Kokofit 150k july 11 2013

PT Fit Redefined, LLC

dba Koko FitClub

Business Plan 2013 -14

Table of Contents

I. Executive Summary ............................................................................................ ...2

Highlights

Objectives

Mission Statement

Keys to Success

II. Description of Business......................................................................................... 4

Company Ownership/Legal Entity

Location

Products and Services

Management

Start-Up/Acquisition Summary

III. Marketing .............................................................................................................. 6

Market Analysis

Market Segmentation

Competition Analysis

Sales Strategy and Implementation

Competitive Edge

SWOT Analysis

IV. Financials Koko projections July 9 2013 150k

PT FIT REDEFINED, LLC DBA KOKO FITCLUB BUSINESS PLAN 2013 -14 - JULY 2013 2

Executive Summary

Company Overview

The National Franchise Koko FitClub, LLC, with 150 locations nationwide, is a brand of personal

training studios that allow franchises to provide premium customized strength utilizing patented

SmarTraining, customized Cardio and customized nutritional plans for annual members at a

cost of ONE MONTH compared to ONE HOUR of traditional personal training.

PT Fit Redefined, LLC, formed December 25, 2010, was the first Franchise Area Developer in

the Austin Market, and is currently operating three successful locations. The first FitClub

location in Austin, Texas opened the doors in August, 2011. Due to tremendous growth and

market acceptance, development plans began for a second FitClub location, which opened the

doors in June, 2012. The second FitClub location is currently on record as the fastest

franchisee to reach 100 members. As of June, 2013 Our Franchise group ranks #4 in the USA.

The company’s rapid growth provided the momentum to develop plans for a third FitClub

location, which opened the doors in November, 2012. PT Fit Redefined, LLC, by operating

three successful locations with 710 total members, is currently generating sustained revenue

due to recurring monthly profit at each of the three FitClub locations.

PT Fit Redefined, LLC, is currently seeking $150,000 for exclusive use in retiring higher interest

debt of $100,000 and marketing of $50,000 to fill all 3 clubs to capacity.

Highlights

• Sustained Profitability for 2013

• Tied for 3rd Place - Koko Franchise Group in USA

• High level employee commitment and performance

• Extremely high Client retention & satisfaction

Objectives

• Obtain $150,000 Equity investment

• $100k retires debt freeing up $5000 month cash flow

• $ 50K marketing increases current clubs to 850 memberships

• Increases monthly revenue to approx. $80,000/MTh by EOY 2013


Mission Statement

PT Fit Redefined, LLC was established to provide a venue and business opportunity that the

owners could share their passion for fitness to bring about the life changing reality of health &

wellness to their neighbors. Over the last couple of years the business grew and the Company

is now seeking to bolster its existing businesses by running it to full member capacity and

expanding franchisee operations in newer areas of Austin. From the new locations, the

Company seeks to:

• Expand the Company’s brand in the Austin/Travis/Williamson county Market

• Provide a steady year-round opportunity which will facilitate growth

• Provide a substantial return for all investors

Keys to Success

PT Fit Redefined, LLC provides solutions and capitalizes on these opportunities with the

following:

1. Results-With Koko, there's no wasted time. Every workout is designed for maximum

effectiveness and efficiency. That's how Koko delivers the best results in the minimum

time possible. In fact, one 30-minute Koko SmarTraining strength workout delivers the

same benefits of up to 90 minutes of a typical gym workout for most people! And 15-

minutes of Koko Cardio is TWICE as effective as the typical treadmill or elliptical workout.

With Koko, customers see and feel real results every single day. They can see them

online, as each workout is scored for performance.

2. Motivation- By having the ability to track progress, and see how you stack up to others in

the Koko fitness community, you stay motivated to achieve fitness.

3. Customer service- Koko even keeps you motivated and informed about your progress

through monthly statements and progress emails to keep you on track.

4. Instruction- with Koko, whenever someone wants to work out, they simply come in; plug

in the Koko Key into any Koko SmarTrainer and go! We provide step-by-step instruction

along the way. Koko instantly greets the customer by name and guides them through the

program for that day. Just like a private trainer.

