The increasing public awareness of leading a healthy lifestyle, Americans living much longer and wanting to stay fit and the fight against a national obesity epidemic are all pumping up the $25 billion gym, health and fitness club industry. Gym memberships have increased considerably over the past 10 years to more than 43.6 million in 2012, according to a report by IBISWorld.
To be sure, fitness clubs are reliant on consumer discretionary spending. Like the restaurant industry, consumers are looking for value and affordability in a gym these days.Fitness franchises come in different shapes and sizes, split between full-service fitness clubs and smaller, convenience fitness clubs. Major players like 24 Hour Fitness, Town Sports International (TOWN), Gold's Gym and Life Time Fitness (LTM) have suffered, but there is still opportunity on the low-end of the price-and-quality scale, IBISWorld analyst Dale Schmidt says. "Now that people have gotten used to the low-cost, low-amenity gyms, even though the economy is improving, we haven't seen a large scale return to the big-budget national chains. Any new entry that could offer a low price point and offer services beyond cardio and weight lifting machines, like yoga classes, while still keeping a low fee, would be the ones most poised to gain market share," Schmidt told TheStreet. For franchisees, that means a lower investment to get in to an industry that is surely here to stay. Another growing sub-sector: youth sports franchises. Besides the growing obesity epidemic, especially among children, due to budget cuts, local town and city recreation departments have been crimped, while school outsourcing of their sports programs has surged. It provides a huge opportunity for private league operators, says Frank Fiume, CEO of i9 Sports, a fast-growing youth sports franchise in the U.S. The company offers leagues, camps, and clinics for boys and girls ages 3-14 in today's most popular team sports such as flag football, soccer, basketball and baseball. "i9 Sports has experienced double-digit growth year-over-year as parents seek more ways to keep their kids fit and introduce new sports to their families," Fiume says. "As franchise owners, i9 Sports Area Developers are providing an outlet to get kids moving yet they still have the flexibility and work/life balance they seek." He says the industry is also "ripe" for reinvention. "Most youth sports programs today are disorganized and highly political. Well-run programs like ours stand out and gain a quick following," Fiume says.