Snap Fitness Announces Minority Equity Investment by Summit Partners

06/03/2008

Leading franchisor of compact, state-of-the-art 24/7 fitness centers poised for continued growth

CHANHASSEN, MINN and BOSTON, MASS - Snap Fitness, Inc., the rapidly growing franchisor of compact, 24/7 express fitness clubs, today announced it has received a minority equity investment  from Summit Partners, a private equity and venture capital firm that has raised more than $11 billion since inception. Terms of the transaction were not disclosed.

Founded in 2003 by CEO Peter Taunton, Snap Fitness offers fitness clubs that emphasize fast, convenient and affordable workouts in neighborhoods across North America.  A typical 2,500-square-foot facility features the same quality equipment as traditional big-box health clubs, but in a smaller, non-intimidating setting and at a fraction of the membership price.

Snap Fitness is experiencing phenomenal growth with more than 1,500 locations across the United States and Canada, with some 30-40 new stores added monthly. Overseas expansion is projected for later this year.

The company is the leader in promoting member-friendly policies and value-added benefits. It offers month-to-month memberships as opposed to long-term contracts, and allows memberships to be frozen for up to three months a year with no penalty. In addition, the company provides members with a host of products and services, such as an online wellness assessment and customized supplements, designed to give members better results and more value for their money.

"Our relationship with Summit Partners will allow us to fuel our international expansion operations, fortify our brand, and lay the groundwork for long-term growth," said Peter Taunton, Snap Fitness' Founder and CEO.  "This partnership will allow us to realize Snap Fitness' true growth potential and stay true to our focus of  providing our members a high-quality, high-value fitness experience, while finding ways to support the success of our franchisees.  We look forward to working closely with Summit to leverage their expertise in helping rapidly growing companies."

"Snap Fitness is led by a superior management team that understands the growing demand for a convenient and affordable health club experience," said Sonya Brown, a Principal with Summit Partners. "The company provides a platform, a brand, and a support infrastructure that enables franchisees to offer a product and service second-to-none in their market space.  We believe Snap Fitness is poised for continued strong growth, and are delighted to be working with Peter Taunton and his team."  Ms. Brown, along with Summit Partners Vice President Peter Rottier, will join the Snap Fitness Board of Directors.

About Snap Fitness, Inc.

Fresh off its #3 ranking on Entrepreneur Magazine's list of Top New Franchises and recently ranked #1 on Franchise Market's Top 100 New Franchises, Snap Fitness (www.snapfitness.com) is experiencing phenomenal growth with more than 1,500 locations sold nationwide, newly-opened locations in Canada and some 30-40 new stores added monthly. Founded in 2003 by CEO Peter Taunton, the Chanhassen, Minn.-based franchisor offers compact, state-of-the-art, 24/7 express fitness clubs that emphasize fast, convenient and affordable workouts in neighborhoods across America.

About Summit Partners
Summit Partners (www.summitpartners.com) provides private equity and venture capital for growth companies.  Founded in 1984, Summit has raised more than $11 billion in capital and has provided equity, recapitalization, and management buyout financing to more than 300 growing companies across a range of industries. Of these companies, nearly 125 have completed public offerings and more than 110 have been acquired through strategic mergers and sales. Summit Partners has offices in Boston, Palo Alto, and London.

Summit Partners seeks to work with outstanding management teams that have self-financed their companies to profitability and market leadership. Notable consumer products and services investments include 3-Day Blinds, Belkin Corporation, Champion Windows, Harris Research (Chem-Dry), MDVIP, and Physicians Formula.

The business of Summit Partners in the UK is regulated by the Financial Services Authority. Summit Partners Limited is registered in England and Wales. The registered number is 4141197, and the registered office is located at 20-22 Bedford Row in London, WC1R 4JS, UK. In the US, Summit Partners operates as an SEC-registered investment advisor. This document is intended solely to provide information regarding Summit Partners' potential financing capabilities for prospective portfolio companies.