5. Variation-Each time a customer comes back, Koko automatically adapts the new session

to all the previous progress. So no two workouts are ever the same. No one gets bored,

everyone stays motivated, and they see real results


Description of Business

Company Ownership/Legal Entity

PT Fit Redefined, LLC is a Limited Partnership C corporation that is privately owned. Koko Fit is

a franchise of PT Fit Redefined, LLC. SmarTraining is the principal strength and conditioning

program for people of all shapes and sizes, from the highly specialized combat warrior to the

grandmother trying to build enough strength to pick herself up after a fall. This is a fitness

program that is, by design, broad, general and inclusive. We do not specialize. We generalize.

Sports, combat, survival and life reward are just a few of the accomplished goals of our

program. Our program utilizes the ten standards of fitness; cardiovascular/respiratory

endurance, stamina, strength, flexibility, power, speed, coordination, agility, balance and

accuracy.

Location

There is a huge untapped and growing market in the Round Rock, Cedar Park and North West

Austin areas that we intend to target and hence our new franchises will be based out of these

locations. For our new Koko fit franchise operations, we will be occupying roughly 1,400 to

2,000 square feet of retail space.

Products, Services and Pricing

Our Company has developed a 3 unit Koko FitClub franchise network in Austin, TX, which

provides a service that features and offers for sale to the public, membership to a specialty

fitness club with patent-pending fitness equipment, personalized technology and software

programs, which develop individually customized exercise plans for Koko FitClub members,

guides them through their daily workouts and provides them with website tracking of their

exercise activity, along with various merchandising relating to fitness.

PT Fit Redefined LLC has a professional personal training staff. Our personal trainers provide

the knowledge and expertise in designing and implementing a fitness program. Each trainer is

Koko Master certified and has standard first aid and CPR.

We generate revenue by selling month-to-month memberships for $299 per month ($99 per

month for a yearly contract) for unlimited personal training sessions using the patented KOKO

Smart Training system. There is a one-time membership orientation fee of $299.


Management Summary

Robert D. Reisch, CEO

Robert holds an MA in Philosophy from St. Meinrad University and a BA in Business

Management from The State University of New York. Robert has 25 years of business

experience, both as an entrepreneur as well as an non-entrepreneur. He was co-founder of two

startup companies. InVzn Development Corp, & LegalSpan/Manexa. Founded in 1992, inVzn

developed the first trial presentation system used now in courtrooms across America & Europe.

Legal Span/Manaexa develops online continuing education programs for Attorneys,

Accountants, Bankers and Strength & Conditioning coaches. Robert attributes a large part of

his company’s success to the fitness centers he developed in both companies at inception.

Robert was also the founder of the underground fitness center, a non-profit fitness center for

teens on Martha’s Vineyard, MA. Mr. Reisch has been featured on “The Today Show”, National

Center for State Courts, and “Good Morning America” for his work in technology and business.

Funding and Use of Funds Summary

In order to boost the memberships at each of the existing clubs to 850 members, funds will need

to be secured for marketing. This will also be an additional equity investment sought worth

$50,00.00. An additional $100,000 is required to pay off higher interest debt. Total Equity

investment requested = $150,000.00

Budget for Koko FitClub Build-out, Equipment & Supplies List

Items Costs/club Total/club

Total Costs

Additional Marketing Budget for promoting membership in Clubs#1, #2, #3

$50,000.00

$100,000 debt payoff

$100,000.00

Total Equity investment

$150,000.00


Marketing

Market Analysis

We are part of the fitness market. Entrepreneur magazine named the fitness category the fifth

hottest franchising trend. This trend has accelerated within the $17.6 billion explosion in the

health and fitness industry. Fitness franchises outpace overall franchising among the 1,500

franchise systems in the United States - there's plenty of market share for everyone. In fact,

health club membership has grown by an average 4.6% annually in the past decade.

Working out at a health club is the #1 sport activity in the United States according to the

National Sporting Goods Association.

• Fitness is a $17.6 billion industry that has doubled in size in the last 10 years.

• There are 42.7 million health club members in the United States.

• The U.S. is home to 23,500 health clubs and the number grows each day!

• Health club memberships nationwide are 48 percent male and 52 percent female.

• The average health club member has an annual income of $76,000.

• The average health club member attends their club 92 days per year.

• Personal training is the most widely used health club programs.

