Annual owner earnings answer
This is an independent manager-run estimate for one mature U.S. Retro Fitness outlet, not an official profit claim. The base scenario is about $69,000 in estimated pre-tax owner earnings before personal income taxes and financing principal. An active owner who replaces a paid manager may receive a larger owner-operator benefit of about $116,000-$279,000, but $89,750 of that comparison is the market value of the owner’s labor rather than passive business profit.
The earnings figures are independent analytical scenarios. They are not an Item 19 financial performance representation by Retrofitness, LLC. The model combines identified facts from the 2026 Franchise Disclosure Document with a separately identified IRS industry-margin proxy and BLS manager-wage benchmark. Actual results can differ materially by location, club size, membership and ancillary sales, labor, occupancy, financing, owner involvement, local advertising, maintenance, and execution.
Legal franchisor: Retrofitness, LLC, a subsidiary of Fierce Brands, LLC. Current disclosure: Retrofitness 2026 Franchise Disclosure Document, issued April 30, 2026. Item 19 status: official Gross Sales, revenue-per-square-foot, membership, and same-store-sales data; no outlet profit, EBITDA, Net Income, cash flow, owner compensation, or owner earnings. Population: 74 outlets open more than one year, consisting of 73 franchised outlets and one corporate outlet. Benchmark: IRS 2022 corporate tax data for the broader amusement, gambling, and recreation industry, checked against the Census definition and scale of NAICS 713940 Fitness and Recreational Sports Centers. Date checked: July 17, 2026.
The revenue anchors are current, same-brand FDD figures, but the margin is an external government-industry proxy that is broader than fitness centers and is not outlet-level Retro Fitness expense data.
Median Gross Sales
Full 74-outlet Item 19 population, March 1, 2025 through February 28, 2026.
Mature outlets reported
Seventy-three franchised outlets plus one corporate outlet open more than one year.
Core disclosed burden at median sales
Royalty, Ad Fund, mature local-ad requirement, and current technology fee; not total operating costs.
Central margin proxy
IRS Net Income (less deficit) divided by total receipts for a broader recreation-industry category.
Base manager-run earnings
Median Item 19 Gross Sales multiplied by the 6.7% central margin proxy.
Item 19 evidence
What does the 2026 Retro Fitness FDD actually report?
Officially, Item 19 reports revenue and membership—not owner earnings. For the 74 outlets open more than one year, average Gross Sales were $1,243,660 and median Gross Sales were $1,026,733 for the 12 months ended February 28, 2026. Those figures describe club revenue before operating costs, recurring franchise obligations, financing, and taxes.
The FDD defines Gross Sales broadly as revenue from operating the club, including member dues, services, products, subletting, subcontractors, and usage income, excluding state and local sales taxes. The Federal Trade Commission warns that gross sales do not reveal actual costs or profit; a high-revenue outlet can still lose money because of rent, payroll, and overhead. See the FTC consumer guide to evaluating Item 19 earnings claims.
| Item 19 revenue observation | Gross Sales | Outlet count | How it is used here |
|---|---|---|---|
| Bottom 25% cohort median | $702,411 | 19 | Conservative revenue anchor; not a probability forecast |
| Full-population median | $1,026,733 | 74 | Base revenue anchor |
| Full-population average | $1,243,660 | 74 | Context only; not substituted for the median |
| Top 25% cohort median | $1,950,515 | 19 | Upside revenue anchor; not a guarantee |
FDD source: Retrofitness 2026 Franchise Disclosure Document, Item 19, pp. 55-59. The cohort medians are medians within the stated top or bottom group; they are not the statistical 25th and 75th percentiles.
Item 19 expressly says the reported Gross Sales do not deduct the costs and expenses required to reach Net Income or profit. The $1,026,733 median therefore cannot be described as salary, owner income, cash flow, or take-home pay.
Scenario model
How is the annual earnings range calculated?
The estimate multiplies three FDD-reported revenue anchors by three transparent all-in margin assumptions. The 2022 IRS Corporation Income Tax Returns report shows $6.953 billion of Net Income (less deficit) on $103.655 billion of total receipts for the broad “Amusement, gambling, and recreation industries” minor industry, a derived margin of 6.7%. Following a ±3 percentage-point sensitivity produces 3.7%, 6.7%, and 9.7% scenario margins.
