Sports & Recreation Industry Profile

Demographics

Franchises in the sports and recreation industry can expect to tap into a market prime for their services. Participants in organized fitness, training and sports programs comprise a significant portion of this popular industry, with statistics indicating that interest in these types of services is increasing. In 2016, membership in U.S. health clubs reached an all-time high of 57.3 million members, representing a 3 percent increase from 2015, according to the International Health, Racquet and Sportsclub Association (IHRSA).

Depending on the type of services you offer, you can choose to specialize in a specific demographic market. People of all ages have a desire to compete and participate in physical endeavors, evidenced by statistics from the Physical Activity Council, which represents eight of the major trade associations in the U.S. sports, fitness and leisure industries. In a 2016 industry report, the Council said that 42 percent of the population age 6 and over participated at least once a week in a high calorie-burning activity.

When examined by type of activity, research from the Physical Activity Council indicates that fitness and outdoor sports are the most common types of activities across all generations. Individuals categorized as Generation Z, or those born in 2000 and beyond, were more likely to participate in team sports and outdoor activities. Their older counterparts, categorized as Millennials, Generation X and Baby Boomers, more often participated in activities centered on fitness. Changing attitudes about aging and the benefits of physical activity have helped increase participation by older adults in this market. According to the IHRSA, adults over age 55 comprise 25 percent of U.S. health-club members, with membership in this age group reflecting a 5 percent increase between 2012 and 2016.

Statistics on the opposite end of the age spectrum reflect the fact that children also can represent a steady source of revenue in the sports and recreation industry. In three out of four U.S. households, at least one child participates in youth sports, representing about 45 million children, according to the Aspen Institute. With the Centers for Disease Control and Prevention (CDC) reporting that children who participate in organized activities are more likely to be confident, display a greater sense of well-being, enjoy better health and less likely to smoke or use drugs, parents can justify the the time and effort they spend supporting sports and recreation programs.

Growth Potential

The opportunity to market the health benefits of sports and recreation activities to potential clients is substantial. According to the CDC, about 70.7 percent of U.S. adults age 20 and over are categorized as obese or overweight, based on a standard weight-for-height measurement called body mass index (BMI). In addition, the Physical Activity Council reported that 27.5 percent of U.S. residents were inactive in 2016. According to the CDC, regular physical activity can contribute to weight reduction, disease prevention, better bone and muscle strength, and increased longevity, among other health benefits.

Industry opportunities also exist to use novel approaches to realize the gains of regular physical activities. In contrast to traditional "big box" fitness centers, more clients are investigating the benefits of smaller studios. These establishments typically occupy more intimate spaces and offer novel, proprietary programs that include barre, kickboxing, pole dancing, Bikram yoga, trampolines, high-intensity workouts or boot camps. According to industry analysts at Kurt Salmon, a management consulting firm, small-box fitness studios are leading the majority of growth in the fitness club and studio market. Of the 54 million Americans who are health club members, 42 percent belong to a studio, identified as a boutique or facility that concentrates on a specific fitness discipline, according to a report by CBS News.

The key to getting people committed to active lifestyles is to get them involved in activities in which they are participating with others, according to the Physical Activity Council. Small-box studios are well positioned to meet this need. According to analysts at Kurt Salmon, the increasing popularity of these types of businesses is attributed to the fact that clients benefit from enjoying unique offerings, a personalized workout and a rewarding social experience. Participants at small-box studios enjoy a feeling of camaraderie and social connection made possible by smaller groups and an intimate physical space. The good news for franchise owners is that these members typically spend 17 percent more time working out and 51 percent more money on memberships, classes and other exercise activities versus traditional gym members.

Opportunities also exist for specialized training programs that cater to the youth market. With the growth of elite and travel youth sports, parents have proven that they are willing to finance physical activities and coaching intended to supplement their children's success in more formal competitive endeavors. In a 2016 TD Ameritrade survey of parents whose children played or were playing in competitive youth sports, researchers reported:

• For 63 percent of parents, spending ranged between $100 and $499 per month, per child, on youth sports, with some reporting costs as high as $1,000 monthly.
• For 66 percent of parents, the joy of watching their children excel in sports justified their spending.
• For 77 percent of parents, spending on youth sports affected their household budgeting, often requiring cutting back on other discretionary spending, including saving and investing.
• More than half (58 percent) of parents of adult children who competed had no regrets about the money they spent on their children's sports expenses.

