Podcast Summary: The Brian Beers Show

Episode: He Bought a FAILING 24/7 Gym (The Shocking Numbers) | 299
Date: December 1, 2025
Host: Brian Beers

Overview

In this episode, Brian Beers breaks down the real financials and the turnaround story of a once-failing 24/7 gym franchise. The episode focuses on "Eric" (a pseudonym), who took over a loss-making gym, implemented strategic changes, and turned it into a thriving, profit-generating business. Brian highlights actionable lessons, operational insights, recent performance metrics, and the power of leveraging franchise systems for entrepreneurial growth.

Key Discussion Points and Insights

1. Backstory: Acquisition of the Gym

• Eric was an employee (manager/personal trainer) at the gym before purchasing it.
• Original owner was losing money and wanted out; Eric and his sister bought the gym, financing directly through the seller (seller financing meant no traditional bank loan).
• Quote: "You don't have to go to the bank. I'll be the bank. Just make a down payment, pay me every month, and then the thing is yours." (00:45)

2. Revenue Structure and Business Model

A. Revenue Breakdown (Jan–July)

• Total: $622,000 over 7 months.
  • 60% from memberships (~$386,000, 1,000 members, avg. $52/month).
    • Pricing simplified to one bi-weekly plan: $29.99 every two weeks, which effectively increases annual billing by one extra payment.
    • Quote: "He simplified his pricing...We have one plan, do you want it or not?" (03:00)
  • 37% from personal training – a major income driver.
  • Rest from merchandise and "enhancement fees" ($20/member, twice a year, earmarked for equipment upgrades).
    • Quote: "A way of self-funding the upgrades, which is really cool." (06:30)

B. Core Levers for Revenue Growth

• Simplifying pricing structure.
• Upselling personal training—leveraging Eric’s background for quality/trust.
• Focusing on member experience and developing ancillary sales (merchandise, enhancement fees).

3. Expense Structure

• Wages: $152,000 (over 7 months – trainers, front staff, admin).
• Payroll taxes: ~10% of wages.
• Rent: $61,000 in 7 months (~$100k/year; about $9k/mo).
  • Quote: "Rent is where people can get totally crushed in the gym business." (08:15)
• Franchise Fees: Fixed payment model, ~$850/month (better than revenue-percentage common in franchises).
  • Access to systems, bulk purchasing, and a support network.
  • Quote: "For $850 a month...you get access to all these other members...and the community." (11:05)
• Merchant fees: Credit card processing (no cash).
• Advertising/marketing: ~$20,000 over 7 months (<$3K/month), now reduced for 2nd gym’s pre-sale.
• Other: Cleaning, supplies, insurance, repairs, legal, conferences, merchandise, maintenance (~$20K/7 months).
• Total expenses (7 months): $377,000.

4. Profitability

• Net Operating Income: $244,000 for 7 months (~$30K/month).
  • Quote: "Pretty, pretty awesome business if you ask me." (14:00)

5. Turnaround Strategies

• Pre-purchase scenario: Business had 600 members, $35K/month revenue, losing $7K/month.

• Post-purchase actions:

  • Eric worked 60 hours/week for the first year: talking to every member, fixing problems, upselling, outreach to olds members, self-managed marketing (Facebook ads).
  • Local presence: "The members loved us...as coaches and managers." (21:02)
  • Strictly using franchise playbooks and improving execution, unlike the previous owner.
  • Focused on “diluting” fixed costs as membership/revenue increased.

• Operational lesson: A franchise is always a local business at heart, not just a brand.

6. Business Model Analysis and Scaling

• Fixed vs. Variable Costs:

  • Rent, many expenses are fixed; once covered, additional income grows profit disproportionately.
  • Main variables: Wages (grow with training sales), merchant fees.
  • Importance of understanding cost structures for profitability and resilience.

• Scaling Impact:

  • As membership increases, fixed costs (rent, fees) become a smaller % of revenue/profit margins increase.
  • Personal training and upsells grow per-member revenue (now ~$89/member, with training, vs. $52/member from the base membership alone).
  • Margin now at 39% net operating.

• Comparison to Host's Other Franchises:

  • Gym model can outperform others (like auto repair) in terms of variable-vs-fixed cost structure and potential for margin improvements.

7. Expansion: Second Gym and Financing

• Opened second gym (brand new build).
• Local bank provided 100% financing based on proven P&L; buildout cost: $700–$900K.
• No debt on the first gym (seller note recently paid off), maximizing cash flow for leverage.
  • Quote: "He’s making $35,000 every single month...now he's leveraged that to put no money in to buying a second gym." (38:00)

8. Broader Lessons and Takeaways

• Importance of operator engagement and sweat equity in turning around a struggling franchise.
• Value-add of the franchise system, especially for those new to an industry.
• Opportunity to snowball success: Using one successful unit to finance/build the next.

Notable Quotes & Memorable Moments

• On seller financing:
  "You don't have to go to the bank. I'll be the bank. Just make a down payment, pay me every month, and then the thing is yours." (00:45)

• On simplicity in pricing:
  "We have one plan, do you want it or not?" (03:00)

• On the self-funding equipment model:
  "That money goes into a big fund which then helps pay for new equipment. So it's a way of like self-funding the upgrades, which is really cool." (06:30)

• On the dangers of rent:
  "Rent is where people can get totally crushed in the gym business." (08:15)

• On the value of being local:
  "Every franchise is a local business that just happens to have some playbooks that happens to share a brand name." (21:50)

• On personal involvement and hustle:
  "He personally worked 60 hours a week for the first 12ish months...to try to call old members back, to run a bunch of Facebook ads." (21:02)

• On the business turnaround:
  "Pretty, pretty awesome business if you ask me." (14:00)

• On expansion momentum:
  "He’s making $35,000 every single month...now he's leveraged that to put no money in to buying a second gym." (38:00)

Timestamps for Important Segments

• [00:00] — Background and acquisition details
• [03:00] — Pricing model overhaul
• [06:30] — Explanation of “enhancement fee” for equipment upgrades
• [08:15] — Analysis of rent and cost structures in gyms
• [11:05] — Franchise fees and value proposition
• [14:00] — Financial performance and NOI revealed
• [21:02–21:50] — Turnaround strategy and local business focus
• [38:00] — Launching the second gym and scaling with banking finance

Conclusion

Brian uses Eric's story to show that even a failing gym can become a lucrative, sustainable business in just a few years through effort, pricing strategy, and maximizing franchise systems. The episode is packed with real numbers and practical insights into franchising, local business ownership, and financial modeling—making it a must-listen for current or aspiring franchisees seeking actionable tactics and inspiration.