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5 Fitness Franchises Getting Buff

Stocks in this article: TOWN LTM

1. Planet Fitness

Corporate locations: 44

Franchise fee: $10,000 per store

Investment: $1.3 million per store

Monthly customer fee: $10 or $19.99

Planet Fitness was founded in 1992. It began franchising in 2003. Today, the company has 550 locations and 3.7 million members.

The company offers inexpensive gym membership fees of $10 or $19.99 per month, depending on the level of service desired, and has steadily expanded operations over the past three years, IBIS reports.

The combination of its low price with an accessible gym environment for gym novices is the company's sweet spot.

"We're the leader in the low-price category. We sort of invented the low price category in the gym business," says John Craig, in charge of brand development for Planet Fitness.

One way to instill that environment is with its "lunk alarm," Craig says.

The lunk alarm is a loud siren mounted to a wall that goes off if someone slams weights on the floor too hard. "We're really not for bodybuilders," Craig says. "We're kind of for people who want to exercise and not feel like they're in a high pressure atmosphere." The approach is visible throughout the gym, from its purple and yellow colors to the selection of the equipment and the gym's "vibe."

Planet Fitness gyms don't have the overhead that some full service gyms have: they don't provide group fitness classes, and there are no daycare options, swimming pools or racquet ball courts.

"We focus on the things that most people really want in a gym and we try to do those really well without building swimming pools that can make it a very intense and overhead-busy business," Craig says.

To be sure, its gyms are large. They tend to be anywhere from 17,000 to 25,000 square feet, so Planet Fitness needs to be sure that it's gaining the membership volume to support such large square footage.

"Combine the atmosphere with the $10-price point and you've got something, and we do," Craig says. "If you have thousands of members it can be a very profitable enterprise."

Planet Fitness' membership grew strongly during the recession, with some clubs signing up more than 1,000 new members each month in 2009, says IBISWorld, citing the International Health, Racquet and Sportsclub Association.

Planet Fitness is slated to have 600 gyms by the end of 2012.

"We started out on the East Coast, but now were sort of coast-to-coast. You can expect to see more expansion throughout the Midwest, the South and the West," Craig says. "We're clearly the fastest growing enterprise right now and I think we have the most profitable and best business model going."

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