If you are looking towards opening a Gold’s Gym Franchise, it will be nice for you to have a preview of what the company represents before going ahead to enquire about the total cost of opening the franchise in your location. Gold’s Gym International, Inc. is an American chain of international co-ed fitness centers (commonly referred to as gyms) originally started by Joe Gold in Venice Beach, California. Each gym offers a variety of cardio and strength training equipment as well as group exercise programs. Its headquarters have since relocated to Dallas.
Since Gold’s Gym opened its first international location in Canada in 1985, the company has expanded its global franchising program to include nearly 180 international gyms including operations in Russia, India, Australia, Costa Rica, Japan, the United Kingdom, Netherlands, Germany, Egypt, Saudi Arabia, Mexico, Peru, Indonesia, Spain, Poland, Venezuela, Mongolia and the Philippines. In 2017, the company opened its first location in Amman, Jordan.
The franchisor is Gold’s Gym Franchising LLC. The franchisor grants franchises for health clubs which are primarily identified by the marks of the franchise system. Gold’s Gym facilities offer a full array of amenities, products and services to members.
Currently, all new Gold’s Gym facilities must offer cardio training equipment, resistance training equipment, group fitness, personal training and locker room services, a kids’ club, and must have a “pro shop” including sale of clothing, accessories, drinks, bars, supplements, nutritional products and other items. (However, the franchisor may elect to waive some of these requirements if the Gold Gym facility is to be located in certain large, urban locations, such as Manhattan, New York.)
New Gold’s Gym facilities also may offer other optional amenities, products and services that the franchisor currently authorizes, like cardio cinema, basketball, racquet and other courts, smoothie bars and juice bars. In addition, although not required, the franchisor recommends that new Gold’s Gym facilities install a pool. Here are areas where you are expected to spend money and the cost associated with it;
Financial Investment Required to Open Gold’s Gym Franchise
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Initial Franchise Fee
$20,000 to $40,000
If you sign the Franchise Agreement for a new Gold’s Gym Facility (including a Conversion Facility), then unless you qualify for a Veteran Discount (described below), you will pay Gold’s Gym a $40,000 initial franchise fee in a lump sum.
Please note that if you operate an existing Gold’s Gym Facility under a Franchise Agreement that is about to expire, and are signing the Franchise Agreement and Renewal Addendum to renew your rights to operate that Gold’s Gym Facility, then you will pay Gold’s Gym a $20,000 initial franchise fee in a lump sum when you sign that Agreement and Addendum.
The initial franchise fee is not refundable under any circumstances. Gold’s Gym might pay a portion of your initial franchise fee to a referral source.
Gold’s Gym currently offers new franchisees who qualify as a Veteran (as defined below) a 20 percent discount (the “Veteran Discount”) on the initial franchise fee. If you qualify for the Veteran Discount, your initial franchise fee is $32,000.
This Veteran Discount only applies to qualified Veterans signing their first Franchise Agreement with Gold’s Gym. This Veteran Discount does not apply to any future Franchise Agreement that a Veteran might sign with Gold’s Gym, nor does Gold’s Gym offer the Veteran Discount to its existing Gold’s Gym Facility franchisees. In addition, this Veteran Discount does not apply to any renewals, conversions (from another form of Gold’s Gym Franchise Agreement), or extensions of the Franchise Agreement.
A “Veteran” is defined as any person who served in the Army, Navy, Air Force, Marine Corps, Coast Guard, or National Guard and obtained an honorable discharge or release. If the new franchisee is a corporation, limited liability company, or other entity, then the Veteran Discount applies if one or more Veterans owns more than 50 percent of the new franchisee.
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Additional Training Programs
$500 per person per session
Gold’s Gym will provide initial training for your Facility’s personnel at no additional charge.
Please note that if Gold’s Gym determines that you or any of your personnel cannot complete the initial training programs to its satisfaction, then it may require you or your personnel to attend additional training programs at your expense. Gold’s Gym currently charges $500 per person per session for this additional training, and this fee is not refundable.