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GUEST BLOGGER | Patrick Strait

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Snap Fitness Launches Partnerships with Leading Online Health & Fitness Companies

01/21/2008

Alliances Collectively Keep Club Members Engaged, Create New Revenue Streams for the Company's 1,300 locations

CHANHASSEN, MINN. January 21, 2008 - Snap Fitness, the rapidly expanding franchisor of compact, 24/7 express fitness clubs recently ranked 3rd on Entrepreneur Magazine's list of Top New Franchises, today announced strategic partnerships with three industry-leading companies: Bioceutica, Health Solutions Ltd. and HyperStrike. The partnerships, which take effect immediately, give club members access to a package of customizable, Web-based health and wellness planning tools that supplement the traditional, in-club workout experience.

By visiting http://www.mysnapfitness.com/ and activating their Personal Web Page, members can take advantage of value-added features that allow them to learn their true "health age" and build a Personal Wellness Plan; talk confidentially to health and wellness coaches by phone to prioritize and achieve their health goals; create customized workouts that can be tracked daily and supported with video tutorials using break-through 3D animation; take a nutritional assessment and tailor meal plans to fit their weight goals; order supplements that are customized to each individual's unique biochemistry, similar to what professional athletes rely on; track their monthly club attendance for employer or insurance-plan reimbursement; schedule fitness assessments and more.

Most of the new products and services are free and part of the standard membership, according to Peter Taunton, founder and CEO of Snap Fitness.

"The 24-hour fitness category is becoming more competitive and mature, and in the long run, it will be the innovative concepts that thrive," said Taunton, a 25-year fitness industry veteran whose scaled-back concept was recently ranked #1 on Franchise Market Magazine's list of Top 100 New Franchises.

"Strategically, these services provide a competitive advantage; create new revenue and member retention opportunities for our franchisees; and, most importantly, give our members more ways to set and reach their fitness goals. We're all about providing our members a better experience, helping them achieve better results and giving them more for their money. That's the surest way to achieve sustainable growth."

The augmented services and support align with Snap Fitness' "Be Well" motto and company-wide focus that encourages members to not only get fit, but to embrace overall wellness.

"Where other clubs leave you to fend for yourself, we're giving our members added value - and equipping our franchisees with powerful sales tools to sign and retain members."

PARTNER COMPANIES

HyperStrike
Founded in 2005, HyperStrike is an interactive online fitness service providing members with innovative individualized workouts developed by a team of world-class certified personal trainers. Utilizing cutting-edge 3-D video instruction and comprehensive training resources, HyperStrike empowers and motivates people exercising at health clubs to accelerate the achievement of their personal fitness goals. The company's website is http://www.hyperstrike.com/.

Using HyperStrike's free Online Training Center, Snap Fitness members can create a customized workout routine, track progress and the free service includes access to a library of fitness and nutrition articles. Members can also take advantage of the company's Online Nutrition and Meal Planning, which provides calorie and diet recommendations tailored to individual needs. The 2-year-old, California-based company is led by founder & CEO Michael Greeves, a certified personal trainer with over 14 years of experience in the fitness industry.

Bioceutica
Bioceutica is the first company to make customized, scientifically-tested nutritional supplementation affordable and thus available to most Americans. Bioceutica's formulary has been supplying health care professionals with quality supplements for over 50 years. Its clients include prominent celebrities, athletes and professional sports teams. The company's website is http://www.bioceutica.com/.

Bioceutica offers Snap Fitness members the same advanced nutritional supplements used by professional athletes. For a small fee, members can use the company's MyVitaminsRxTM program to create customized supplements formulated to match their unique biochemistry. The supplements have been proven to jumpstart energy level and vitality, reduce stress, improve immunity, and optimize metabolic functions that promote weight loss. Bioceutica is based out of Massachusetts and led by President Lou DeCaprio.

Health Solutions Ltd.
Founded in 2003, Wisconsin-based Health Solutions provides employee wellness and health promotion services to a variety of manufacturing, service and professional companies nationwide. The company's two founders have a combined 65 years experience in health care clinical practice, administration and population health management. The company's website is http://www.healthsolutionsltd.com/.

Snap Fitness members can learn their true "health age," complete an online Wellness Assessment, and receive personalized recommendations on everything from enhancing a fitness routine to weight management through Health Solutions' free online coaching service. Health and wellness coaches are also reachable via phone for members seeking to make positive fitness and lifestyle changes and needing additional support. Patrick Trotter, MPH, FACHE is founder/president of the 5-year-old Sheboygan, Wisc.-based company.

