sports management case study
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Based in Woodbury, Minnesota (USA), Anytime Fitness gives current and potential entrepreneurs an opportunity to purchase and manage a fitness center. The company began offering fitness center franchises in October 2002 (Anytime Fitness, 2022b). As of 2022, Anytime Fitness now has 4,700 locations with a combined 4 million members in 39 countries including the United States, Canada, and Australia (Anytime Fitness, 2022a). Thirteen centers are in Kentucky with 2 in Louisville (Anytime Fitness, 2022b).
Anytime Fitness centers are open 24 hours a day, 7 days a week, 365 days a year. Members can expect on-site staff during normal operating hours (e.g., 7 AM to 7 PM). They also can access the facility at any time of day or night using a fitness center-issued key fob or card (Anytime Fitness, 2022a).
Anytime Fitness Gym: Step Inside (1:13)
Inside every fitness center, members can find equipment such as treadmills, elliptical and rowing machines, stair climbers, and free weights and racks. Members also have access to classes such as spinning, Zumba, cardio, and yoga. Other services include personal training, private showers, and wellness programs (Anytime Fitness, 2022a).
Membership fees vary by location but are typically $41-45 a month (Anytime Fitness, 2022a). Members can access personal training for $40-85 per hour. Anytime Fitness centers also have contracts with local businesses and health providers, who encourage their employees or clients, respectively, to visit the centers as needed. The price per visit is $25-35.
According to the International Health, Racquet, and Sportsclub Association (IHRSA), fitness centers around the world generate approximately $87 billion each year (Anytime Fitness, 2022a). One million people become members of fitness centers annually. From 2014 to 2019, revenues related to fitness centers grew by 7.8% (Anytime Fitness, 2022a). The COVID-19 pandemic curtailed, and for a time completely halted, attendance at all fitness centers. However, the industry is experiencing a rebound and is expected to grow through at least 2028 (Smith, 2023).
Anytime Fitness Franchise
Entrepreneur ranks Anytime Fitness on its lists of Fastest Growing Franchises and Top Global Franchises (Anytime Fitness, 2022a). Anytime Fitness continues to seek new investors who have interest in owning a franchise, and the company provides details about this opportunity.
Anytime Fitness Franchise Fitness Center Opportunity (8 pages)
Anytime Fitness also publishes a Franchise Disclosure Document. Every organization that sells franchises must provide a similar document to current and prospective franchise owners. The franchise disclosure document gives information about the financial requirements to start a franchise and the revenues and expenses expected once the franchise opens its doors to customers.
Anytime Fitness Franchise Disclosure Document (388 pages)
Anytime Fitness Scenarios
The Anytime Fitness Franchise Disclosure Document is a long one. Arguably some of the most important information can be found on pages 55-56 of the document (pages 63-64 of the PDF). These pages detail the income statement for Anytime Fitness locations.
The Anytime Fitness income statement shows the revenues and expenses for an average fitness center as well as the revenues and expenses for its top performing fitness centers (best case scenario), its middle performing fitness centers (most likely scenario), and its bottom performing fitness centers (worst case scenario).
Anytime Fitness center revenues come from monthly and annual memberships, personal training, and pay per visit fees. More details about these revenue sources are above.
Each fitness center incurs direct costs, or cost of goods sold. These include costs for processing memberships and credit cards, key fobs and cards for members to have 24/7 access to the facility, supplies, and wages and payroll taxes for personal trainers.
Each fitness center also incurs indirect costs, or operating expenses. These include salary for the manager (which could be the franchise owner), commissions and bonuses, payroll taxes and other employee benefits such as access to a 401k, rent, utilities, telephone, internet, and repairs and maintenance. Additionally, every fitness center pays a monthly franchise fee, minimum amount for local advertising, general advertising fee that helps support all Anytime Fitness locations, insurance, technology, attendance at the Anytime Fitness conference held every two years, software, office supplies, and other expenses.
The question now becomes how to make a decision about this potential franchise. Imagine youre presented with an opportunity to invest in and manage an Anytime Fitness center. Would you view this as a wise financial decision?
How to Choose a Profitable Franchise (3:01)
Franchise Chatter (2022) suggests potential and current franchise investors consider three key performance indicators (KPI) when analyzing franchise opportunities. Keep the first two key performance indicators in mind as you think about this Anytime Fitness decision. You can also find out more about Anytime Fitness at the Franchise Chatter website:
Anytime Fitness Worth It? (4:34)
Vetted Biz (2023) provides additional information about the fitness industry as well as Anytime Fitness, including its competitors and financials. You can also find out more about the Vetted Biz perspective on Anytime Fitness at its website: https://www.vettedbiz.com/anytime-fitness-franchise/
Most documents and videos discussing whether to invest in a franchise focus on the initial investment, or what potential investors must pay in start-up costs. For Anytime Fitness, this can range from $382,000 to $784,000. These costs include a franchise fee, travel and training, building lease and build-out costs, rent, architect and design fees, opening costs, grand opening advertising, insurance, furniture, and contingency funds (VettedBiz, 2023).
For this case study, you do not need to factor the franchise initial investment into your decision. Your task is to focus only on whether Anytime Fitness represents a good decision after this initial investment.
Case Study Questions
The Anytime Fitness franchise disclosure document includes an income statement with four columns outlining the average, top third, middle third, and bottom third financial performances. Use the income statement spreadsheet, videos, other information and documents above, and any additional sources to respond to the following questions.
1. Anytime Fitness reports in its franchise disclosure document that one of its highest performing fitness centers makes $1.5 million annually. This is approximately $1 million more than the revenue for an average Anytime Fitness center. Use the income statement spreadsheet to complete the following:
Describe two options to help increase revenues for an Anytime Fitness center.
Describe two options to help reduce direct costs for an Anytime Fitness center.
Describe two options to help decrease indirect costs for an Anytime Fitness center.
2. The Franchise Chatter video includes three key performance indicators (KPI) potential investors should consider. List the first two key performance indicators. Use these first two indicators to assess the income statement scenarios (average, top third, middle third, bottom third). Do each of the four scenarios meet these two key performance indicators? Why or why not?
3. Review the six options you described in question 1. Would your proposed options improve the financial performance enough to meet the key performance indicators? What is your confidence level (high, medium, low) about each option?
4. Based on your analysis, would you invest in an Anytime Fitness center? Why or why not? Include responses from questions 1-3 and any sources you used as part of your answer.
(Remember that you only need to focus on the income statement and not the initial investment. Also, if you believe factors in addition to/instead of the key performance indicators should be considered, please include those considerations here.)
Please refer to the case study rubric in the syllabus. Please make sure to include every component listed in the rubric in your written submission (e.g., introduction, analysis, implications).
Anytime Fitness. (2022a). Anytime Fitness. https://www.anytimefitness.com/
Anytime Fitness. (2022b). Anytime Fitness franchise disclosure document. https://www.anytimefitness.com/wp-content/uploads/2022/06/Anytime-Fitness-2022-FDD.pdf
Franchise Chatter. (2022, July 8). FDD talk: Anytime Fitness franchise costs, fees, average revenues and/or profits (2022 review). https://www.franchisechatter.com/2022/07/07/fdd-talk-anytime-fitness-franchise-costs-fees-average-revenues-and-or-profits-2022-review/
Smith, S. (2023, January 6). Fitness industry perseveres through 2022 to get back on top. https://www.ihrsa.org/improve-your-club/industry-news/fitness-industry-perseveres-through-2022-to-get-back-on-top/
Vetted Biz. (2023). Anytime Fitness Franchise cost high, revenue low. https://www.vettedbiz.com/anytime-fitness-franchise/
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