Do you want to become a franchise to the world’s first indoor trampoline park, Sky Zone, and make money from the opportunity? It indeed looks like a great opportunity with relatively lower opening costs than its competitors and the potential to make good money.
Since you will be pouring a lot of money to open their park, you might wonder whether it’s actually worth it. This article will talk about Sky Zone and its franchise systems and what it offers to entrepreneurs to show you if it’s worth owning one.
About Sky Zone and Sky Zone History
Sky Zone is the world’s first wall-to-wall indoor trampoline park with offerings to all ages.
In addition to their trampolines, they also offer fun, fit, low-impact activities like fitness classes and dodgeball and provide corporate events and birthday parties.
They were founded in 2004 and quickly grew, hosting 10,000 visitors in the first six months of opening.
Now, the company has close to 200 parks across the United States and has been actively franchising since 2009.
The company aims to fuel growth through new customers while also keeping the existing customers in the loop, which creates long-term growth. That’s why their franchise system is highly recommended to entrepreneurs looking to own a trampoline park franchise.
Franchise Model Table
| Cost Or Fees | Amount |
|---|---|
| Initial Investment | $1.5 million-$4 million |
| Franchise | YES |
| Franchising Since | 2009 |
| Franchise-Fee | $75,000 |
| Royalty-Fee | 6% |
| Liquidity | $500,000-$750,000 |
| Estimated Outlets | 191 |
How Much Does it Cost to Open a Sky Zone Franchise?
The total expected average cost to open a Sky Zone franchise is between $1.5 million and $4 million. This expected average includes the $75,000 franchise fee and all other related startup costs from payroll to construction.
Depending on your choices, like whether you will rent the building or buy it and whether you will need renovation or not, the costs could change drastically. This is the average cost of all franchises opened so far.
Franchise Requirements
Sky Zone doesn’t look for any business or industry experience when you apply to be a franchisee. However, it helps to have business management experience to increase your chances of approval.
They might not look for a professional background, but they do have strict financial requirements. You need a minimum net worth of $1.8 million and minimum liquid assets somewhere between $500,000 and $750,000.
Sky Zone Overall Sales
The latest report available from Sky Zone shows us that the company generated a total revenue of $20.3 million in 2022.
In the same year, the company’s net income, when removing all the expenses, amounted to $14.4 million. This is a significant profit margin that tops most of the franchised businesses.
Sky Zone Franchise Profit & Sales
According to the Franchise Disclosure Document of Sky Zone, in 2022, the average unit volume, which is the overall annual sales per store, was around $2.2 million.
This number is the average of all 144 franchised parks that were open in the previous 12 months. The highest annual sales for a park were around $6.1 million, and the lowest was $382,000.
So if we assume a profit margin of 15% then we can calculate that Sky Zone franchise owner make estimated net profits of $305,357 on average.
| Financial Overview | Percentage of Revenue | Amount ($) |
|---|---|---|
| Individual Franchise Annual Revenue | 100% | 2035718.00 |
| Rent | 10.63% | (216295.04) |
| Insurance | 5.31% | (108147.52) |
| Salaries | 21.25% | (432590.08) |
| Franchise Royalty Fees | 5.31% | (108147.52) |
| Utilities | 2.13% | (43259.01) |
| Cost of Goods Sold (COGS) | 26.56% | (540737.59) |
| Labor (Variable) | 13.81% | (281183.55) |
| Total (Expenses) | 85.00% | (1730360.30) |
| Net Profit | 15.00% | 305357.70 |
Note: The displayed expenses are estimates based on industry averages and standard costs. Actual expenses may vary due to factors like location, business size, and market conditions. We recommend conducting detailed research or consulting with a financial advisor for a tailored financial analysis.
Payback Period Of Sky Zone
With an investment of $4,000,000 and an estimated 15% profit on the average net sales from 2022, which is $2,035,718, the yearly profit would be $305,357.
So, to find out how long it will take to earn back the initial investment:
Payback Period = Investment / Yearly Profit = $4,000,000 / $305,357 = 13.09 years
Based on these figures, it will take approximately 13 years to pay back the initial investment for Sky Zone. This time period could be longer or shorter depending on your sales, revenue, and profit figures.