About Snap Fitness
Fresh off its #3 ranking on Entrepreneur Magazine's list of Top New Franchises and recently ranked #1 on Franchise Market's Top 100 New Franchises, Snap Fitness is experiencing phenomenal growth with more than 1,100 locations sold nationwide, newly-opened locations in Canada and some 30-40 new stores added monthly. Founded in 2003 by CEO Peter Taunton, the Chanhassen, Minn.-based franchisor offers compact, state-of-the-art, 24/7 express fitness clubs that emphasize fast, convenient and affordable workouts in neighborhoods across America. For more information, visit snapfitness.com.

GUEST BLOGGER | Patrick Strait

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Snap Fitness Ranked #1 on Franchise Market Magazine's Top 100 New Franchises

10/15/2007

CONTACT: Patrick Strait, Snap Fitness, 952-426-7173

Snap Fitness Ranked #1 on Franchise Market Magazine's Top 100 New Franchises
Top Billing Recognizes "Express" Health Club's Rapid, 750 Percent Growth

CHANHASSEN, MINN. October 15, 2007 - Snap Fitness, the rapidly expanding franchisor of compact, 24/7 fitness centers, today announced that national trade magazine Franchise Market has ranked the company first on its annual list of "Top 100 New Franchises" in its fall 2007 issue. The ranking, based on number of franchise units and growth rate, rewards Snap Fitness' 750 percent expansion in the period between September 2006 and December 2007. The company started this year with 423 clubs and expects to end with more than 1,200 sold, virtually tripling in size. An additional 600 units are projected for next year, including expansion into Canada.

The Top 100 list hits newsstands Wednesday, just as franchise companies representing a variety of concepts and industries converge on Los Angeles for the 2007 West Coast Franchise Expo, October 19-21. A total of eight fitness-related franchisors are included in the Top 100. Snap Fitness is the first to achieve the top ranking; previous years' rankings listed companies alphabetically.

"Fitness is emerging as a new, rapid-growth category of franchising, said Matt Russell, publisher of Franchise Market. "Snap Fitness and other health club franchisors are a fascinating phenomenon to watch, as their growth drives change within the entire fitness industry."

Snap Fitness is a leader among so-called "express" fitness centers that offer members a fast, convenient, affordable workout alternative to traditional big-box health clubs. A typical 2,400-square-foot facility features the same quality equipment as larger, fancier clubs, but in a smaller, non-intimidating setting and at a fraction of the price. The company also is a pace-setter in promoting member-friendly policies: it does not require contracts and allows memberships to be frozen for up to three months a year with no penalty.

The customer-centric approach is a key factor fueling franchise sales. Other factors include an affordable investment price, low-overhead business model and a turnkey operational support system that enables absentee ownership for those who want it. Franchisees can oversee their stores' activities from afar, whether from the comfort of home or thousands of miles away, thanks to a Web-enabled infrastructure and state-of-the-art technology. In fact, approximately 70 percent of Snap Fitness proprietors manage their clubs remotely.

 "Franchise Market is a leading publication within the franchising world, and we're honored to be ranked first among this group of innovative, fast-growth concepts," said Peter Taunton, founder and CEO of Snap Fitness. "Our top ranking is further proof that our business model works. We're now taking steps to balance growth with long-term sustainability and maximize our franchisees' investments."

About Franchise Market Magazine
With a circulation of more than 200,000 per issue and readership of 700,000, Franchise Market has a unique, targeted distribution through SCORE offices, Small Business Development Centers and SBA offices located throughout the country that reach out to aspiring entrepreneurs, providing expert counsel and business growth advice. Additionally, Franchise Market is distributed through major franchise trade shows including The West Coast Franchise Expo, Franchise Expo South and the National Franchise & Business Opportunity trade shows.
  
About Snap Fitness
Fresh off its new #1 ranking on Franchise Market's Top 100 New Franchises, Snap Fitness is experiencing phenomenal growth with more than 1,100 locations sold nationwide, newly-opened locations in Canada and some 30-40 new stores added monthly. Founded in 2003 by CEO Peter Taunton, the Chanhassen, Minn.-based franchisor offers compact, state-of-the-art, 24/7 express fitness clubs that emphasize fast, convenient and affordable workouts in neighborhoods across America. For more information, visit snapfitness.com.