• Cardiovascular equipment is the top area of expansion in U.S. health clubs.

• Even with a flood of publicity and medical research pointing to physical fitness as the

solution; nearly 90% of America has yet to join a gym.

• 50 Million By 2010 - The industry's goal is to have 50 million health club members

nationwide by 2010. Source: International Health, Racquet & Sportsclub Association

(IHRSA) Member Census


The Austin Market

Economic Growth Potential in Austin- Austin has consistently over the last few years been

voted the best place to work and live in Texas, frequently making the top five and ten lists of

Forbes, Money, and Inc. magazines . This is attributable to factors such as a flourishing private

sector with 6.5% growth in five years, expansion of small businesses by 1% last year, a spurt in

population growth by 18% in five years. It has one of the most educated populations, that is

either self-employed or employed in High-Tech and Services industries. Besides they have a

burgeoning youth and retired population. This demography loosely correlates to earning

potential, or at least indicates a higher average household income and buying capacity.

Therefore, being in Austin, PT Fit Redefined, LLC’s target market is broad enough and we enjoy

significant market opportunity. Despite experiencing solid growth during the past decade (with

the exception of the past two years), the health and fitness clubs market has not yet reached

saturation. As a result, the Gym, Health and Fitness Clubs industry are expected to remain in a

growth phase, with revenue expected to rise at an average annual rate of 2.6% to $28.2 billion

nationally in the five years to 2016, according to IBISWorld, the nation’s largest publisher of

industry research. During this period, demand is expected to improve as the US economy

stabilizes and unemployment declines. According to IBISWorld’s latest report, the Gym, Health

and Fitness Clubs industry in Austin have benefited greatly from the vast array of marketing

campaigns and ensuing consumer trends for fighting obesity and improving health. This trend

has resulted in soaring demand for fitness activities especially among youth and baby boomers,

and industry operators have capitalized on this growth by expanding establishments in both size

and number.

Demographics and market indicators

Population Growth Rate The population in Austin has grown by 37% in the last decade as compared to a national

average growth of 9.7%.


Growth rates 2010-

2020

2020-

2030

2030-

2040

2040-

2050

Austin MSA 35.30% 32.50% 31.50% 31.80%

Texas 21.80% 22.00% 21.50% 21.60%

Population by Age & Sex Nearly half of the region's population, 43%, is in the peak working years between the ages of

18-44 (compared to 36% nationally). The median age of the Austin metro is more than four

years younger than the national median (32.9 years vs. 37.3 years).

Population by Age & Sex, Austin MSA, 2011

Male Female Total

0-17 229,702 219,273 448,975

18-24 101,785 99,242 201,027

25-44 293,128 280,314 573,442

45-64 203,420 208,121 411,541

65+ 65,641 82,893 148,534

Total 893,676 889,843 1,783,519

Population Distribution by Age, 2011


Income

The median household income in Austin is $57000 which is higher than the national median

household income. This gives us an advantage to expand our business in a thriving and fortified

economy like Austin.

Income, 2011

Austin MSA Texas United States

Median household income $56,783 $49,392 $50,502

Per capita income 30,093 24,682 26,708

Households by Income Group, 2011


The Austin Market Segmentation

In Austin, Customers’ top needs include:

1. Results- Customers want to see results when they go to the gym. They lose motivation if

they do not feel or see a change.

2. Instruction- Many people stop going to the gym because they do not know how to

properly use the equipment.

3. Customer service- Customers want to feel recognized and not be intimidated to come to

the gym.

We at PT Fit Redefined, LLC understand this and make the extra endeavor to achieve this. Our

target market is individuals that live/work within a 5-10 mile radius, who are between the ages of

30-60 years old earning a household income of $70,000 per year or more. The latest study

shows that 15% of the population have a gym membership. Koko Fit facilities tend to capture 1-

3% of the population. To run a successful facility, we need at least 1% of 20,000 residents in the

bustling North Austin neighborhood, to generate a sufficient number of members to run

profitable new and old franchises.

• Weekend Warriors: an important market segment for Koko fitness will be the weekend

warriors. These people don't like to be locked into long-term commitments but like the

freedom to come and go when the opportunity presents itself. These people will be a

target market for special promotions and periodic activities.

