Five-Studio Boutique Pilates Franchise Portfolio, Chino Hills CA

$5.3M

Revenue

$2.0M

SDE

5.3x

Multiple

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Full Editorial Writeup

This is a portfolio of five boutique Pilates studios operating across two California markets under an established franchise brand. The business generates roughly $5.3 million in annual revenue with approximately $2 million in owner cash flow, and critically, about 90% of that revenue comes from recurring memberships. That recurring base is what separates this from a typical single-location fitness play: it produces predictable monthly cash flow rather than transactional, walk-in-dependent revenue.

Operationally the business is built to run without a hands-on owner. A regional management layer (two regional managers and five assistant general managers) handles day-to-day operations, while the current owner focuses on leadership, payroll, and weekly management meetings. The studios carry more than 1,500 Google reviews with every location above 4.8 stars, which signals consistent service delivery and a genuine reputation moat across all five sites.

The asking price of $10.5 million against $1.98 million SDE puts this at roughly 5.31x, which is a full multiple for a fitness business. What justifies a premium here is the multi-unit scale, the recurring membership model, the installed management team, and the franchise support structure. What a buyer is paying up for is a semi-passive, systematized cash flow stream rather than a job.

Why we like it

Earnings quality is strong for the category: 90% of revenue is recurring membership dues, which smooths month-to-month volatility and makes SDE more forecastable than a class-pack or drop-in model. Roughly $1.98 million of cash flow on $5.3 million of revenue is a healthy 37% margin, indicating disciplined cost control across the studio network.
The moat is reputation and density. More than 1,500 Google reviews with every location above 4.8 stars is hard to fake and expensive for a new competitor to replicate, and operating five studios across two markets creates local brand awareness and referral flywheel effects that a single studio cannot match.
Market tailwinds are real: the listing cites an $11.8 billion US Pilates market driven by demand for low-impact, longevity-focused exercise. Pilates has moved mainstream with the group-class membership model, and this brand is riding a structural shift in how people approach fitness rather than a passing trend.
Operator advantage is meaningful because the business is already manager-run with a regional management layer and franchise corporate support. A buyer with no fitness experience can step in, and the seller explicitly says additional owner involvement can lift marketing, retention, and reactivation, meaning there is upside a more engaged operator can capture.

How to improve it

Attack member churn and reactivation immediately. With 90% recurring revenue, a few points of retention improvement flow almost entirely to the bottom line, so implement automated win-back campaigns for lapsed members and a formal at-risk-member outreach program in the first 90 days.
Build a referral engine off the review base. With 1,500-plus reviews and 4.8-star ratings, the studios have earned trust they are not monetizing; launch a structured member referral program with incentives and track referral-sourced signups per studio to turn advocacy into new membership growth.
Optimize class utilization and pricing. Audit peak versus off-peak class fill rates by studio and introduce dynamic scheduling or off-peak membership tiers to raise reformer utilization, then test modest price increases given the strong ratings and low customer complaints.
Expand ancillary revenue per member. Retail inventory of roughly $62,000 is transferring, so build out apparel, equipment, and private-session upsells; increasing average revenue per member without acquiring new members is the fastest margin lever available.
Evaluate a sixth and seventh studio. The management infrastructure (two regional managers, five AGMs) can likely absorb additional units, so model greenfield or acquisition expansion within the existing two markets to leverage fixed corporate and management overhead.
Tighten labor and scheduling economics. With 54 employees (9 full-time, 45 part-time), payroll is the largest cost line; implement labor-to-revenue targets per studio and instructor performance tracking to protect the 37% margin as you scale.
Deepen local partnerships. Re-engage referral partnerships with physical therapists, chiropractors, and wellness providers in each market to create a steady, lower-cost acquisition channel that complements paid marketing.

Diligence notes

Scrutinize the recurring revenue claim in detail. Pull the membership roster, monthly recurring revenue by studio, cohort retention curves, and average member lifetime; a 90% recurring figure means little if churn is high and new signups are propping up the base rather than a stable membership.
Verify the franchise relationship and transfer terms. This is a franchisee, so confirm royalty and marketing fees, remaining franchise agreement terms, renewal rights, territory protections, transfer approval requirements, and any capital expenditure obligations the franchisor can impose post-sale.
Confirm the management team stays. The semi-passive thesis depends entirely on the two regional managers and five AGMs remaining; review compensation, employment agreements, tenure, and retention risk, because if that layer leaves, the buyer inherits a five-location operating job, not a passive asset.
Examine lease terms across all five studios. All locations are leased, so review remaining lease length, renewal options, rent escalators, and how rent maps to each studio's profitability; a strong P&L can be undermined by short leases or a landlord able to reprice at renewal.
Validate studio-level P&Ls, not just the blended number. Break out revenue, membership counts, and cash flow per location to identify whether one or two studios carry the portfolio; a concentrated performance profile changes both the valuation and the risk relative to the 5.31x asking multiple.

Source

Originally listed on BizBuySell. View original listing →