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GUEST BLOGGER | Patrick Strait

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Snap Fitness Sells 1,000th Fitness Center

08/20/2007

CONTACT: Patrick Strait, Snap Fitness, 952-426-7173

Snap Fitness Sells 1,000th Fitness Center
Rapid-growth franchisor will expand to Canada in Sept. 2007

CHANHASSEN, MINN. August 20, 2007 - Minnesota-based Snap Fitness, franchisor of compact, 24/7 fitness centers, today announced the sale of its 1,000th location-a major milestone in the company's explosive expansion. The privately held company expects to end the year with more than 1,200 units plus expansion into Canada. With 430 centers operating in 45 states and 30 to 40 opening each month, Snap is the fastest-growing franchisor of 24/7 "express" fitness centers according to Club Business International, a health club trade publication.

The company says its scaled-down business approach is helping drive a restructuring in the decades-old fitness industry-once more dominated by large, "big box" health clubs.

"Reaching this milestone is proof of the effectiveness of our business model," said Snap's CEO and founder Peter Taunton. "Our emphasis on best-in-class systems, processes and support enables franchisees to achieve success and live their dreams. Our track record of zero stores closed, combined with our triple-digit revenue growth, shows we're doing this better than anyone else."

Since Snap Fitness' inception, not one store location has closed, attributable to robust support systems that activate immediately after franchisees sign on. Site selection, lease negotiation, store build-out and a grand opening promotional campaign ramp up franchisees and help them quickly reach breakeven. A recent study shows 80% of Snap clubs reach 250 members, which for most clubs equates to breakeven, within six months.

About Snap Fitness

Ranked 11th on Entrepreneur Magazine's list of "Top New Franchises" and among Success Magazine's "10 Franchises We Love," Snap Fitness is experiencing phenomenal growth with 1,000 locations sold nationwide and some 30-40 new locations added monthly. Founded in 2003 by CEO Peter Taunton, the Chanhassen, Minn.-based franchisor offers compact, state-of-the-art, 24/7 express fitness clubs that emphasize fast, convenient and affordable workouts in neighborhoods across America. For more information, visit snapfitness.com.

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GUEST BLOGGER | Patrick Strait

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Building It Up By Breaking It Down: Snap Fitness’ Scaled Back Franchise Strategy Re-sculpts Fitness Industry

06/06/2007

CONTACT: Patrick Strait, Snap Fitness, 952-426-7173

Building It Up By Breaking It Down: Snap Fitness' Scaled Back Franchise Strategy Re-sculpts Fitness Industry  
Anti-big box franchisor experiences repeated triple-digit revenue rises by trimming down an excessive health club industry and simplifying life for club patrons and owners alike  

CHANHASSEN, MINN. June 6, 2007 - "When it comes to franchising, less often means more. " This lesson from Minnesota-based Snap Fitness 24/7, recently ranked 3rd on Entrepreneur Magazine's list of "Top New Franchises," is a strategy other start-up companies have more reason to take notice of than ever. The franchisor of convenient, 24/7 fitness centers has achieved exponentially high revenues through an ultra-compact approach that counters the huge square footages and amaranthine amenities of big box gyms with the "simple bare necessities," priced at lower rates and placed in nearby locales. The results: a high quality, no frills workout for today's busy health club member universe - and an amazing ROI for franchisees.  

Led by its young yet experienced CEO Peter Taunton, Snap Fitness is staging a "small gym revolution" of hundreds of neighborhood franchise owners transforming couch potatoes into fit bodies. Focusing on quality over quantity and stripping away all but the core elements of effective exercise, Snap opened 18 stores and tallied $180,000 in revenues during 2004, its first year. The company has since blossomed into a network of nearly 830 stores underway in 45 states and grossing $5.4 million in corporate revenues last year. It projects total 2007 revenues of $14 million and is on pace to achieve its goal of selling at least 1,200 stores by year-end.  

This success is indicative of a greater movement within the health and fitness industry towards smaller franchise-based operations. According to recent data from Club Business International, fitness franchises have collectively experienced a 144 percent increase over the past five years, a time span in which some well-known big-box clubs have struggled to make ends meet. In explaining the trend, Taunton points to increased gym use among the economically powerful baby boomer generation, which tends to be very health conscious and values convenience and accessibility. Eliminating the extras and relaxing restrictive policies has paid off, he says. For instance, despite its customers' ability to freeze accounts at anytime and rejoin free of penalties, Snap Fitness boasts a membership retention rate higher than the industry average.  

