Should I Buy an Existing Gym or Start a New One?

Deciding whether to buy an existing gym or build a new gym from scratch is one of the most important decisions for a fitness entrepreneur. Although many people new to the industry lean toward an existing business, there is no one-size-fits-all answer. The right path depends on your market, capital, risk appetite, and a host of operational details. This is one of the most common questions I get asked, so here are the key things to consider.

Acquisition and Setup Costs

When you buy an existing gym, you’ll often pay a premium because the price includes goodwill, a membership base, equipment, facilities, and sometimes leasehold interest. But there are also hidden costs — refurbishment, equipment replacement, or even outstanding liabilities. The age and condition of the assets and the overall maintenance backlog can make a huge difference to your actual investment.

Starting new generally requires more upfront capital. You’ll need to fund the construction or fit-out, equipment, permits, licenses, staff recruitment, and marketing. And because you won’t have any existing members, revenue will start slower.

Valuation of Existing Clubs

Existing gyms are commonly valued on metrics like price per active member, EBITDA multiples, and the strength of the real estate or lease terms. In the current market, you can expect to pay anywhere from 2–6x EBITDA, depending on business strength and additional capital needed. Starting new has no immediate valuation, as the value is tied directly to your initial costs and risk.

Time to Build Membership

Buying an existing gym means you’ll have a member base from day one, so revenue starts immediately. However, growth may plateau depending on local market saturation, and you need to assess how many of those members are active and engaged versus dormant. Remember, just because there’s little competition now doesn’t mean competitors won’t arrive in the near future.

Starting a new club usually involves a ramp-up period of 6–18 months before reaching breakeven membership levels. You’ll need to budget for heavy marketing, discounts, pre-sales, and strong community outreach to accelerate growth.

Capital Needs After Purchase

Even if you buy a functioning gym, expect to spend more on renovations, repairs, and updating older equipment to meet safety standards or franchise brand requirements. This reinvestment is normally reflected in the multiple you pay, but you’ll also need to plan for retention campaigns to avoid member drop-off after the transition.

In a new club, everything is purchased up front — fit-out, equipment, staffing, and marketing. On top of this, you’ll likely need additional working capital to cover negative cash flow in the early stages. And remember, reinvestment isn’t a one-time cost. All gyms require upgrades at some point.

Reasons for Selling and Market Risks

If you’re buying, always investigate why the current owner is selling. Declining membership, lease expiry, heavy competition, financial distress, or regulatory issues are all risks you could inherit. Assess membership trends, retention history, local competition, and demographic changes before signing.

For new builds, risks include market saturation, high local competition, construction delays, licensing hurdles, and — most importantly — whether the community will embrace your concept. Building strong local awareness and acceptance is vital.

Operating Costs and Overheads

Buying an established club may give you more predictable overheads, with stable utilities, payroll, and maintenance. But older facilities can spring unexpected repairs, and lease terms need close inspection. Sometimes, sellers benefit from rent holidays or reduced rates early in the lease, which can make the numbers look better than they really are.

With a new build, cost overruns are common in construction or fit-out. Early staffing levels can be misjudged, and initial marketing spend is often higher than planned. Ensuring your lease is commercially sound for both the short and long term is critical.

Return on Investment and Payback Period

Buying an existing gym can deliver a quicker payback, since you’re purchasing current revenue. But this depends on paying a fair price and managing hidden costs and risks like churn or liabilities.

Starting a new gym typically means a longer payback period, since membership and cash flow take time to grow. However, you’ll have greater control over layout, design, equipment, and brand positioning, which can allow you to optimise for margins from the very start.

Pros and Cons

Advantages of Buying

• Immediate cash flow if membership is healthy, or an opportunity to grow it further.

• Established reputation and community presence.

• You inherit members, reviews, and possibly staff.

• Potentially cheaper than building from scratch if fit-out is modern.

Disadvantages of Buying

• Inherited maintenance or aging equipment.

• Risk of member churn during transition.

• Lease or contract terms may be unfavourable.

• Hidden liabilities such as compliance issues.

• Trading conditions can change quickly, with new competitors entering the market.

Advantages of Starting New

• Full control over facility design, equipment mix, and brand identity.

• Flexibility to choose location, lease, and staff.

• Opportunity to incorporate modern tech and sustainable design.

• Ability to set culture and standards from day one.

Disadvantages of Starting New

• Delayed revenue and negative cash flow in the early stages.

• Costs can be underestimated and timelines often slip.

• Heavy upfront marketing investment is required.

• Entrenched local competitors can make entry tough.

Key Questions to Ask Yourself

• What is the asking price, and does it reflect fair value?

• What is the current membership profile (active vs inactive, churn, retention)?

• What lease terms will you inherit, and are they sustainable?

• What additional capital will be required post-purchase?

• How healthy is the local market, and how strong are your competitors?

• Is the reputation of the existing gym a help or a hindrance?

• What’s your appetite for risk and your ability to fund slow months?

• What’s the realistic payback period for either option?

Conclusion

There is no universal answer. Buying an existing gym can reduce early risk, accelerate revenue, and provide a quicker payback — provided you’ve done proper due diligence and accounted for hidden costs. Starting new gives you maximum control, fresh branding, and purpose-built facilities, but requires more capital, more patience, and exposes you to the risk of a slow ramp-up.

I’ve seen clubs sold for over $1 million EBITDA, only to have competition arrive within 12 months, cutting earnings in half and leaving buyers overexposed. On the other hand, I’ve seen new clubs launch with 1,000–2,000 members pre-sold, reaching positive cash flow on day one thanks to strong landlord incentives and community engagement.

Like any investment, the decision depends on the timing, market, and specific deal in front of you. Always do your research, seek professional advice, and go in with a clear plan.