Common Business Models for Franchises in the Sports and Recreation Industry

Business owners in the sports and recreation industry emphasize that one of the most important considerations for satisfaction and success is that you love what you do, according to a report by Entrepreneur magazine. The enthusiasm that you feel for the specific activity or sport you're providing will be contagious to your clients, leading to longer retention and more frequent repeat business. Since most franchises in sports and recreation industry involve the provision of hands-on services, business owners say it's important that both you and your employees enjoy what you're doing so that you can encourage your clients to do the same.

Some of the most common business models for franchises in the sports and recreation industry are:

• Boutique Facilities: Franchises such as Title Boxing Club, Club Pilates and Cyclebar are part of the "small box" movement toward more specialized facilities. Each offers unique, proprietary programs in novel workouts that typically provide social as well as physical benefits in smaller settings. Small-box fitness studios are driving the majority of industry gains in the fitness club and studio market, a $22 billion segment of the U.S. sports and recreation industry, according to Kurt Salmon.
• Children's Programs: Franchises including My Gym Children's Fitness Center and Stars & Stripes Kids Activity Center offer sports and recreation programs to children as young as 6 weeks. Offerings, which range from recreational activities to sports training, can help all children establish healthy habits into adulthood and elite athletes gain a competitive edge.
• Clothing and Equipment: Franchises including Pro Image Sports and T Docks offer retail products that supplement activities in this industry. From apparel to specialized equipment, the sports and recreation industry includes opportunities to pursue traditional retail options can serve either the general public or specific markets.
• Entertainment:Franchises including Space Walk Bounce Houses and Paniq Escape Rooms allow you to invest in a business where you're offering recreation and fun. While there may be fitness advantages, the purpose of these types of franchises often is to provide the setting and supervision for a safe and enjoyable experience.
• Intense Training: Franchises including F45 and Tapout Fitness deliver motivational workouts that emphasize hard work, while delivering results and variety. Clients can challenge themselves with different types of equipment and classes, often including a signature style of boot camps without getting lost in a big box health club.
• Travel and Outdoors: Franchises including Expedia CruiseShipCenters and Yogi Bear's Jellystone Parks Camps-Resorts provide unique recreational experiences. In this category, owners use their expertise in areas including travel planning and outdoor recreation to introduce guests to memorable experiences in new surroundings.

Financial Matters of Franchises in the Sports and Recreation Industry

Startup costs for franchises in the sports and recreation industry can vary widely, depending on the type of franchise you choose to own. Some options, such as travel planning can be managed from a home office with a reliable computer connection. In some cases, retail businesses that market specialized sports equipment or supplies may be suited to a home office supplemented by visits to customer sites. Location costs also can be minimized in fitness or children's franchises that allow for the rental of multi-purpose gym space from locations such as schools or churches on an as-needed basis.

For most franchises in the sports and recreation industry, operation of the business will require the purchase or rental of a specially equipped facility in which services and equipment can be offered safely according to the franchise specifications. Expenses can start at $50,000 and increase into the hundreds of thousands for these business models. Comparable to a franchise in any industry, a business in the sports and recreation industry will involve initial costs that are likely to include a franchise entry fee and ongoing fees for royalties. You also can expect to incur additional costs related to licenses or proprietary programs. Ongoing fees typically include the cost of rent or mortgage payments, utilities, employee expenses, marketing/advertising, and site and equipment maintenance.

However, as a franchise owner in the sports and recreation industry, you may benefit from financial advantages involving:

• Group discounts negotiated by your franchisor that reduce the cost of equipment, products and professional services used across the franchise
• Advantages in securing financing because your investment is supported by a proven business plan, representing less risk
• Assistance from your franchisor in securing a loan or leasing/purchasing equipment

You can find a cleaning franchise that may work for you by searching Franchise Opportunities' Sports & Recreation Franchises category.

Benefits of Franchises in the Sports and Recreation Industry

As the owner of a franchise in the sports and recreation industry, you'll have advantages that can improve your chances of realizing a return on your investment versus starting out on your own. According to the IHRSA's 2015 State of the Industry report, health clubs that were associated with a larger chain reported a median net membership growth of 9 percent, the highest among all business segments reported by the IHRSA. The benefit of having name recognition from your first day of business can give you a solid foundation on which to build your franchise. Having a proven business plan can ensure that you'll minimize your risk of costly mistakes and failure.