"Another ‘a-ha' of our growth potential was when we discovered the concept worked just as well in rural areas as urban neighborhoods," notes Taunton, who says 90 percent of its members live within two miles of the stores. Indeed, the scaled down business model has succeeded for Snap franchise owners based everywhere from tiny Cokato, Minn. (population 2,700) to major cities including Los Angeles, Chicago and Atlanta.  

Taunton knew his idea held real growth potential when he reached profitability for his first two test stores, a 4,500 square foot club in Alexandria, Minn. and a 2,500 square foot site in Litchfield, Minn., in six and three months respectively. Since that time, 80 percent of Snap's stores, typically sized between 2,000 and 4,500 square feet, have reached a 250 memberships within a mere 120 days. For the majority of clubs, this means generating a profit approximately four months after opening.  

Since the company started its amazing growth curve, not one Snap Fitness gym has closed, a feat attributable to franchisees' low buy-in cost - $50,000 upfront and $150,000 to $165,000 overall - reducing time to profitability. Taunton says another success factor has been the company's support system, which begins immediately after a franchisee signs on with Snap and continues when the store opens. New gym owners are often up and running in as little as two months due to a combination of skilled site selection; close connections to lenders and an unparalleled store set-up and installation process. Upon opening, franchisees benefit from a delay-free billing structure (some Snap competitors take a percent out of revenues, which can more than double what franchisees owe); a Web-based franchisee portal with internal news updates; monthly Webinars; sales and marketing consultation; personal training options and an automated billing structure that expedites revenue, to name a few.

Taunton also has introduced new revenue streams to help franchisees achieve success quickly, including online meal planning, nutritional supplements and music downloads. And he has adeptly leveraged supplier relationships by mandating they contribute to each store's grand opening fund-a critical factor in a successful launch. It's a total recipe that has worked for a wide gamut of owners: personal trainers channeling their passion for fitness into a more lucrative framework; executives looking for a smaller scale side gig - even a lottery winner investing his winnings.  

Proof that owning a business doesn't need to be a constant hassle

Despite the tremendous moneymaking opportunity that comes with being a Snap Fitness franchisee, it's the uniquely laissez-faire management model that owners point to with most gratitude, often recounting the HR headaches experienced from previous franchise opportunities. Seven of 10 Snap Fitness proprietors regularly manage their clubs as "absentee owners," meaning they remotely oversee their stores' activities - sometimes thousands of miles away - rather than being tethered to the facilities. While continual sanitation and check-ins from a store manager are necessary, franchisees have the luxury of a state-of-the-art technology and security system that has led to a zero-incident history within the entire store network. The Web-enabled infrastructure includes features such as secure door access, constant and recorded video surveillance and two-way alert and communication systems with fire, medical and law enforcement personnel. At any moment's notice, owners can monitor the activities within their clubs online, review usage statistics or be notified of any real or false alarms triggered. The automated process carries into bookkeeping as well, with Snap Fitness' headquarters using a Web-based financial system to collect membership dues, distribute payments and prepare tax forms, all at the convenience of store owners.  

Snap's relatively hands-off nature also solves an age-old challenge encountered by many entrepreneurs interested in growing but unable to proceed due to never-ending operational needs: Approximately 60 percent of Snap's franchisees own multiple stores, adding to their portfolio once existing sites become profitable. After already seeing a dramatic restructuring within the entire recreational services industry, Taunton predicts near limitless opportunities for his neighborhood-driven, ‘round-the-clock fitness product. "All-inclusive can become a difficult service to sustain, particularly when customers recognize that it comes at a price."  

About Snap Fitness
Ranked 11th on Entrepreneur Magazine's list of "Top New Franchises" and among Success Magazine's "10 Franchises We Love," Snap Fitness is experiencing phenomenal growth with nearly 800 locations nationwide and some 30-40 new locations sold monthly. Founded in 2003 by CEO Peter Taunton, the Chanhassen, Minn.-based franchisor offers compact, state-of-the-art, 24/7 express fitness clubs that emphasize fast, convenient and affordable workouts to neighborhoods across America. For more information, visit snapfitness.com.

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GUEST BLOGGER | Patrick Strait

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