Jetts FAQs

Commercial faq!

Get the facts so you’re in the know.

Get the facts How long has Jetts been established?

The company was first established in February 2007 with the first Jetts club opening in Helensvale, QLD in August 2007.

What is the average size of a Jetts Club?

The average size of a Jetts Club is approximately 300m2. Sites can range in size between 200 – 500m2.

How do I find and secure a location?

On completion of Franchisee training, you will have the tools and knowledge to start sourcing suitable sites in your local market. Jetts Head Office’s internal development team will work closely with you through this process, including site qualification, demographic analysis and even negotiating your lease. From the completion of your training, our leasing managers will also work with our extensive agent network to help you identify any site opportunities

What makes for an ideal site?

An ideal site is located in or is in close proximity to a convenience centre with the tenancy having prime visibility, prominent signage opportunities, ample car parking, and a medium to high level of foot traffic.

Do we design and build the club or does Jetts help with this?

The layout of each club is designed by our experienced Development team and a standard equipment package is used with only minor variations between clubs.

Additions to equipment can be made after opening in consultation with Jetts Head Office. Approved preferred suppliers will assist you in conjunction with our development team to manage the whole process and timeline.

How soon after I have attended training will I be opening my club?

The timeline on opening your own club varies depending on the location of the site and the length of the Council approval process. Once a site has been secured, the Council approval process may take approximately 3 months and Jetts allocates another 45 days on top of this for an average fitout process. If there are building works to be done, or if your club is required to go through a different approval process then this timeframe may be longer.

What are the total costs of opening a franchise?

Due to the differences between clubs, these figures are given as a guide only and may differ between sites.

Capital Works (from $200k – 500k) The breakdown of this includes: • Franchise fee • Security System • Bank Guarantee • Fit out • Signage • Marketing prior to opening • Wages prior to opening • Foundation Member Packs (give away merchandise for the first 150 members) • Flights and accommodation to the Sunshine Coast for meetings and training • Legal and Accounting costs Equipment (approx $180 – 240 k) The standard basic equipment package is usually financed via lease or mortgaged over a 5 year period.

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Get the facts Which areas are available?

Metropolitan Areas – Sydney Expansion during the next 12 - 18 months will be focused primarily in the Sydney metropolitan market.

Regional Towns Jetts has targeted selected regional towns which will be available for club development.

Details of these regional towns are available on request.

Other Opportunities Opportunities for clubs in metropolitan Queensland and Western Australia are limited to sales of existing clubs. Please contact Jetts for information of clubs available for sale.

I noticed you don’t allocate territory maps? How does this work, and what assurance do I have in the protection of my business?

Jetts has a history of high performance with varying club proximity without cannibalisation of existing businesses. The business commenced with territories but with 20/20 hindsight these have played no role in defining the success of a club, do not limit our competitors’ choice of location nor influence our members’ decisions. Given our long track record of diligence when selecting new locations we are well versed in the need to maintain and grow the performance of existing clubs. We only open new clubs with careful consideration for the impact on surrounding clubs and the broader fitness landscape.

In franchising, territories are more common in service based franchises as retail franchises are all about maintaining the standards and quality of offering that will attract customers to visit your location. When selling a successful club, the ability to sell or the value are also not factors we have seen in determining saleability.

Legally, Jetts are also bound buy the Franchising Code of Conduct and other regulations to act in “Good Faith” in regards to the protection of a franchised business. A failure to do so can leave us liable to damages if businesses are impacted significantly.

Lastly, our commitment and focus from the outset has been multi club ownership for our franchisees and in practice we have offered existing franchisees in any area first right of refusal where our multi-club criteria are satisfied. In our expansion of the next 100 clubs we are only seeking around 15-20 new franchisees. Consequently, our strategy will be difficult to execute if we damage relationships by acting without fair play and integrity.

How long does will it take to reach Breakeven?

Depending on the location of the club and strength of the pre-sale, historically some clubs may break even on opening day whereas others have taken 8-12 weeks. While there have been some clubs that have taken longer than 12 weeks to reach breakeven, these have been in the minority. What occurs with your club depends on a range of factors. We recommend speaking to existing franchisees about their experiences

What are the revenue streams of the business?

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Direct debit memberships Paid in advance memberships Joining fees Card fees Supplement and merchandise sales Rent from Personal Trainers

What are some typical ongoing costs associated with running a franchise?

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Wages - 35 hours per week in total as a minimum requirement Electricity Marketing activities Various licence fees and service agreements Insurance premiums Cleaning and maintenance costs Rent of premises Equipment package repayments

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Get the facts I know you can’t disclose how much I could make under the Franchising Code of Practice, but how can I calculate potential earnings?

Please note various costs may differ between clubs and this would alter the calculated outcome.

Assume for the purpose of the exercise that we are working on a club size of 300m2: Membership capacity is formulated by calculating 3.5 members per m2 of floor space.

