The Feasibility Study Consultant's Role in Fitness Center Feasibility Studies

US gym membership reached a record 81 million in 2025. Fitness and recreational sports centers charge off SBA loans at roughly 17.1% against an all-industry average near 15.8%. Both are true, and the explanation is not that the sector is weak — it is that roughly 63% of fitness SBA borrowers are startups or businesses under two years old. Fitness is not a risky industry financed conservatively. It is a healthy industry financed at its riskiest point.

The paradox, resolved

The demand data is strong and getting stronger.

The Health and Fitness Association reported 77 million US members in 2024 — roughly 25% of Americans aged six and over — a second consecutive year of 5%-plus growth after 72.9 million in 2023 and 68.9 million in 2022, and a 20% increase on 2019. HFA's 2026 report, released 9 April 2026, put 2025 at a record 81 million, up 5.2%, with total participation including non-members passing 100 million.

Membership penetration climbed from roughly 20% in 2019 to about 25% in 2024 — an all-time high. IBISWorld puts 2026 US gym and health club revenue at $47.0 billion, up 1.3% on the year against a 3.6% five-year compound growth rate.

And the loan performance is worse than average. Analysis of SBA disclosure data by PeerSense puts NAICS 713940 at roughly 17.1% charged off as a share of resolved loans on the matured FY2018–2021 cohort, against an all-industry average near 15.8%. PeerSense states the basis explicitly: "Across 1,283,073+ resolved SBA 7(a) loans in this dataset, the average default rate is about 15.8%, measured as charge-offs divided by fully resolved loans rather than the full active book."

The reconciliation is in who borrows. Of calendar year 2025 fitness 7(a) loans, roughly 49% went to startups, 14% to businesses under two years old, 31% to established businesses of two years or more, and 5% to acquisitions. Combined, about 63% were brand new or early stage.

That is the profile SOP 50 10 8 was written to scrutinise, and it is why a fitness feasibility study now carries more weight than it did two years ago.

Brand matters more than segment

This is the finding that should change how anyone underwrites a franchised gym, and it is not what the industry conversation suggests.

Brand-level SBA loan performance data compiled from disclosure records shows dispersion so wide that segment labels are close to meaningless:

At the strong end:

Club Pilates — 0.0% across 292 loans

Planet Fitness — 0.0% across 173 loans

Orange Theory — 1.4% across 465 loans

Pure Barre — 1.9%

At the weak end:

Planet Beach — 56.2%

My Gym — 35.7%

Fitness Together — 33.3%

World Gym — 30.4%

iLoveKickboxing — 29.7%

Curves — 19.0%

Title Boxing — 17.4%

Gold's Gym — 15.6%

Snap Fitness — 12.6%

Anytime Fitness — 10.5% across 1,299 loans

Separately, Fit Small Business's analysis of FY2020–2023 data for franchises with more than 25 SBA loans identified Anytime Fitness as carrying both the highest default rate and the highest total charged-off loan count in that window.

Two brands both described as "boutique franchise" sit at 0.0% and 56.2%. The category tells you nothing. Unit economics, royalty load, buildout cost and closure patterns tell you everything.

One correction worth making explicitly, because it circulates widely and is wrong. The frequently repeated "Orangetheory 76% SBA default rate" figure is stale — it reflects a 2000 to 2016 vintage on a small early sample and is contradicted by current brand data at 1.4%. It should not be used as a current benchmark, and a study that cites it is signalling that its data is not current.

The practical instruction for a feasibility consultant is to cite brand-level performance rather than segment averages, and to read the Franchise Disclosure Document directly rather than the franchisor's marketing.

The same dispersion applies to lenders. Analysis by Lumos Data found default outcomes varying more than twenty-fold — from 0.5% to 12.3% — among 36 lenders each holding more than $1 billion in 7(a) portfolios in 2025. Which lender underwrites the deal matters nearly as much as the deal.

