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Row House Franchises: $365K Investment Cost Yet Low Profits
One of the fastest growing fitness franchise with over 70 locations opened from 2019 to 2022 despite the pandemic, Row House is a very popular franchise for a number of reasons.
First, it’s one of the very few pure player in the high-growth indoor rowing fitness market. Secondly, it’s a very affordable franchise: you would invest on average $365,000 to set up a new Row House studio (vs. $1.6 million for the average fitness club franchise).
Yet does this mean you should go ahead and buy the franchise? What about the profits you would make as a franchisee? How much revenue can you make with a Row House studio?
In this article we are looking at Row House from the perspective of its Franchise Disclosure Document to find out whether it’s a good franchise investment and why. Spoiler alert: it may not be as profitable as you would think. Let’s dive in!
Key figures
| Franchise fee | $60,000 |
| Royalty fee | 7.0% |
| Marketing fee | 2.0% |
| Investment (mid-point) | $365,000 |
| Revenue per unit | $223,000 per year |
| Revenue per sq. ft. | $112 per year |
| Sales to investment ratio | 0.6x |
| Investment payback* | 10 years |
| Minimum net worth | $500,000 |
| Minimum liquid capital | $100,000 |
Download the Row House franchise business plan
Updated with Franchise Disclosure Document
5-year pro forma financial model
Free support
What is Row House?
Row House is a chain of indoor rowing studios headquartered in California.
Established in 2014 by Eric Von Frohlich and Debra Strougo, the boutique fitness brand was built around the rowing concept as an exercise.
It views rowing as the most effective workout that delivers results while remaining the exciting and risk-free exercise every fitness enthusiast craves.
Row House opened its franchising doors in 2017.
Today, the boutique fitness brand has 93 locations worldwide, with 86 rowing studios in the USA.
Row House franchises pros and cons
Pros
- Proven and unique fitness concept: the rowing concept is one of its kind in the competitive fitness industry, delivering results within an untapped niche.
- A recurring revenue model: indoor rowing is an ongoing arrangement, attracting recurrent revenue as long as you satisfy the client’s needs.
- Multiple income streams: membership fees, class packages and retail sales.
- Low-cost model: the franchisor uses a simple business model with a low-cost entry, low labor requirements and affordable real estate planning.
- Extensive franchisor support: the Row House team boasts decades of experience in the fitness industry to help franchisees launch and grow their businesses. The franchisor guides new business owners from site selection to lease negotiation, construction and staff recruitment. Extensive ongoing training in the form of weekly and monthly webinars and one on one consultations are vital to building a successful business.
- Scalable business: franchisees can bank on vendor relationships with national partners and low development costs to scale their businesses.
- Growth potential: indoor rowing is a new concept in the health and fitness industry. Opening a Row House franchise is an opportunity to join a lucrative field with limitless growth potential.
- Sales, marketing and advertising support: the franchisor helps business owners market their fitness studios.
- Financial assistance: Row House works with third-party financial sources to help franchisees secure funding for their fitness clubs.
- Exclusive territories: franchisees have exclusive rights to operate their rowing workout studios in designated locations without competition from other Row House units.
Cons
- Full-time business: not a part-time investment or a side hustle.
- No absentee ownership: franchisees must be involved in every business operation.
- Minimum employee requirement: 8 employees are required to operate a Row House franchise.
- Not a mobile unit/home-based opportunity: franchisees must operate within the physical locations.
- Competition: may include 9Round Fitness, GritCycle and TriggerPoint Systems.
How much does a Row House franchise cost?
On average, you may need to invest around $365,216 to open a Row House franchise.
The investment amount is an average, indeed, it will change depending on the fitness club size and location. According to Franchise Disclosure Document 2022, this amount can be as low as $247,116 and as high as $483,316.
Row House startup costs
The initial investment covers all the startup costs you may need to start a franchised fitness club.
In addition to the initial franchise fee of $60,000, the investment amount covers these essential startup costs:
- Formation Costs: training expenses, real estate improvements, office equipment, furniture, signage, permits, business licenses, key tags, architect fees, initial equipment package, low voltage AV and door access, etc.
- Initial Marketing: advertising expenses
- Operating Costs: rent, insurance, and working capital for first 3 months, etc.
| Type of cost | Low | High |
|---|---|---|
| Initial Franchise Fee | $60,000 | $60,000 |
| Formation Costs | $121,400 | $286,500 |
| Initial Marketing | $15,000 | $20,000 |
| Operating Costs | $50,716 | $116,816 |
| Total | $247,116 | $483,316 |
What is the revenue of a Row House studio?
On average, a Row House franchise makes $223,144 in sales per year.
This revenue is the annual median sales of 81 franchised studios operating in 2021. It can vary depending on the type of studio you choose.
Indeed, as a franchisee Row House offers you 2 types of studios you can choose to set up:
- Fully scheduled studios (studios having at least 120 classes per month); and
- Minimally scheduled studios (less than 120 classes per month
As you can see below, fully scheduled studios generate more revenue than minimally scheduled studios on average.
