One of the largest franchise groups for Planet Fitness has secured a $58.75 million credit facility that will enable it to expand in its existing areas as well as possible expansion on the West Coast.
Lynne and Victor Brick (couple in the center holding large scissors) plan to expand their group of Planet Fitness franchises within their current markets of Maryland, Tennessee and Florida, but they also may be looking to the West Coast for expansion. Photo courtesy of Victor Brick.
One of the largest franchise groups of Planet Fitness is about to get even bigger. By securing a $58.75 million credit facility from GE Capital's Franchise Finance business, PF Growth Partners LLC (PFGP) can continue to expand its operations, including possible expansion on the West Coast.
With the funds, PFGP plans to finance its existing debt and fund its growth plans, says Victor Brick, who co-founded PFGP seven years ago with his wife, Lynne Brick, and Terry Woods.
"The main reason we acquired the funds was to accelerate our growth, not only by opening more clubs in our existing areas but also by acquiring new areas," Brick says.
The Timonium, MD-based group, which operates 29 clubs in Florida, Tennessee and Maryland, has two more clubs in presale that will open this month. In the future, PFGP plans to open 10 to 12 locations per year and expand across development territories, Brick says. PFGP is continuing to open clubs in its original area of Maryland, venturing into Washington, DC.
The company, which has 450 employees, also plans to expand into East Tennessee because of the success it has had with its Nashville clubs, expand into parts of Florida beyond its existing Broward County territory and acquire some clubs in major metropolitan areas on the West Coast.
"The West Coast may seem like a stretch for us, but we feel our infrastructure is such that we can duplicate our success anywhere in the country as long as there is a market," he says.
Brick adds that Planet Fitness corporate is judicious in determining to whom they will award areas, and by securing the financing, PFGP has proven that it can handle the accelerated growth.
"Even though we had a great track record, they needed to be sure we had the financial strength to open clubs at the pace we said we could," Brick says. "Now they know we have that strength."
In November, the franchise group also received $35 million from a Calgary-based private equity firm called Alaris Royalty Group. GE Antares Capital Group forged a relationship with Alaris, which helped the parties to come to a solution to benefit all the parties involved, says Bill Kraus, senior managing director of GE Capital, Franchise Finance, in a GE release.
In addition to providing franchise financing to PFGP, GE Capital, which has $6 billion in assets, has provided corporate and vendor financing for other fitness-related companies, such as YouFit and Life Fitness International Sales.
The new credit facility from GE and funds from Alaris will provide other benefits, too, Brick says.
"The $58 million has dramatically brought down our cost of money by allowing us to pay off all of our debt with lower interest money," Brick says. "In addition, there are opportunities for significant additional capital if certain covenants are met, which we are confident they will be. Combine that with the $35 million worth of distributions we, the partners, were able to take off the table from our Alaris deal and we feel pretty good about how everything worked out."