Fitness Center Feasibility Study in Rhode Island

Small gyms, more franchises

Rhode Island fitness centers are small and franchise-heavy. The median loan of $148,000 is only 0.57x the national median for the class, and franchised units took 52.5% of the loans, so the profile is a branded studio or neighborhood club in place of a large independent facility. Fitness ranks 6 of 39 among Rhode Island asset types, but a 0.71x location quotient puts gyms below their national weight in Rhode Island, and the state ranks 41 of 54 on volume. The file holds 40 approvals totaling $11.0 million over FY2017 to FY2026, and half of them run from $54,500 to $290,500.

Almost entirely 7(a)

Only 1 of the 40 loans used 504; 39 came through 7(a), which fits leased space and equipment financing. Eastern Bank stands alone among named lenders: 5 loans, $566,000. Providence County leads with 18 loans, and Bristol, Kent and Newport counties each hold 6, with Washington County at 4. Annual counts reached 7 loans in FY2018 and have been 6 in FY2026, after dipping to 1 loan in FY2020 and 2 loans in each of FY2021, FY2022 and FY2023.

Cancellation and charge-off percentages for Rhode Island gyms are held back, because both cohorts are smaller than 30 loans. A withheld rate says nothing about whether any loans were cancelled or lost. Franchise-heavy lending can be read through the franchisors' own disclosures of unit closures.

What the study should test

A Rhode Island gym study should begin with membership economics: how many members the catchment can supply at the price point, how quickly joins build, and what churn the concept sees. In a small, dense state, the next competitor may be a few minutes away, so the study should count nearby clubs and boutique studios. If the unit is franchised, the franchisor's disclosed revenue should be compared with local conditions and with rents in Providence, the shore and Newport. Costs for finish-out and equipment belong beside the $148,000 median. The test of loan payment coverage should assume a gradual ramp, and the appraisal will lean on membership cash flow, so the study should show recurring revenue and the lease.