The lending picture

Two measurement frames circulate and must not be conflated.

Cumulative, roughly 1992 to 2025: NAICS 713940 shows 25,432 total SBA loans, $9.2 billion in volume, and a $360,000 average — 91% through 7(a) at 23,176 loans and 9% through 504 at 2,256, with an average term of 124 months.

Single year, calendar 2025: fitness drew approximately $660.1 million across 1,607 7(a) loans, averaging $411,000, at a 10.11% average rate across 301 active lenders, per GoSBA Loans' aggregation of SBA disclosure data published June 2026. FY2025 was the peak year at 1,713 loans and $829.3 million, up 38% on the prior run rate.

Both figures are drawn from public SBA disclosure data by commercial aggregators rather than from SBA's own published tables, and should be treated as directional rather than definitive.

Active lenders in calendar 2025: The Huntington National Bank was the single most active fitness lender at $93.3 million across 333 loans, followed by Live Oak Bank at $42.6 million across 48, Newtek Bank at $35.8 million across 122, then Citizens Bank, First Bank of the Lake and Byline Bank. ApplePie Capital is the specialty fitness franchise lender. Live Oak runs a dedicated fitness vertical and was the largest SBA 7(a) lender nationally by dollar volume in FY2025.

For context on where the whole programme sits, Lumos Data found the 7(a) portfolio's trailing twelve-month default rate reached 4.8% in March 2026 — the highest since 2013 — with the first half of FY2026 annualising at 5.4% across 312,857 active loans. Notably, on that annual-cohort basis Arts, Entertainment and Recreation was not the worst two-digit sector; Transportation and Warehousing led at 7.6%.

The two measures answer different questions. Resolved-loan charge-off tells you what happened to loans that reached an end. Annual cohort default tells you what is happening now. Quoting one as the other is the most common data error in this sector.

What changed on 1 June 2025

SOP 50 10 8 reverted to pre-2021 underwriting after FY2024 produced the 7(a) programme's first negative cash flow in over a decade, attributed to defaults from underqualified buyers.

A mandatory 10% equity injection for startups and complete changes of ownership. For a capital-hungry gym startup this is a real constraint, not a formality.

Seller notes count toward the injection only on full standby — no principal and no interest for the entire life of the SBA loan, typically ten years — and capped at 50% of the required injection, documented on SBA Form 155. This largely removes the short-term seller note as an equity workaround.

A documented 1.1 to 1 debt service coverage calculation is now required on every 7(a) file at any loan size. The FICO SBSS prescreen mandate sunset on 1 March 2026, removing the small-loan exemption from full cash-flow analysis.

The 7(a) Small Loan ceiling dropped from $500,000 back to $350,000, pushing loans between those figures into standard procedures.

The volume effect was severe and it landed on this sector. Lumos found approvals of $500,000 or less fell roughly 38% by count in FY2026, with the $350,000 to $500,000 band down 64% — a retreat driven by processing economics rather than credit quality. Many fitness loans sit precisely in that band.

Franchisor control is now expressly restricted. SBA prohibits transactions where a franchisor or management company exercises complete operational control, and requires that the franchisee retain meaningful oversight — budget approval, control of the bank account, and oversight of employees.

The Franchise Directory deadline has passed

This is a live diligence check, not a future one, and it can disqualify a borrower outright.

The SBA Franchise Directory returned on 1 June 2025. Franchisors must submit their Franchise Disclosure Document and a new one-time Franchisor Certification, replacing the former SBA Addendum and Form 2462.

The certification requires that the franchisee retain meaningful oversight — budget approval, bank account control and employee oversight — and bars franchisors from unilaterally withdrawing funds from franchisee bank accounts.

The deadline to certify was extended to 30 June 2026. Brands not certified by then were removed from the Directory, and their franchisees became ineligible for SBA financing. FRANdata estimated roughly 8,000 franchisors needed to certify.