This IRS measure is the closest reproducible official profit proxy used here, but it is imperfect: it includes businesses outside fitness centers, aggregates corporations rather than individual outlets, and uses tax-accounting Net Income rather than a franchise store-level cash-flow measure. The Census definition of NAICS 713940 confirms that physical fitness centers are a distinct industry, while the 2023 Census AIES industry table reports $39.645 billion of revenue for employer firms in that fitness-center category. Census does not provide a Retro Fitness-specific outlet margin.
| Scenario | FDD revenue anchor | All-in margin assumption | Estimated manager-run earnings |
|---|---|---|---|
| Conservative | $702,411 | 3.7% | $26,041 |
| Base | $1,026,733 | 6.7% | $68,867 |
| Upside | $1,950,515 | 9.7% | $189,344 |
Estimated manager-run owner earnings by scenario
Annual pre-tax residual before personal income taxes and financing principal; values rounded in the visual.
Interpretation: Revenue variation and margin variation compound. The upside is not simply a higher-margin version of the median club; it also uses the FDD’s top-25% cohort median sales.
Sources and formula: Retrofitness 2026 FDD, Item 19, pp. 55-59; IRS 2022 Corporation Income Tax Returns, Table 5.1. Formula: FDD Gross Sales anchor × scenario margin. Calculations use full precision and are rounded only for display.
- Estimated pre-tax owner earningsCash available after normal unit-level operating expenses and recurring franchise obligations, before personal income taxes and before financing principal payments.
- Interest and depreciationThe IRS Net Income proxy embeds tax-accounting treatment of interest and depreciation; those components cannot be isolated from the public aggregate. The result is not EBITDA.
- Capital expendituresReplacement equipment and major remodel cash outlays are not separately modeled. Depreciation appears in the benchmark, but actual replacement timing can reduce cash available.
- Scenario statusThe 3.7%, 6.7%, and 9.7% margins are analytical sensitivities, not Retrofitness-reported margins and not probabilities.
Recurring obligations
How much of median sales is committed before rent and payroll?
At the $1,026,733 Item 19 median, the standard royalty, Advertising Fund, mature local-ad requirement, and current technology fee total about $152,871, or 14.9% of Gross Sales. This is a derived FDD calculation for a mature outlet; it is not a complete expense ratio and does not include payroll, rent, utilities, insurance, repairs, supplies, merchant fees, taxes, or other operating costs.
| Obligation | FDD formula | At $1,026,733 sales | Model treatment |
|---|---|---|---|
| Standard Royalty Fee | 5% of Gross Sales; $1,000 monthly minimum | $51,337 | Included within the all-in scenario margin |
| Advertising Fund | Greater of 2% of gross revenue or $400 monthly | $20,535 | Included within the all-in scenario margin |
| Local Advertising Requirement | Greater of $6,000 monthly or 5% of Gross Sales after opening ramp | $72,000 | Included as operating spend; not added again |
| Retro-techno package | Currently $750 monthly | $9,000 | Included within the all-in scenario margin |
| Core disclosed total | Sum of the four items above | $152,871 | 14.9% of median Gross Sales |
FDD source: Retrofitness 2026 Franchise Disclosure Document, Item 6, pp. 8-18. The calculation assumes the standard 5% royalty, no default-related increased royalty, and a mature outlet after the first three post-opening advertising months. It excludes the $5 web-signup fee, first-year JNM charges, penalties, optional services, and bookkeeping/call-center fees that may become optional after the first 12 months open.
The earnings scenarios use an all-in margin after normal operating costs and franchise obligations. The $152,871 burden is shown to explain the economics; it is not subtracted again from scenario earnings. Subtracting it twice would understate the model.
Owner role
How does owner involvement change annual economic benefit?
An owner who personally performs the full manager role may add roughly $89,750 of labor value to the manager-run residual. This produces estimated owner-operator benefit of about $116,000, $159,000, and $279,000 across the three scenarios. These are scenario figures for one mature outlet, not official Item 19 owner compensation.
Item 15 requires the franchisee to designate a Managing Owner who personally supervises the business. The FDD also permits a separate trained Designated Manager, and either the Managing Owner or the Designated Manager must be available whenever the outlet is open. That structure allows manager-run operation, but it does not establish passive ownership. The official Retro Fitness franchise website describes the current U.S. opportunity and operating formats; the FDD contract language controls the actual owner and manager obligations.
Manager-run earnings versus owner-operator benefit
The owner-operator figure adds the May 2025 BLS national mean wage for entertainment and recreation managers, excluding gambling.
Interpretation: The gap is compensation for work. It should not be described as passive profit, a distribution, or an additional return available to an absentee owner.
Sources: Retrofitness 2026 FDD, Item 15, pp. 45-47; BLS May 2025 national occupation wage table. The $89,750 benchmark is a national mean wage and excludes employer payroll taxes and benefits.
