Buying a gym or fitness center entails some risks but these are less than when you start a new gym. An existing gym has the necessary equipment and inventory; members; trained employees; and performance history. Before committing to buy a gym or fitness center, consider the following.
1.Emerging Threat in the Location
A gym for sale may be on the market because of the owner’s impending retirement, health concerns or lack of heirs to the gym. If, however, there are a few gyms for sale in the vicinity, there must be a looming demographic change. Find out from the city’s planning department if there are plans for major road repairs or building construction that may disrupt people or car traffic. These could negatively affect the gym’s operations and potential for profit.
2. Business Licensing for the Gym
Is the gym properly licensed? How long has it been operating? Check with the Better Business Bureau and other appropriate licensing agencies.
Where is the nearest competitor of the gym for sale? There is a chance that a popular franchise may open a gym in the area that may wipe out the gym. Contact various gym franchise companies to see if there are such plans.
Do your research on the reputation of the gym for sale. Ask its neighbors, customers, suppliers, and local community leaders. Has there been bad publicity? Were there complaints against its business practices or its owner? Local newspapers and industry publications for the past years are also good sources of information. You can also check with the Chamber of Commerce or Better Business Bureau.
5. Financial Records
Thoroughly review the gym’s financial records including cash flow statements, accounts payable and receivable, employee contracts and payroll, balance sheets, contracts, leases, tax and licensing payments, and other important information.
6. Member Base
Does the gym rely on only a small member base? Will these members continue to do business with the gym under a new owner? Will the gym survive if you lose these members?
7. Business Plan
While still deciding on whether to purchase the gym, plan ahead. Establish your financial goals and plan how to achieve them. Do you have enough funds to keep gym operations running smoothly after the sale?
8. Liabilities and Actions against the Gym
Check the gym’s payables – debts, loans, claims against it, taxes payable, bills and the like. You do not want to be saddled with financial commitments. Look for liens, judgments or lawsuits involving the gym or its owners in the county or federal court system.
9. Professional Licensing
If the gym’s business requires its owners or key employees to be professionally licensed, check with the appropriate state licensing agency. Are the business permits and licenses paid and up to date?