Sky Zone Franchise Failure Rate
Franchised Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2016 | 108 | 136 | +28 |
| 2017 | 136 | 148 | +12 |
| 2018 | 148 | 151 | +3 |
For the Franchised outlets:
- In 2016, the growth rate was (28)/108×≈25.92%
- In 2017, the growth rate was (12)/136×≈8.82%
- In 2018, the growth rate was (3)/148×≈2.02%
Company-Owned Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2016 | 3 | 4 | +1 |
| 2017 | 4 | 4 | 0 |
| 2018 | 4 | 8 | +4 |
For the Company-Owned outlets:
- In 2016, the growth rate was (1)/3×≈33.33%
- In 2017, the failure rate was (0)/4×≈0%
- In 2018, the growth rate was (4)/4×≈100%
Total Outlets:
| Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|
| 2016 | 111 | 140 | +29 |
| 2017 | 140 | 152 | +12 |
| 2018 | 152 | 159 | +7 |
- In 2016, the growth rate was (29)/111×≈26.1%
- In 2017, the growth rate was (12)/140×≈8.57%
- In 2018, the growth rate was (7)/152×≈4.60%
According to the above-mentioned table, we can see that the franchised outlets for Sky Zone franchised outlets grew from 2016 to 2018, showing a growth rate between 25.92% and 2.02%.
Even the company-owned outlets during the same period grew, showing a growth rate between 33.33% and 100%.
Overall, when we combine the data of franchise and company-owned outlets, we can see that the Sky Zone franchise has grown in the years 2016-2018, showing a total growth rate between 26.1% and 4.60%.
Training and Support
All the new franchisees are obligated to complete the initial training after they sign the franchise agreement and before they can open their park.
The mentioned initial training for the franchisee and up to three managers will take place at a certified Sky Zone Training Park. This training typically lasts between 7 to 21 days.
Once the park opens, as part of the support program, the franchisor will provide on-site assistance for five days when the park opens at no cost to the franchisee.
There might be optional refresher training for experienced managers in the future. They also help and support with any kind of marketing of the franchised park.
Terms of Agreement and Renewal
The initial length of the agreement is ten years. Once the initial ten years are over, the franchisee can renew their agreement if the franchisor approves it and both sides are in good standing. The renewal is for another 10-year period. There might be a renewal fee applicable depending on the franchise agreement.
Obligations and Restrictions
Franchisees are obligated to personally manage and run the franchise. In case they can’t or won’t manage the store personally, they might give authority to someone else with the prior consent of the franchisor. All owners that have a share in the store are responsible for the Franchise Agreement, and they have to guarantee the performance of the franchise jointly.
Franchisees can only offer products and services approved by the franchisor. They must provide all the products and services required by the franchisor.
Financial Assistance
The franchisor does not offer direct or indirect financial assistance to potential franchisees. They do not guarantee any kind of note or lease during the process. The franchisee is obligated to find their own financing through their own means.
Aspiring entrepreneurs in the park franchise realm have choices like the Urban Air franchise to consider.
Sky Zone Comparison
| Name | Franchise Fee | Royalty Fee | Initial Investment |
|---|---|---|---|
| Urban Air Adventure Park | $100,000 | 7% | $3.7 million-$8.1 million |
| Launch Trampoline Park | $50,000 | 6% | $1.8 million-$4.4 million |
| Sky Zone | $75,000 | 6% | $1.5 million-$4 million |
Conclusion
Sky Zone is the world’s first indoor trampoline park, with close to 200 parks across the United States. They are an active franchise offering a solid franchise support system to make sure that each franchisee can succeed in their endeavors.
The average overall sales a Sky Zone park makes is around $2.2 million, which is a significant number compared to the rather lower startup costs.
Overall, the opportunity can be very lucrative if you have the financial power to get started since they don’t offer any kind of financial assistance.
FAQs
Is Sky Zone a franchise?
Yes, Sky Zone is currently a franchise, and they have been offering the opportunity since 2009 without interruptions.
What do I need to be a Sky Zone franchisee?
You need a minimum net worth of $1.8 million and a liquidity of a minimum of between $500,000 and $750,000. You don’t need professional experience to be a Sky Zone franchisee.
How much is the Sky Zone franchise fee?
The Sky Zone franchise fee is $75,000. You pay this fee when you sign the agreement in a lump sum.
Who owns Sky Zone?
CircusTrix Holdings of Provo, Utah owns Sky Zone. This brought 195 units of trampoline park chain under its umbrella.
Where is Sky Zone headquartered?
Sky Zone is headquartered in Los Angeles, California. Its full corporate address is 1201 W 5th St, Los Angeles, CA 90017.
Who founded Sky Zone?
Sky Zone is a Los Angeles-based company that was founded in 2004 by entrepreneur Rick Platt.
How many locations does Sky Zone has?
Sky Zone is the world’s largest developer and franchisor of trampoline parks, with a network of more than 300 global locations.
Sources
https://www.franchimp.com/?page=pdf&f=105865_2023.pdf