industry ($80).

How profitable is a Retro Fitness franchise?

We estimate the average Retro Fitness gym makes $260,000 in profits per year. This corresponds to a 26% EBITDA margin.

Note that this is purely an estimate of which we have provided some details below. Indeed, Retro Fitness does not provide any detailed information whatsoever when it comes to costs apart from royalty and marketing fees. Therefore, we used our own fitness franchise benchmark.

Profit and lossAmount% revenueNotes
Revenue$998,000100%
Staff$(279,440)28%industry average
Rent$(169,660)17%industry average
Royalty fee$(139,720)14%as per FDD
Marketing$(49,900)5%industry average
Other Opex$(99,800)10%industry average
EBITDA$259,48026%
Source: Franchise Disclosure Document 2022

Should you invest in a Retro Fitness franchise?

So are the $260,000 profits per year worth investing $1,681,000 upfront? Retro Fitness may be a profitable business, yet it’s also an expensive franchise.

In order to assess whether a franchise is worth investing, we must compare the profits to the initial investment ($1,681,000 mid-point investment).

Now, assuming a 15% net profit margin (after all expenses have been paid) which makes sense given EBITDA is around 26%, we found Retro Fitness has a payback of 7 years on average.

This is a good payback period: you would repay all creditors (banks) and investors within 7 years after the initial investment. This is also in line with fitness franchises as per our own fitness benchmarks (~8 years on average).

Therefore, we can safely say Retro Fitness is a good investment if you want to get into the fitness industry as a franchisee. Yet, make sure to take into account other factors than profitability such as competition, the franchisor’s support and training, etc.

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Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.

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