Tough Mudder will unveil its line of branded boutique fitness clubs today, selling franchises to its new “bootcamps” for $50,000 as part of its continuing efforts to diversify its business beyond obstacle course events. Its target markets are U.S. cities except N.Y. and L.A., which Tough Mudder co-Founder & CEO Will Dean and his team think are saturated with fitness options and offer inferior profit potential. The target users are anyone who is not getting results at a classic “big box” gym and might benefit from a more varied, team-oriented fitness class. The company estimates total startup costs of between $200,000-300,000, including the fee, and Dean is telling potential franchisees they can expect year-one revenue to exceed $500,000. A single class would cost around $15 for the consumer, he said. “It became very clear to us, that if you look at the U.S. market and strip out markets like New York and L.A., which have thousands of different bootcamps -- almost everywhere else in the U.S., the fitness scene hasn’t really changed in 15 or 20 years,” Dean said. “Most people are still going to their traditional big-box gym. It turns out very few people can generate meaningful fitness results working out alone in a traditional big-box gym.” Tough Mudder will host a meeting July 19 at its Brooklyn HQ for interested franchisees. It is starting out with modest expectations, hoping to sell 10 franchises in the first year. The company is targeting the Northeast, where many Tough Mudder participants are close enough geographically to participate in multiple events per year. Within the second year, Dean said, they hope to open 100. Franchisees will have access to the obstacle course series’ database of 3.5 million race participants.
CONTINUING GROWTH PLAN: Dean said Tough Mudder's goal is to turn the company's bricks-and-mortar locations into all-encompassing brand HQs for its fan community, in the same way that Harley-Davidson dealerships are. “No other franchise business is building a business off an existing tribe, with an existing event business,” Dean said. A franchisee would need at least 1,500 square feet, ideally 2,000, Dean said. Tough Mudder also promises low labor costs, because its classes will be led by standardized, ever-changing workout routines distributed via iPad. The Tough Mudder fan base is strongest outside of major markets, as the company claims nearly seven in 10 Tough Mudder finishers live outside the top 10 urban areas in the country. In addition to the franchise fee, Tough Mudder will take an undisclosed percentage of revenue from franchisees. It is planning one corporate owned-and-operated bootcamp location at a location to be determined in suburban N.Y. and will also maintain a “showcase” gym above its Brooklyn headquarters for franchisee sales, training and recording of workout content to be used by franchises. The launch of the franchise business culminates more than a year of intense planning for Tough Mudder, which continues its attempts to diversify revenue beyond participation fees. Tough Mudder launched a website today with more information.
