Bangalore-based Snap Fitness India, the Indian master franchisee of Minneapolis, US-based fitness chain Snap Fitness, is in the process of raising a $10-million (approximately Rs 55 crore) growth fund to fuel its expansion in the country.
“We are working with PricewaterhouseCoopers (PwC) for the fund-raising exercise. We should be able to close the deal within the next one year,” Snap Fitness India chief executive officer, Vikram BM, told Business Standard.
Snap Fitness, with 2,200 centres worldwide, entered India in 2008, with a flagship centre in Bangalore. At present, the company operates four company-owned and 36 franchisee-run fitness centres in India, with a total membership strength of 30,000. Of these, 30 are located in Bangalore, with the remaining centres spread across New Delhi, Mumbai, Hyderabad and Chennai.
“We intend to use the proposed funds to meet our mandate of opening 300 centres –– 100 company-owned and 200 franchisee-operated –– in the next five years, including 10 each in Hyderabad and Chennai. This year, we are looking at opening 40 centres pan-India,” he said.
Snap Fitness’ centres, in sizes of 3,000 sft, 4,000 sft and 5,000 sft, typically entail an investment of between Rs 1.2 crore and Rs 1.5 crore each. The company follows a 'hub-and-spoke' model, where it will have one company-owned centre and close to four franchise-run locations built around that area. While the operational break-even happens from day one, each centre reaches a cash-positive stage once it gets at least 600 members in three to five months’ timeframe.
At present, the wellness industry in India is pegged at $3 billion. While the unorganised sector dominates 95% of this market, organised brands like Talwalkers, Gold’s Gym and Snap Fitness account for the rest.
According to Vikram, the penetration in the fitness industry world over is between 17% and 18%, while it is only one% in the case of India. “However, courtesy the growing link between fitness and health, we are expecting at least a four% year-on-year growth in India,” he added.