• Hardcore Fitness Buffs: another market segment for our facility will be those who view

themselves as dedicated fitness gurus/athletes. These people are very particular about

the type of workout equipment they use, and usually enjoy the opportunity to be "looked

at" by other users of the facility. As long as the right equipment is available, these people

are willing to lock into long-term commitments with a facility.

• Gym Rats: a third market segment for Koko fitness clubs will be those people who love

to be in a gym. Usually associated with basketball, gym rats seek to find places to play,

practice, or just hang out, usually at a very reasonable price. The better the atmosphere

and the more people to watch them, the more gym rats are attracted to a facility. This is

a very large market for us.


The Austin Market Segmentation

• Families: this is a smaller, but important market segment for our facility. We have

"something for everyone" and that will attract families that want to become members of

the facility as well as families who simply want a few hours of fun every now and again.

These people will also be the main target for summer camps and activities that allow for

fun and education for the children while the parents enjoy some relatively cheap

babysitting.

• Senior Citizens: this market segment will be our fastest growing market as more senior

citizens are retiring to Austin than any other group. When provided with health promoting

programs, senior citizens are willing to participate due to the new focus on physical

activity and the constant encouragement from family and physicians. In fact, this group

was the fastest growing club membership segment over the last 10 years according in

the Texas. It grew up to four times faster than other segments.

• Tourists: another small market segment for Koko fitness will be the tourists who are

attracted to the facility because of its size and appearance. Fabric structures often

become tourist attractions because of their different and interesting appearance.


The SWOT Analysis

Analysis of Strengths, Weaknesses, Opportunities, and Threats for Koko Fitness Club and their

two major competitors:

Koko Fitness Club Big Box Centers

Personal Training

Studios

Strengths

Competitive rates Well known- Have a

strong reputation

High quality Facility with

new/large selection of

equipment, good results

Personable

Atmosphere

A lot of equipment,

low costs

Kids center with

computers

Manufacture own

equipment

Many Locations, no

scheduling issues

Personal attention,

highly motivational

Have a strong

understanding of

equipment

They have a variety

of classes offered

Good hours- convenient

for those working out at

different hours

Classes offered at a

variety of times Informative website

Weaknesses Small and unknown

Crowded, may scare

away beginners

Not many different

classes offered

Difficult to find

location- and only one

location

Impersonal

atmosphere

Classes are not offered

at convenient times

Hours are less

convenient

May be intimidating

to beginners

Commute time

May be intimidating to

beginners

Prohibitive costs

Out of date website

Smaller staff

Opportunities There is room to

grow and increase

Offer discounts to

employees of certain

Good location


the company and its

reputation

companies

To expand the

number of facilities

Could take advantage

of location within

North Austin and

surrounds with high-

tech corporations and

communities

People are getting

used to have gym

and health clubs in

their daily routine of

life.

A large segment of

market is still

untapped, low income

area will be of special

focus for Koko

Fitness which is

totally ignored by the

rivals.

Appeals to beginners-

may bring in new

customers

Threats There are a lot of

strong competitors

There is only one

location- many not willing

to travel for a workout

Current advertising is

not sufficient

Reputation may be

bad

It is getting older,

facilities may become

dated


Marketing & Promotion Strategy

PT Fit Redefined, LLC will utilize a variety of the modern marketing methods that will collectively

make up the company’s marketing strategy. A budget of $50,000 has been earmarked for

marketing the existing clubs. The great thing about marketing Koko Fitness clubs ( existing and

new ones), is that each market segment relates, in certain ways, to all the others.

Our main objective with our marketing strategy will be to get people into our new facility. Once

people see what we have to offer, and feel the atmosphere, they will want to return and

participate in the many activities and programs that will be available to them.

Some of the ways to increase new memberships in the existing clubs and to get people into the

facility include:

1. Offering tours to junior colleges, universities and senior high schools of the facility.

2. Radio and Newspapers-Advertise on 100.3 and 98.7, which are popular radio stations among

the target population. Having a large promotional event in the facility with a DJ advertising the

company’s programs and offerings in a morning show and which will be free to everyone in the

facility. Promote the facility in local newspapers and popular health magazines

3. Hosting and supporting various community and charity events that will bring in many people

who otherwise would not come.