What does a manager-run scenario include?
It includes normal manager compensation inside operating expenses and treats the remaining modeled Net Income as pre-tax owner earnings. The applicable population is a single mature club using the 2025-2026 FDD revenue anchors. It does not assume that the owner performs day-to-day manager labor.
What does an owner-operator scenario include?
It combines the same residual business earnings with the wage-equivalent value of replacing a paid manager. The applicable figure is called estimated owner-operator benefit because part of it compensates the owner for labor. It is not pure business profit and is not after-tax take-home pay.
Uncertainty
How much confidence should a buyer place in the range?
Confidence is limited, even though the revenue evidence is strong. The principal weakness is that Retrofitness Item 19 does not publish club-level expenses or profit, so a broad 2022 IRS margin must stand in for a current Retro Fitness operating statement. The scenario range is decision-useful for screening, not a substitute for location-specific diligence.
- Mixed ownership populationItem 19 combines 73 franchised outlets with one corporate outlet. The corporate club is only 1 of 74, but its economics may not match a franchisee’s.
- Mature-outlet selectionThe sales population includes outlets open more than one year. A new club’s ramp, opening advertising, and early staffing may differ materially.
- Wide observed sales dispersionFull-population Gross Sales ranged from $352,352 to $3,710,789. The bottom-25% and top-25% cohort medians are far apart, so site and execution risk dominate a single average.
- System population changeItem 20 shows franchised outlets declining from 86 at the end of 2023 to 81 at the end of 2024 and 76 at the end of 2025. Six franchised outlets ceased operations for “other reasons” in 2025. These counts do not establish why an outlet closed or whether it lost money, but they warrant direct franchisee investigation.
- Financing and capital intensityThe FDD’s initial investment range is $832,216-$3,241,991 and the franchisor offers no financing. Debt principal is excluded from the earnings range; site-specific interest is not modeled separately.
- Local economicsRent, property configuration, utilities, wage rates, insurance, equipment maintenance, personal-training mix, smoothie-bar sales, and local advertising efficiency can move the operating margin by more than the modeled sensitivity.
FDD sources: Retrofitness 2026 Franchise Disclosure Document, Items 7, 10, 19, and 20, pp. 20-24, 28, and 55-62.
Only 34% of the 74 outlets attained or exceeded the $1,243,660 average Gross Sales, while the full-population median was lower at $1,026,733. That is why the base scenario uses the median rather than the average.
Buyer verification
What should a prospective owner verify before relying on this estimate?
A buyer should obtain the Item 19 substantiation and reconstruct actual mature-club economics from franchisee records. The estimate is scenario-based for one U.S. outlet; written evidence from comparable locations should replace broad assumptions wherever available.
- Request written Item 19 substantiation. Confirm the 74-outlet data, the treatment of the one corporate outlet, and each cohort’s inclusion rules.
- Interview owners near the three revenue anchors. Ask for trailing-12-month payroll, rent and common-area charges, utilities, insurance, repairs, merchant fees, advertising, technology, and manager compensation.
- Separate manager salary from residual profit. Determine whether the owner works full time, hires a Designated Manager, or uses an affiliate management arrangement—and what each structure costs.
- Reconcile every recurring obligation. Verify the current royalty rate, Ad Fund charge, local-ad minimum, technology package, web-signup fees, and any optional or required bookkeeping, call-center, IT, or management services.
- Ask about closures and transfers. Use Item 20 and the current/former franchisee lists to understand why outlets ceased operations, transferred, or did not open.
- Build a location-specific cash model. Keep operating earnings, interest, debt principal, equipment replacement, owner wages, distributions, retained earnings, and personal taxes in separate lines.
Decision synthesis
What is the strongest defensible earnings conclusion?
The strongest defensible range is approximately $26,000-$189,000 in annual manager-run pre-tax owner earnings for one mature U.S. Retro Fitness outlet, with a $69,000 base scenario. It is scenario-based, not official. The most important earnings driver is the combination of club Gross Sales and the post-fee operating margin; the largest unresolved uncertainty is the absence of same-brand club-level expense and profit data in Item 19.
Active ownership can raise total economic benefit to approximately $116,000-$279,000 when the owner replaces a paid manager, but the added $89,750 is labor value, not passive profit. Before making a decision, a buyer should verify the Item 19 substantiation, obtain comparable outlet profit-and-loss statements, and test the model against current and former franchisee interviews—especially around labor, occupancy, local advertising, equipment replacement, and debt service.