As a franchisee, you can benefit from the industry trend toward smaller boutique facilities since using a smaller physical space can minimize start-up and maintenance costs. In addition, smaller gyms and studios have the advantage of lower trainer-to-client ratios, allowing clients to develop more personal relationships with staff and other participants. This situation can increase the social component that industry analysts say is a top motivator for people to commit to exercise. Creating a space where clients feel personally connected can increase the likelihood of higher retention rates and membership renewals.

Owning a franchise in the sports and recreation industry also will give you access to a corporate franchise team. These professional advisors have the experience and expertise to help you:

• Establish and implement franchise standards and practices
• Identify and attract the best target market for your franchise
• Fulfill necessary insurance and credentialing requirements
• Identify, train and retain the best employees for your franchise
• Navigate challenges unique to your franchise service
• Connect with other owners in your franchise to share solutions

As you grow a franchise in the sports and recreation industry, you also can expect to achieve personal rewards that complement financial gain. If you're passionate about sports and recreation, you'll appreciate the opportunity to help others realize the benefits of participating in physical activities. According to the CDC, the commitment required to participate in organized sports teaches children the importance of being on time, working on a team, and realizing improvement through hard work, all of which can help children acquire healthy habits that they can continue as adults. Whether it's introducing children to the basics of a new sport or guiding serious athletes toward competitive goals, you'll have the chance to make a long-term impact on the lives and health of your clients.

Important Considerations for Franchises in the Sports and Recreation Industry

If you're considering ownership of a gym or fitness club in the sports and recreation industry, you'll have to deal with the ongoing challenge of customer retention. According to the IHRSA, members who remained with a fitness club past the first year did so for an average of 4.9 years in 2014. While members of multipurpose clubs stayed for an average of 6.3 years, studio members remained for less time, typically between 4.4 and 5.1 years. The popularity of new specialized programs may actually work against membership retention as these participants may be more likely to investigate the "newest" trends at other facilities. As a whole, the majority of fitness clubs have an attrition rate between 30 and 50 percent. With the potential to lose up to 50 percent of your clients annually, you'll face an ongoing challenge to attract new clients to compensate for those who leave.

Depending on the business model you choose in the sports and recreation industry, you also may have to consider:

• Accommodating coverage for your facility 24 hours a day, every day of the year, as more clients prefer the flexibility of exercising around the clock
• Conducting appropriate screening and clearances for staff if your franchise provides services to children
• Encouraging your staff and clients to follow appropriate safety precautions to minimize your liability with regard to injuries
• Maintaining continuing education to ensure you and your staff stay current on changes in sports regulations, exercise techniques and best training practices in the services you offer
• Working to avoid high employee turnover rates to maintain your best employees, since they can be key to attracting and retaining clients
• Providing incentives for satisfied clients to post positive reviews on social media and refer their friends to help your franchise maintain profitable membership rates

Characteristics for Success: Who Should Consider a Franchise in the Sports and Recreational Industry?

With so many franchise options available in the sports and recreation industry, you are sure to find an investment that will match your interests. You'll be more likely to maintain your passion if you're prepared to handle the specific demands and challenges of a sports and recreation franchise. Having specific strengths and skills can keep you as energized as your clients while you work to grow a profitable franchise in this dynamic industry.

You should consider a sports and recreation franchise if:

• You can find a franchise in which you love what you do. Successful business owners in the sports and franchise industry agree that you'll be more likely to succeed if your clients can see that you're personally involved and excited by the service you're providing.
• You're a high-energy individual. If you're a hands-on owner, it's likely that you're going to be physically active for the majority of your day. You should be prepared to give 100 percent from your first class to your last, so that every client enjoys an ideal experience.
• You have first-hand experience in the sport or activity that you offer. Even if you're no longer a competitor or participant, you can draw upon your own experience in motivating and assisting your clients to help them do their best.
• You have an education or experience in business management or marketing. No matter how much you enjoy running your franchise, you'll have to assess your performance in terms of profit and loss in order to stay in business.
• You can identify and maintain the best employees. You will need to ensure that your staff maintains the same level of enthusiasm and commitment as you, since their interactions will contribute to customer satisfaction as well as referrals and membership renewals.
• You have solid administrative skills or are willing to hire someone who does. Tracking memberships and ongoing class registrations, along with employee certifications and licenses can be time-consuming. Your time and talents may be better spent in client interactions if paperwork management is not your strong suit.

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Industry Snapshot*:

*Based on currently active listings at FranchiseOpportunities.com