Confirm the brand's current Directory listing before any other work begins. A feasibility study for a franchised gym that does not verify this is analysing a transaction that may not be financeable at all.

The sector in 2026: growing, and decelerating at the top

The barbell has intensified. High-value-low-price and premium are both growing; the mid-market and parts of boutique are squeezed.

Planet Fitness serves 21.5 million members across 2,909 clubs as of 31 March 2026, with Black Card penetration at 67%. Q1 2026 revenue was $337.2 million, up 21.9%, with same-club sales up 3.5%.

But on 7 May 2026 it cut full-year same-club-sales guidance to roughly 1% from 4% to 5%, citing a slower than expected start — 700,000 net member adds in Q1 against roughly 1 million a year earlier. The stock fell approximately 31%, its worst single-day decline on record. The company paused its national Black Card price increase and still plans 180 to 190 new clubs in 2026.

The signal for feasibility work is that even the category leader is finding member growth harder than rate growth. A projection built on membership expansion rather than pricing needs to justify itself.

Life Time at the premium end grew Q4 2025 revenue 12.3%, with average monthly dues above $200, average revenue per membership around $796 per quarter, and adjusted EBITDA margin near 26.7%.

Boutique took real damage. Xponential Fitness — Club Pilates, Pure Barre, YogaSix, StretchLab, BFT — reported 2025 revenue of $314.9 million, down 2%, with North American systemwide sales of $1.75 billion up 13%, same-store sales up 0.5% for the year but down 4% in Q4, and a $53.7 million net loss. It guided 2026 revenue down to $260 to $270 million.

It closed 140 studios in 2025 against 341 gross openings, with roughly 30% of contractually obligated licences more than twelve months behind schedule.

And on 18 March 2026 the FTC secured a stipulated order including, in the Commission's words, "$17 million that will be returned to franchisees, which is the largest amount ever to go back to consumers in a franchise case." The FTC alleged Xponential falsely claimed studios could open within six months when many franchisees waited more than a year. A separate $22.75 million settlement with more than 500 franchisees brought the combined figure to roughly $40 million.

Club Pilates, at more than 1,414 studios, remains the resilient standout within the same portfolio. Which is the brand-dispersion point again: Pilates and barre concepts are outperforming cycling and stretch concepts inside a single franchisor.

On facility counts, estimates vary by definition — IBISWorld cites roughly 114,370 US fitness clubs for 2024 on a broad definition including martial arts and CrossFit affiliates, while narrower commercial club counts run above 32,000. The pandemic erased over 10,000 US gyms, from 41,370 in 2019 to roughly 31,028 by mid-2022.

Digital complemented rather than replaced clubs. Penetration hit records alongside the app boom, and more than 75% of studio users hold at least one additional membership. The competition shows up in usage rather than cancellation — see frequency below.

Recovery, longevity and wellness are the fastest-growing ancillary category, with saunas, cold plunge, red-light therapy and assisted stretching leading.

Membership economics

Retention, corrected

The current benchmark is 66.4% annual retention, per HFA's 2025 Fitness Industry Benchmarking Report covering 175 companies and more than 17,000 facilities — meaning roughly one member in three cancels each year.

Use that figure, not the 71.4% that circulates widely. That number is a 2015 IHRSA datapoint and is now a decade stale.

By segment: big-box churn runs roughly 30% to 35%; boutique studio churn runs 35% to 45%, worse than many operators assume.

Frequency is the retention variable

Members attending three or more times a week retain at 85% to 90% annually. Members attending less than once a week retain at 15% to 25%.

And average frequency has fallen sharply. Per HFA's 2025 Consumer Report: "the average member visited a fitness facility 78.5 days per year in 2024 (around 1.5 times per week)... down significantly from 109.5 days per year (2.1 times per week) back in 2019."

Half of new members quit within their first six months, and the first 90 days are decisive.