3.5 members x 300m2 = 1050 members at capacity. (Please note with approval from head office in clubs over 300m2 up to 5 members per m2 can be achieved if certain criteria are met.)

To calculate/estimate the revenue streams; A round figure of $40 per member per month may be used to calculate base revenue.

New members pay some variable start-up costs including a joining fee ($0-$99), a card fee (profit margin of $16), the first month’s membership fees in advance and sometimes merchandise.

Personal trainers pay rent of $200 per trainer per week and can operate on a ratio of 1 trainer for every 300 members.

Expenses include (Estimates for costs indicated are monthly costs and available within the Disclosure documents.)

Bank Charges Bank Interest Accountancy, Bookkeeping & Legal Advertising Levy Advertising & Promotion Cleaning Electricity Equipment Finance Franchise Fees Insurance Licence Fee Printing, Postage & Stationery Rent Equipment Maintenance Security Phone & Internet Wages Superannuation Workcover In your growth projection you will also need to allow for a membership drop off every month. This is variable for every club but the clubs do aim to keep his figure at under 5% per month. We recommend you do projections for 300, 600 and 1000 members to estimate where the business is positioned at different stages of growth.

Is there a National Marketing Fund? How is the fund allocated?

As most of Jetts members come from 1km from the site, the national fund is a small nominal amount as opposed to a percentage. This fund will be used for branding exercises primarily as opposed to call to action promotions. Examples may be billboards, national print advertising in newspapers or magazines, and occasionally TV. Most franchisees will achieve capacity or near capacity operation within 12 months on the back of local and regional marketing campaigns which are often guided and created by the Jetts Head Office, however at times funding on a regional level may be subsidised by this national fund. Jetts also has a marketing department which are responsible for evolving the brand and producing templated marketing material.

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Get the facts What support, both initial and ongoing, does Jetts provide?

Jetts have a Head Office team and various external advisors and suppliers to offer support in every aspect of your operation including: • • • • • • • • •

Training – induction at Jetts Head Office, as well as ongoing programs/ workshops available either at Jetts Head Office or on-site by request.

Club layout and design Site qualification Real estate negotiation and acquisition Financial pathway recommendations Marketing design and support Software support Business performance management – (via portfolio manager) Pre-opening sales program

*individual levels and types of services may vary depending on a range of factors.

How do the clubs operate unstaffed? Are there risks?

All Jetts clubs include a sophisticated security and monitoring system, a carefully selected risk-managed equipment package, and all members are required to complete an orientation process to ensure they are familiar with the correct use of all equipment.

Jetts’ insurance policy has been formulated over a long period of time, and our insurance provider is comfortable with the lower level of risk presented by a Jetts club compared to some other competitors.

How many staff are required to run the business effectively?

Most Jetts clubs employ 1 manager with staffed hours of approximately 35 hours per week in total, as well as contracting 2-3 personal trainers.

What is the term of the franchise agreement?

The term of the franchise agreement is 15 years which will be made up of a 5 year term plus 2 x 5 year options.

Is there a renewal fee?

There is no renewal fee, however when an option is taken up the franchisee will have their franchise agreement updated to the most current version which may have had alterations to some of the ongoing fees. There are legal fees associated with the renewal.

Why choose Jetts over other fitness franchise companies?

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What is the resale value of a club?

As the franchise model is relatively new there is no longitudinal average for us to be able to draw on. Historically to date around 3x EBITDA has been achieved

Is it difficult to obtain lending for the Franchise?

It has just got easier as we have secured an Accreditation package with Westpac. This will give our newest franchisees up to 50% unsecured funds for new sites and up to 60% unsecured funds on existing sites for sale.

BRW #1 fastest growing franchise for 2012 Australian owned and operated Strong support from Jetts Head Office The largest chain in Australia offering great brand leverage Consistency of brand Consistency of offer Consistency of quality Strong multi club representation Organic growth via word of mouth referrals.

Outside of this it largely depends on your current situation and banking relationship.

Currently business lending on gyms in general is perceived as “Higher Risk” and recent economic factors and lending policy has meant that unsecured lending on gyms can be harder to obtain for some potential franchisees with most lenders.

Jetts offers some of the lowest membership rates in the market. Can competitors match our price once we open?

There is always a possibility that competitors will lower their prices, however our members confirm that dollar for dollar we are the best value proposition in the market.

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Get the facts Why is Professional Indemnity insurance required? What is the level of specified cover?

Professional indemnity insurance is required to protect against any advice given by a Franchisee or staff member to a Jetts member in the event that the information is incorrect and leads to an insurance event. The level of cover is $5M. Professional indemnity insurance is different to public liability insurance.

What is the expected life of the fitness equipment?

Strength equipment will need to be replaced approximately every 10 years, however the upholstery on this equipment is required to be replaced in accordance with the refurbishment clause at the end of 5 years (or the end of the first term, depending on the lease agreement). Cardio equipment tends to age faster and should be replaced every 4-5 years to keep up with technological advances.

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