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Studio Program Initial Fees
$500 per program
Please note that if you participate in one or more optional Studio Programs, you must pay Gold’s Gym an initial fee of $500 per program. Accordingly, the initial fees for the Studio Programs will range from $0 (if you elect not to offer any Studio Programs) to $1,500 (if you elect to offer all 3 of the Studio Programs that are currently offered). This initial fee is not refundable.
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Development Fee Under the Development Rights Agreement
$10,000 multiplied by the number of Gold’s Gym Facilities you agree to develop in the Development Area
Please note that you must pay Gold’s Gym a lump sum development fee when you sign the Development Rights Agreement. Your development fee is $10,000 multiplied by the number of Gold’s Gym Facilities you agree to develop in the Development Area. Gold’s Gym will insert this fee in the Development Rights Agreement before signing it.
So also, the development fee is not refundable under any circumstances. However, Gold’s Gym will reduce by the $10,000 the amount of the initial franchise fee due under each Franchise Agreement you or your affiliate signs under the Development Rights Agreement (other than the first Franchise Agreement), subject to a maximum aggregate reduction for all initial franchise fees equal to the total development fee.
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Royalty
Greater of 5 percent of Facility’s Gross Revenue each month or $2,000 per month
The Due Date for this fee is on the day Gold’s Gym periodically specifies of each month (“Payment Day”), currently the 15th.
Please note that first Royalty payment is greater of $2,000 or 5 percent of Facility’s Gross Revenue beginning when first Gross Revenue was recognized (including presale) through end of previous month.
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Marketing Contribution
Greater of 2 percent of Facility’s Gross Revenue each month or $1,350 per month and the Due Date for this fee is on the Payment Day of each month, currently the 15th.
Please note that Gold’s Gym may periodically increase Marketing Contribution by any amount if at least ⅔ of all U.S. Gold’s Gym Facility owners vote for increase, with each owner receiving 1 vote for each Facility they own.
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Cooperative Contributions
Amount that the Cooperative determines, up to 3 percent of Gross Revenue and the Due Date for this fee is as the Cooperative determines.
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Marketing Spending Requirement Shortfall
Difference between Marketing Spending Requirement and amount you spent and the Due Date for this fee is as incurred.
Please note that if you fail to meet the Marketing Spending Requirement, Gold’s Gym may require you to pay it the shortfall to use for marketing.
- Studio Program Training Fee: Gold’s Fit/Burn and Gold’s Cycle: currently $250 per trainee (each program). If field-based training, Gold’s Fit/Burn is $1,250 for a minimum of 5 trainees, and Gold’s Cycle is $1,250 for a minimum of 5 trainees; plus instructor travel expenses (estimated to be $1,500 to $3,000)
The Due Date for this fee is as incurred and it is due only if you elect to participate in one or more of the optional Studio Programs.
- Gold’s AMP Program Monthly Member Fee: $5.00 per month per Gold’s AMP member and the Due Date for this fee is on the Payment Day of each month, currently the 15th.
Please note that for each Gold’s AMP Member who is also a member of your Facility, you will pay Gold’s Gym or its affiliate a monthly fee of $5.00, regardless of the amount you charge or collect from those Gold’s AMP Members.
- Portal Access (Gold’s AMP Program): This fee is not currently charged, but if implemented, approximately $99 per month (subject to increase) and the Due Date for this fee is an the Payment Day of each month, currently the 15th.
Please note that if you participate in the AMP program, you will be provided access to a portal that will allow you to manage the members of your Facility who become Gold’s AMP Members and to invoice for and collect from those members the fees applicable to their participation in the Gold’s AMP Program.
- Relocation Expenses: Actual out-of-pocket costs and expenses Gold’s Gym incurs inspecting the proposed new site and the Due Date for this fee is Promptly upon receipt of Gold’s Gym’s invoice.
Please note that it is due only if you request to relocate the Facility.
- Convention Registration Fees: Currently under $500, but could increase if Gold’s Gym’s costs increase and the Due Date for this fee is Approximately once per year.