Which reframes the January surge. The joiners who sign up in January and stop attending by March are the least valuable cohort in the business, because frequency rather than sign-up timing predicts retention. A projection that leans on January volume without an onboarding plan is projecting churn.

Dues, and the average-versus-median gap

The average US gym membership ran about $69 a month in 2024, up from $65. The median was $38.

That gap is the barbell in a single statistic — most Americans are on inexpensive plans while a smaller cohort pays premium dues. A pro forma using the average overstates realistic pricing for an HVLP or mid-market concept.

By segment: HVLP roughly $15 to $25 a month; traditional and mid-market at a $38 median and $69 average; boutique studios roughly $100 to $250; premium above $200.

Studios were the most popular facility type in 2024 at 23.1 million members, just ahead of fitness-only gyms at 22.2 million. Members earning more than $75,000 a year account for just over half of all memberships.

Acquisition cost benchmarks commonly run $60 to $120 per new member, with retention costing roughly a fifth of acquisition.

Click-to-cancel: vacated, not resolved

The FTC's "click-to-cancel" Negative Option Rule was vacated in its entirety by the Eighth Circuit on 8 July 2025, on procedural grounds — the FTC failed to issue a required preliminary regulatory analysis for a rule with more than $100 million in economic impact — days before its 14 July 2025 effective date. The FTC has since submitted a draft Advance Notice of Proposed Rulemaking to potentially revive it.

But gyms remain subject to ROSCA, Section 5 of the FTC Act, and a patchwork of state automatic-renewal laws. The compliance burden did not disappear.

Neither should a model assume that friction in cancellation reduces churn, nor that the regulatory risk is gone.

Revenue mix, and the personal training trap

Membership dues made up roughly 52% of health and fitness club revenue in 2025, with the balance from training, classes and add-ons.

Personal training is the margin driver and the projection trap.

In 2024, 23% of members used a personal trainer and 32% did small group training. But the average member completed only 21 PT sessions — down from 28 in 2019. Women drove participation growth, up 15.9% to 7.3 million.

So penetration is rising while intensity per member is falling. A model assuming both high penetration and pre-pandemic session counts will overstate PT revenue, and it is a common error.

One figure to handle carefully: the frequently cited claim that personal training represents roughly 47% of health club revenue globally is skewed by PT-centric studio formats and is not transferable to an HVLP pro forma.

Other ancillary lines: small group training, recovery services — the fastest-growing category — retail and supplements at roughly $12 per member per month industry-wide, childcare, and nutrition. Life Time acquired the LTH nutritional products brand for $10 million in 2025.

Corporate and insurance-linked memberships are material: HFA's total-user penetration figure of 31% explicitly includes employer and insurance programme members.

What the consultant actually does

Defines the trade area by drive time, not by radius

This single methodological choice can change the conclusion.

A radius ring and a drive-time polygon drawn on the same site can capture very different populations, because the ring counts residents who never cross the arterials that actually feed the site. In constrained geographies the difference can exceed a factor of two.

Conventions by format: HVLP clubs draw from roughly a 10 to 15 minute drive time — a larger trade area, because thousands of members are needed. Boutique studios draw a tight 10-minute or one to three mile radius — smaller, denser, higher income. Premium and full-service draw a wider affluent trade area.

A bankable study discloses the delineation method, tests alternatives, and reports a reconciled range rather than presenting a single ring as fact.

Applies localised penetration, not the national figure

The method is target population, multiplied by fitness penetration, multiplied by attainable market share.

National penetration anchors at roughly 25% membership, or 31% including non-member users. But it must be localised. Rural penetration runs around 8% against roughly 25% urban. New York and California lead the states at approximately 29.7% and 29.2%.

Applying the national figure to a rural or low-income trade area is the most common way a fitness projection is inflated, and it is easily checked.

Models the ramp and the break-even

Gyms carry near-100% gross margin because there is minimal cost of goods — but EBITDA margins run roughly 15% to 25%. HFA's 2025 median EBITDA margin was 23.6%, with two-thirds of clubs positive.

