Los Angeles, CA (PRWEB) September 03, 2012
The Children's Fitness Center Franchises industry has fared relatively well considering a large portion of its revenue comes from consumers' discretionary income. Growing awareness of the benefits from exercising regularly, especially in response to a rising child obesity rate, drove demand leading up to the recession and helped to offset losses throughout the economic decline. However, drops in disposable income and rising external competition during the peak of the recession took a toll on the industry's growth. In the five years to 2012, revenue is expected to decrease at an average annual rate of 0.7% to $303.2 million.
Most of the damage took place in 2008 and 2009, when industry revenue decreased 2.2% and 2.8%, respectively. During this time, households were forced to cut back on discretionary expenditures, which includes children's fitness classes. Furthermore, rising national unemployment meant more parents were at home to take care of their children and make sure they stayed active. In response to the decrease in demand, many franchises were forced to close and those that remained slashed their prices to compete with less expensive afterschool programs. As a result, the number of franchises is expected to decrease at an annualized rate of 2.0% in the five years to 2012. “Lower prices and decreased memberships caused profit margins to plunge and further contributed to the industry's ongoing battle with alternative child fitness activities,” says IBISWorld industry analyst Eben Jose. On the other hand, programs like Michelle Obama's Let's Move campaign and the National Football League's Play 60 program have driven awareness of the negative effects associated with child obesity. Such awareness has resulted in parents being more active in finding fitness programs for their children, which has resulted in revenue growth for the industry. Because of this. IBISWorld estimates the industry will grow 0.5% in 2012. Efforts to fight child obesity are expected to continue throughout the five years to 2017, acting as a key factor in this industry's future growth.
Over the next five years, rising disposable incomes and lower unemployment levels will drive up demand for franchises, resulting in average revenue growth over the period. Furthermore, more variety in classes and a more defined age group will further aid industry growth as establishments are forecast to increase at an annualized rate of 3.2% over the next five years. Overall, the Children's Fitness Center Franchises industry has a moderate level of market share concentration. Together, the top four companies make up about 45.0% of industry revenue. According to Jose, the industry consists of many well-established franchises offering a variety of services, allowing the top companies to earn significant shares of revenue. However, all of the industry's major players have franchise models that vary slightly in regard to royalty fees, startup costs, training and marketing support, which makes them each suitable to certain potential franchisees. As a result, it is unlikely that any one company will ever dominate the industry in the near future. For more information, visit IBISWorld’s Children's Fitness Center Franchises in the US industry report page.
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IBISWorld industry Report Key Topics
This industry operates franchised fitness and recreational sports facilities that feature exercise and other physical fitness or recreational sports activities for children aged 18 and younger. Operators also provide facilities management and fitness instruction. The Business Franchise collection focuses solely on franchised outlets. It excludes non-franchise data. Data shows total franchise outlets, total franchise revenue and the average profit margin earned by franchisees.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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