4. Mailing out free day passes and sponsoring local sports events in the surrounding areas in

North Austin/ Cedar Park/ Round Rock.

5. Direct Mail- We take out pinpointed Direct Mail campaigns such as postcards directed to a 30-

60 YEAR OLD demographic. The postcard will also contain pricing, the packages offered at

Koko fitness, the location, a free tour, and the first class equipment that we have in our facility.

6. Vehicles- We Have KOKO fit wrap on owners’ vehicles with the message to follow the vehicle to

KOKO

7. Flyers, business cards, brochures- We distribute brochures, flyers and business cards to our

contacts and potential clients. We will have a Free strength and condition analysis flyer that will

be distributed to all local businesses within a 3-mile radius.

8. To measure current customer satisfaction, we will have a five question survey done half yearly.

The survey will be given to current members on a gym visit. The survey will include questions

about the instructors, the facility, and the service. It will allow the customer to rate these items

on a scale of 1 to 5. It will be based on an overall score. The president and manager of Koko

fitness will review and calculate the results of this survey.


9. Have a suggestion box in the gym that customers can put ideas in. Also put a suggestion box

online that website visitors can enter suggestions into.

10. Have longer hours of operation of gyms and invest in more cleaning staff to maintain the

property and equipment. Also, enhance the image of the clubs by replacing the current signage

with a more aesthetically pleasing and a larger one.

11. Networking- We have a great working relationship with local businesses who are able to provide

us with referrals each year.

12. Website- Up to date and professionally maintained. Our website allows prospective customers

to see our products and services and find our location. We intend to form an online community

of existing members through our blogs and use this tool to attract new members as well

13. Social Media- With the advent of Facebook, You TUBE, Twitter, and the likes, we have a

comprehensive campaign to market ourselves through these channels. We promote social word

of mouth by having contests using the proprietary KOKO fit score amongst members. Clients

are offered incentives to post their KOKO fit score on their Facebook pages. We have member

videos showing how to and how fun on YOUTUBE. We have local merchant owner KOKO fit

contests posted on their business pages.

14. Word of Mouth- Our reputation with our existing clientele brings in many new customers through

word-of-mouth referrals.

Sales Strategy and Implementation

Competitive Edge

While each of our competitor companies possesses several strengths and has been able to

establish itself as a legitimate competitor in the marketplace, PT Fit Redefined, LLC maintains

several competitive advantages over these companies. People buy our services because we

capitalize on every flaw a "global gym" has to offer. Koko Fit offers real one-on-one coaching

each and every time a person comes into the facility at a fraction of the cost of a "global

gym". Most gyms offer personal training for $50-$100 a session. Our gym charges $99 per

month for unlimited sessions. Our facility creates workouts that compound full body

movements. These workouts are fun, very intense and can be scaled to all ages and

experience levels. The typical "global gym" caters to the bodybuilder types that have no

functionality to what life can throw at you. Our gym doesn't use expensive, useless machines

that isolate each muscle, thereby creating uneven muscle balance. Koko Fit gives each

individual an opportunity to lose weight, gain muscle mass and regain the agility and balance

once enjoyed a child.


The competitive advantages that we offer that set us apart are:

1. Product- Koko FitClub is the exclusive franchisor of the revolutionary Koko SmarTraining

System. This proprietary technology separates Koko FitClub from all others.

2. Unlimited personal training- SmarTraining enables PT Fit Redefined, LLC to offer their

members unlimited personal training each month -- at a price that's lower than what

other clubs charge for just one session!

3. Club design- KOKO’s club design sets them apart as well; a sleek, studio-sized space of

just 1,800 square feet that exclusively features Koko's state-of-the-art SmartTraining

equipment.

4. Pricing- We offer personal training, state of the art technology, no staffing problems, and

tons more at a convenient, affordable price.

Financial Analysis

PT Fit redefined LLC will acquire 150 new customers in existing clubs by EOY 2013,

• $100k retires debt freeing up $5000 month cash flow

• $ 50K marketing increases current clubs to 850 memberships

• Increases monthly revenue to approx. $80,000/MTh by EOY 2013

Recurring revenue is a critical part of the business model. The new clubs will be cash flow

positive in the first year. Please see financial projections attached.

Kokofit 150k july 11 2013

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