Ramp to stabilisation runs 12 to 36 months. For context on the long end, Life Time's centres take three to four years to reach expected performance.

Break-even membership varies by format because fixed cost structures differ. HVLP clubs run thousands of members in 15,000 to 25,000 square feet precisely because usage is low frequency; boutique studios are capacity-constrained by class size and are better measured on revenue per available hour; full-service clubs need lower density to deliver the amenity experience.

The most useful single output is the break-even membership count stated alongside the penetration rate it implies. If break-even requires penetration above the local norm, the project has a problem no amount of concept enthusiasm resolves.

Treats pre-sale as the leading indicator

Pre-sale membership performance is the single best pre-opening demand signal, and it de-risks the ramp in a way nothing else does. Weak presales are the earliest warning that the penetration assumption was optimistic.

Where a presale campaign has run, its results are the most valuable evidence in the file. Where it has not, the projection carries more risk and the study should say so.

Cost structure and capital

Buildout, current 2026 figures: roughly $30 to $100 per square foot for interior and equipment fit-out of existing space, and $50 to $250 per square foot ground-up. Costs run approximately 8% to 12% above 2024 levels, with commercial interior fit-out averaging $149 per square foot in early 2026, up 5.5% year over year per Cushman & Wakefield.

Taking over a former fitness space — existing flooring, mirrors, HVAC — can save $30,000 or more.

Equipment replacement cycles: cardio roughly five to seven years and best leased at fair market value; strength equipment ten years or more and better financed with an equipment loan.

Total project cost by format:

Boutique studio: roughly $75,000 to $250,000

Neighbourhood or mid-size gym: roughly $100,000 to $300,000

HVLP or franchise club: frequently $500,000 to $1 million and above once real estate, equipment and franchise fees are included

Full-service club: $1 million and above

Orangetheory's total investment runs $822,292 to $1.4 million, on a franchise fee of $59,950, with an 8% royalty plus 3% advertising fund.

Payroll at the service industry standard of 30% to 40% of revenue; boutique studios target 20% to 25% for sustainability; HVLP runs leaner through low staffing.

Occupancy is typically the largest single fixed expense, and gyms are energy-intensive per square foot. Lease negotiation is the highest-impact financial decision an operator makes, and occupancy consuming too large a share of revenue is the most common way a viable-looking club fails.

Working capital of three to six months plus a dedicated pre-sale and pre-opening marketing budget — commonly $5,000 to $30,000 and above for studios, more for large clubs. Under-budgeting the pre-opening ramp is a classic feasibility error.

Where fitness projects fail

Over-optimistic penetration and capture, usually from applying national penetration to a local market that does not support it.

Occupancy cost too high relative to achievable revenue.

Under-capitalisation — thin working capital and no real pre-opening marketing budget.

Weak presales, ignored rather than treated as the warning they are.

Over-saturation, which is segment and market specific rather than universal. Boutique cycling and stretch concepts show saturation signs; HVLP and Pilates remain expansion-oriented.

A new competitor entering the trade area. A well-capitalised HVLP entrant can materially cut an incumbent's capture and pricing power, particularly where penetration is already near its local ceiling. The pipeline of announced competitors belongs in the analysis alongside existing supply.

And the demand fragility is documented: 41% of cancellations are attributed to cost and 25% to changed circumstances. Memberships are discretionary and among the first expenses cut.

How the programmes differ

SBA 7(a). The dominant route. Given that roughly 63% of fitness borrowers are startups or businesses under two years old, SOP 50 10 8's feasibility expectation applies to most of them. Typical structures: up to $5 million covering franchise fee, buildout, equipment and working capital on a ten-year term; up to 25 years where real estate is included.

SBA 504. For owner-occupied gym real estate at roughly 90% loan to value.

