The Mandate
A multi-unit franchisee adding a fourth location to an existing portfolio engaged Feasibility Study Consultant to prepare a third-party feasibility study supporting a SBA 7(a) financing request for a project located in Bergen County, New Jersey. Total project capitalization fell within the $1M-$3M band. The capital provider, a specialty SBA lender, required documentation consistent with current program review standards. The analytical question put to the team: Did Paramus trade-area population, income, and competitor membership penetration support 4,200 stabilized memberships.
Engagement Scope
- Primary market area defined as a 3-mile drive-time
- Comparable supply set of 13 properties
- Demand model framework: trade-area membership penetration and franchisor AUV benchmark analysis
- Financial projection horizon: 7 years
- Site inspection completed; operator interviews where applicable
- Primary data collection through field reconnaissance and third-party market data
Methodology Applied
Primary Market Area
The PMA was defined as a 3-mile drive-time from the subject site, calibrated to the demand catchment behavior typical of fitness assets in New Jersey. The boundary captured the population, employment, and competitive supply base relevant to the subject's operating thesis.
Supply and Demand Reconciliation
The comparable supply set comprised 13 properties operating within the PMA or in directly substitutable submarkets. Demand was modeled using a trade-area membership penetration and franchisor AUV benchmark analysis approach over a 7 years horizon. The reconciliation tested whether incremental supply, including the subject, could be absorbed within the projection window without compromising stabilized occupancy assumptions.
Capture Rate Calibration
The subject's capture rate was calibrated against the absorption capacity of the PMA. The analysis concluded that PMA absorption capacity exceeded subject build-out by a factor of 2.1 across the projection window, with a stabilized capture rate of 5.6%.
Exhibit 1: Comparable Supply Set, New Jersey PMA
[Table or chart rendered in delivered report.]
Exhibit 2: Demand Projection Summary, 7 years Horizon
[Table or chart rendered in delivered report.]
Exhibit 3: Subject Capture Rate vs. PMA Absorption Capacity
[Table or chart rendered in delivered report.]
Analytical Conclusions
- Trade-area adult population of 74,800 supported a 5.6% membership penetration assumption.
- Comparable system locations cleared 3,800 to 4,800 stabilized memberships within 24 months.
- Sponsor's existing units cleared the franchisor system AUV by 7% to 12%.
- Year-three DSCR of 1.36x cleared the SBA 7(a) review threshold.
Deliverable
The delivered report ran 98 pages with 22 exhibits distributed across nine analytical sections, plus appendices documenting comparable supply data, demographic inputs, and financial projection assumptions. The document was prepared to the documentation standards of the specialty SBA lender. The corresponding SBA 7(a) review framework guided exhibit selection and supporting documentation.