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NEWSWIRE
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Snap Fitness chain is said to be for sale |
By John Craig, Editor - 05.01.2008
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CHANHASSEN, Minn. - Key-club franchisor Snap Fitness is for sale - or at least seeking investors - and has been courting private equity firms over the past month, according to several people with ties to the investment community.
These sources didn't know Snap's asking price and said they couldn't determine how much interest the privately-held five-year-old company was generating from potential suitors.
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Contacted Thursday afternoon, Snap spokesman Patrick Strait neither confirmed nor denied whether the company is for sale.
He said that Peter Taunton, the chain's founder and sole owner, "has no comment at this point."
"There really is not a whole lot of information available at this time," Strait added.
Later in the evening, after this story appeared, Taunton sent an email to Fitness Business News saying Snap "has always been on the lookout for the right strategic partner to expand our brand awareness and assist in our international roll out. Should the right partner come along, we would consider selling a minority stake."
In the fast-growing key-club category, Snap is second in size only to Anytime Fitness.
A "teaser note" that Snap sent to potential buyers several weeks ago says the chain has 508 clubs and has sold a total of 1,230 franchise locations in the United States and Canada. Company revenues jumped from $1.1 million in 2005 to $19 million in 2007, and are projected to near $30 million this year, Snap stated. Anytime and Snap have carved out a niche in the health club market by capitalizing on consumer demand for convenience and affordability, combined with an inexpensive business model whose relatively low startup and overhead fees are within the grasp of a lot of aspiring gym owners.
Key clubs are largely unstaffed, tend to be located in secondary markets and charge $30-$40 a month for an individual membership. They're advertised as needing only a few hundred members to turn a profit, and many franchisees have other business interests or hold full-time jobs while treating the clubs as a side investment.
Picking up on the trend, the World Gym chain last year launched its own key-club brand, World Gym 1440 All Axcess.
Yet for all the strength shown by key-club franchisors, the financial success of individual franchisees is tougher to measure.
In its franchise disclosure document, Snap says that as of Dec. 31, only 71 out of 244 franchisee units that had been open at least six months had as many as 400 memberships.
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