USDA B&I. Available in communities of 50,000 or fewer under 7 CFR Part 5001, the consolidated OneRD rule. Guarantees run 80% for loans up to $5 million, 70% from $5 million to $10 million, and 60% above $10 million, with loans to $25 million and up to $40 million for certain rural cooperatives. FY2025 saw a record $3.5 billion appropriated at a 0.2% subsidy rate, with the guarantee fee set at 3% of the guaranteed amount.

Fitness centres are eligible. Golf courses, racetracks and casinos are not — a distinction worth knowing where a project bundles amenities.

One practical caution: a reported 36% reduction in USDA Rural Development staffing is a near-term processing-speed risk rather than an eligibility risk, and it belongs in the timeline rather than the credit analysis.

Specialty revenue-based lenders — Pipe, Capchase and similar — advance against monthly recurring revenue for established gyms, typically requiring twelve or more months of operation, $50,000 or more in monthly recurring revenue, and retention above 70%. Not a startup route.

In all cases the study must be prepared by an independent third party with no financial interest in the transaction, which excludes the franchisor, the broker and the equipment supplier.

What a lender is reading for

Which brand, and what is its actual loan performance? Not the segment. Club Pilates and Planet Beach are both franchised studio concepts and sit at 0.0% and 56.2%.

Is the brand currently on the SBA Franchise Directory? The certification deadline passed on 30 June 2026 and non-certified brands were removed.

Is penetration localised? Rural runs around 8% against roughly 25% urban, and applying the national figure is the most common inflation.

Is the trade area drawn by drive time, with the method disclosed?

What is break-even membership, and what penetration does it imply?

Are retention and frequency current? 66.4% annual retention and 1.5 visits per week, not the 2015 and 2019 figures.

Is PT modelled at current session intensity? 21 sessions per member, not 28.

What are the presales telling you?

Does occupancy cost work at achievable revenue?

Frequently asked questions

Sources

SBA Standard Operating Procedure 50 10 8, effective 1 June 2025, and the SBA Franchise Directory and Franchisor Certification requirements.

SBA 7(a) loan disclosure data as aggregated by PeerSense (July 2026), GoSBA Loans (June 2026) and sbaloandata.org (2026).

Lumos Data, SBA 7(a) default rate analysis, 2026.

Fit Small Business, franchise SBA default analysis, FY2020–2023.

Health and Fitness Association — 2025 US Health and Fitness Consumer Report (7 April 2025), 2026 Consumer Report (9 April 2026), and 2025 Fitness Industry Benchmarking Report.

IBISWorld, Gym, Health and Fitness Clubs in the US, 2026.

Planet Fitness Q1 2026 results and guidance revision, 7 May 2026.

Xponential Fitness Q4 and full year 2025 results and 2026 guidance.

Federal Trade Commission stipulated order against Xponential Fitness, 18 March 2026.

Eighth Circuit decision vacating the FTC Negative Option Rule, 8 July 2025.

Life Time Group Holdings Q4 2025 results.

Cushman and Wakefield commercial fit-out cost data, 2026.

FRANdata franchise lending and certification estimates.

7 CFR Part 5001, USDA OneRD Guarantee Loan Initiative.

Franchise Disclosure Documents, including Orangetheory Fitness.

Prepared by feasibility-study-consultant.com. SBA loan figures are drawn from public disclosure data by commercial aggregators rather than from SBA's own published tables, and cumulative and single-year frames are not interchangeable; resolved-loan charge-off rates and annual cohort default rates measure different things and are not directly comparable. Buildout costs, acquisition cost and lifetime value benchmarks draw partly from vendor and advisory sources and vary by market. Programme terms including the Franchise Directory certification status, guarantee percentages and coverage requirements are set by SBA and USDA and are periodically revised; confirm current requirements with the participating lender before relying on any detail. Regulatory position on automatic renewal and cancellation remains in flux. This is not legal, tax or lending advice. Last updated: August 6, 2026.