Download the Row House franchise business plan
Updated with Franchise Disclosure Document
5-year pro forma financial model
Free support
How profitable is a Row House franchise?
We estimate that a Row House studio makes about $68,000 in profits per year (31% EBITDA margin).
This profit margin is on the higher end compared to similar franchises (~30% industry average).
Note that Row House only discloses the royalty and marketing fee, which the franchises directly pay to the franchisor.
Indeed other operating costs like cost of sales, staff and rent are not included in the Franchise Disclosure Document. To calculate EBITDA we had to make assumptions using fitness franchise industry averages instead.
| Profit and loss | Amount | % revenue | Note |
|---|---|---|---|
| Revenue | $223,144 | 100% | |
| Staff | $(62,480) | 28% | industry average |
| Rent | $(38,827) | 17% | industry average |
| Royalty fee | $(20,083) | 9% | as per FDD |
| Marketing | $(11,157) | 5% | industry average |
| Other Opex | $(22,314) | 10% | industry average |
| EBITDA | $68,282 | 31% |
Should you invest in a Row House franchise?
To answer that question we must compare the profits to the upfront investment cost you would need to pay for to open a new Row House franchised gym. That’s what we call the payback period: the time it takes for an investment to be repaid with the profits.
We found Row House has a 10 years payback, which isn’t the best vs. other fitness franchises. Indeed as per our own benchmark we found that fitness franchises have paybacks of 8 years on average.
In other words, you would be able to repay creditors (banks) and investors within 10 years on average with the profits from your Row House studio. Whilst not necessarily the best, it’s not a reason not to choose Row House either.
Indeed there are a number of factors to take into account when choosing a franchise, other than the profits or the payback period. For example things like training, the franchisor’s support and territory protection to name a few are important to consider too.
Download the Row House franchise business plan
Updated with Franchise Disclosure Document
5-year pro forma financial model
Free support
How does it compare vs. other fitness franchises?
| Franchise | Net worth ($) | Liquid capital ($) | Investment ($) | Revenue ($) | Payback (years) | |||
|---|---|---|---|---|---|---|---|---|
| Anytime Fitness | https://sharpsheets.io/blog/anytime-fitness-franchises-costs-profits/ | 350,000 | 175,000 | 510,165 | 338,810 | $68 | 10.0 | |
| Planet Fitness | https://sharpsheets.io/blog/planet-fitness-franchises-costs-profits/ | 3,000,000 | 1,500,000 | 3,273,300 | 1,564,877 | $80 | 13.9 | |
| Orangetheory Fitness | https://sharpsheets.io/blog/orangetheory-fitness-franchises-costs-profits/ | 1,000,000 | 300,000 | 1,381,432 | 805,251 | $244 | 11.4 | |
| Club Pilates | https://sharpsheets.io/blog/club-pilates-franchises-costs-profits/ | 500,000 | 100,000 | 287,000 | 544,703 | $363 | 3.5 | |
| Pure Barre | https://sharpsheets.io/blog/pure-barre-franchises-costs-profits/ | 500,000 | 100,000 | 335,812 | 259,534 | $173 | 8.6 | |
| Snap Fitness | https://sharpsheets.io/blog/snap-fitness-franchises-costs-profits/ | 750,000 | 250,000 | 783,328 | 194,124 | $37 | 26.9 | |
| Burn Boot Camp | https://sharpsheets.io/blog/burn-boot-camp-franchises-costs-profits/ | 300,000 | 150,000 | 314,846 | 400,526 | $76 | 5.2 | |
| Crunch Fitness | https://sharpsheets.io/blog/crunch-fitness-franchises-costs-profits/ | 2,000,000 | 400,000 | 3,092,000 | 1,863,627 | $48 | 11.1 | |
| CycleBar | https://sharpsheets.io/blog/cyclebar-franchises-costs-profits/ | 500,000 | 100,000 | 417,410 | 335,855 | $168 | 8.3 | |
| Stretch Zone | https://sharpsheets.io/blog/stretch-zone-franchises-costs-profits/ | 250,000 | 150,000 | 161,027 | 357,632 | $286 | 3.0 | |
| Workout Anytime | https://sharpsheets.io/blog/workout-anytime-franchises-costs-profits/ | 500,000 | 175,000 | 1,519,450 | 511,628 | $49 | 10.0 | |
| Fitness Together | https://sharpsheets.io/blog/fitness-together-franchises-costs-profits/ | 175,000 | 80,000 | 292,013 | 400,000 | n.a. | 4.9 | |
| 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 | |
| Retro Fitness | https://sharpsheets.io/blog/retro-fitness-franchises-costs-profits/ | 1,500,000 | 300,000 | 1,681,341 | 998,459 | $66 | 7.0 | |
| F45 Training | https://sharpsheets.io/blog/f45-training-franchise-costs-profits/ | 300,000 | 100,000 | 457,650 | 632,902 | $253 | 4.8 | |
| Gold's Gym | https://sharpsheets.io/blog/golds-gym-franchise-costs-profits/ | 1,000,000 | 400,000 | 4,043,875 | 1,638,000 | $47 | 16.5 | |
| 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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