Please note that you must pay the registration fees Gold’s Gym periodically establishes for annual conventions. You also must pay travel and living expenses for you and your personnel.
So also, if you (or a required attendee) fail to attend a mandatory annual convention, you will still be required to pay the full-price convention fee that Gold’s Gym assesses for other attendees.
- Fee for Ongoing Training: Currently $500 per person per session, but could increase if Gold’s Gym’s costs increase and the Due Date for this fee is as incurred.
Please note that it is Due only if Gold’s Gym trains any new manager or provides supplemental or refresher training during the Franchise Agreement’s term.
- Transfer Fee: $2,500 for non-control transfer and $10,000 for control transfers and the Due Date for this fee is before transfer is completed.
Please note that this is Payable on proposed transfer of the Franchise Agreement, the Facility or its assets, or any direct or indirect ownership interest in you.
- Successor Franchise Fee: 50 percent of initial franchise fee Gold’s Gym then charges for new Gold’s Gym Facility franchises (currently would be $20,000) and the Due Date for this fee is Upon signing successor Franchise Agreement.
- Management Fee: 3 percent of Gross Revenue, plus direct out-of-pocket costs and expenses and the Due Date for this fee is as incurred.
Please note that this is Due only if Gold’s Gym manages your facility after your death, disability, or default, or while Gold’s Gym is considering whether to exercise purchase option.
- Costs and Attorneys’ Fees: This fee will vary under circumstances and the Due Date is as incurred.
Please note that this is Payable if Gold’s Gym incurs costs as a result of your non-compliance with Franchise Agreement or Development Rights Agreement.
- Indemnification: This fee will vary under circumstances and the Due Date is as incurred.
Please note that you must reimburse Gold’s Gym and its affiliates if it is or they are held liable for claims arising from your Facility’s development or operation, or your breach of the Franchise Agreement or Development Rights Agreement.
- Administrative Fee and Interest: $100 administrative fee and interest at 1.5 percent per month or highest interest rate the law allows, whichever is less and the Due Date for this fee is as incurred.
Please note that this is Due on all overdue amounts not timely paid, and dishonored payments.
- Follow-up Inspection Fee: Approximately $300 to $500 per inspection, but could increase if Gold’s Gym’s costs increase and the Due Date for this fee is when invoiced.
Please note that this is Payable only if Gold’s Gym re-inspects the Facility to determine whether you have corrected deficiencies or you request evaluation.
- Supplier Testing Fees: Approximately $500 to $5,000 and the Due Date for this fee is as incurred.
Please note that Covers Gold’s Gym’s out-of-pocket costs, including travel expenses and testing fees.
- Insurance Costs: Premiums, plus Gold’s Gym’s costs and expenses and the Due Date for this fee is as incurred.
Please note that this is Due only if you fail to maintain (or prove you have) insurance and Gold’s Gym, at its option, obtains insurance for you.
- Audit Expenses: Cost of audit and the Due Date for this fee is as incurred.
Please note that this is Due only if you fail to timely furnish reports or understate figures by 2 percent or more.
- Liquidated Damages Upon Franchise Agreement Termination: Upon termination of Franchise Agreement before it expires and the Due Date for this fee is Payable only if Gold’s Gym terminates for cause or you terminate without cause.
- Term of Agreement and Renewal: The initial franchise term expires 10 years after the facility first opens for member workouts. If franchisees (and their guarantors) have substantially complied with the Franchise Agreement during its term and is then in full compliance, they may acquire one successor franchise under the then current form of franchise agreement (which may be materially different from the Franchise Agreement, including on Territory and fees).
- Financial Assistance: The franchisor does not offer direct or indirect financing. The franchisor does not guarantee a franchisee’s note, lease, or other obligation.
In Summary,
- Initial investments: $2,218,250 – $5,000,500
- Net-worth Requirement: $1,000,000
- Liquid Cash Requirement: $400,000
- Ongoing Initial Franchise Fee: $40,000
- Ongoing Royalty Fee: 5 percent
- Ad Royalty Fee: 2 percent