If you’re thinking of jump-starting the process of opening your own franchise trampoline park business, you’re in for a wild and exciting ride. However, before you jump for joy, it’s important to avoid the pitfalls of making the same costly mistakes that a number of other entrepreneurs have made along the way. To get started planning your new trampoline franchise, it’s important to first develop your knowledge base and fully understand trampoline center dynamics before you take that first small jump forward.
A Brief History of Trampoline Parks
Since trampolining became an official Olympic sport in the year 2000, the practice of trampolining has seen a huge vertical jump in popularity. Instead of simply sticking with backyard trampolines, many brave trampoliners have chosen to take the big time giant leap to ‘pay for play’ trampoline centers. These participatory play trampoline centers provide fun, healthy exercise, programmed events, and even competitive dodgeball games, all played on safely designed trampoline jump pads.
There are currently more than 500 trampoline parks in the U.S. (some markets have multiple competitors from different franchisors and those markets are already oversaturated—there will be a shakeout) and another 100 internationally. The number of trampoline parks has doubled each year over the past 3 years (2013, 2014, 2015), making this segment of the out-of-home entertainment industry by far the fast growing category, according to the International Association of Trampoline Parks indoortrampolineparks.org. IATP already has more than 240 members and growing by leaps and bounds. That is what is known as ‘traction’, where the rubber meets (grips) the road, so to speak, when an industry has taken hold and is exploding. Internationally the growth is wide-open and opportunity is ‘boundless’.
However, with all of this good news, it is critical to keep in mind that startup opportunity costs are in the low seven figures ($2M-$4M) for an average-size 25,000-35,000 sq. ft. free-span (few columns) jumping pad with 23-foot minimum ceiling height requirements (to comply with industry safety standards). Also, keep in mind that competition is hungry and also jumping (chomping) at the bit for a bite of the apple in your chosen territory. Of course, that is the prime reason why ‘franchising’ so-dominates as a way to minimize financial risk, maximize facility throughput and pave the way towards enormous bottom line net profits.
Franchising has basic advantages over going it alone:
- Leveraging a specific, successful brand that has its own unique successful track record can save you valuable time and money when it comes to streamlining operations and marketing. There are a lot of trampoline business franchises on the market, so take a look before deciding on a funding model. Again IATP is a good place to start your due diligence in this arena.
- Be aware that franchise fees usually include an annual licensing fee of approximately 6% of your gross revenue. This fee may seem high, but a good franchisor can save you tens of thousands of dollars on your buildout costs, attractions budget, training your staff, and marketing your trampoline park.
Creating a Trampoline Park Franchise Business Plan
There are several different business plans (business models) in the trampoline park jumping space. You will need to research your demographic market to zero in on exactly who your customer base should be. You could look at younger customers, middle-aged, or even seniors. Most trampoline parks target users from ages 5-25, or 10-30. There will be roughly 50-60 attached trampolines in the main area, providing about 12,000 square feet for 200-230 jumpers at one time. The trampolines are connected and safety cushions make up the jumping area perimeters. Jumpers who lose their balance will naturally fall onto an adjacent trampoline or a perimeter cushion, no matter what direction they fall in.
Your mission statement and goals, along with your financial, marketing and bulleted action plans must be plotted out logically and thoroughly. This must be accomplished without excessive and boring unsupported exaggerations (self-written, inflated, and ludicrous self-aggrandizements). The banking industry brags to their colleagues at their own trade shows and seminars about how funny and entertaining self-written business plans are. They actually joke about how many seconds it takes them to file a business plan of this type in the recycle bin. The average is currently 22 seconds. I am kidding, of course. I would not waste my time actually researching that.
The mission statement describes your reason for existing, while objectives give broad targets to reach and specific methods you will use to reach these goals. Finally, the financing and marketing plans provide detailed information on specifically how you intend to achieve the mission and goals statements.
One more critical piece of advice: Every single number in your feasibility study must exactly match and be fully supported both internally to the feasibility study and in conjunction with your business plan. This is absolutely necessary if you are serious about obtaining the funding required for your trampoline park business venture.
Studying Your Target Demographic Market
It is critical to study your specific trampoline park demographic market ‘before’ getting started in this process and ‘before’ you start thinking about a business plan. Where do you get all of this critical information? Of course, you can’t go to the local competitors who surely do not want to see another gold digger staking a claim in their territory. It is also risky to go to manufacturers of the products who usually project stunning revenues for their products — what did you expect?
However, talking to folks in a different far-a-way city gives you much better chances of gleaning useful information, since you aren’t directly in competition. Typically, they’ll be quite happy to share some wisdom and give you reasons why they are so successful. In reality, they may not be as successful as they make out to be if their market is already saturated with trampoline parks.
Below are some of the best practices for getting your ‘educational jumping license’:
- Google can be your best friend. Enter a specific zip code or state and city, and add “trampoline center” onto the search. Seek out folks you might know who can help.
- Join IATP (mentioned earlier) as a new developer member and get your jump-starting information immediately. Attend the association’s annual convention & trade show and attend every educational seminar available.
- Find networking contacts and groups on LinkedIn and don’t be afraid to ask silly questions, that in reality are not silly at all.
- Last but most important: Sign up for Foundations Entertainment University foundationsuniversity.com. In just 3-days you will get a 4-year education about the entire out-of-home entertainment industry.
Finding Your Best Builder
To get started building a new trampoline business, it’s important to first find a good builder with a great reputation and one that is financially solid. Start by conceptualizing and finalizing your construction budget which is part of the feasibility study. This will help determine how much funding is needed and exactly how much you can afford to pay/sq. ft. for rent+CAM (common area maintenance), buildout, and attractions.
Trampoline park builders help you construct custom jump arenas, using licensed contractors, welders, and engineers. In researching prospective builders use your entire industry networking contacts for recommendations, getting estimates along the way. One piece of advice: It is not in a builder’s best interest to talk you out of building a trampoline park in a location that may not be the best in terms of long-term profitability. This isn’t a part of their job description. Their responsibility is to build you the best facility, basically wherever you tell them you want to locate your trampoline park. If you find a builder that actually wants to look out for your financial future, then sign them up and jump for joy!
Finding & Securing Your Trampoline Park Location
The Finding Part
Before ever even thinking of spending money on building your trampoline center, you absolutely must find the best location you can afford. The ‘rent+CAM’ must be equal to or less than 20% of your independent 3rd party industry expert’s projected and supported gross annual revenues. In fact, a 15% maximum rent+CAM is recommended if your projected labor costs are approaching the entertainment center average of 25% of gross revenues.
Trampoline parks usually can keep labor costs 5% below that of family entertainment centers, mainly because the food & beverage labor costs are much lower. This is due to the fact that currently trampoline parks are not focused on food and beverage revenues. If rent+CAM is higher than recommended, you have already made your first and most costly and irreversible mistake and missed the boat for long term success.
The best location also must fit the mold to support the projected operating expenses, square footage requirements, and height for ceiling accommodation. Cost per square foot needs to be reasonable, such as $10-low to-$20-high per square foot. This price varies depending on if you’ve chosen a mall retail area, or a warehouse in an industrial park, for example. Be sure to choose at least 25,000 square feet to provide plenty of room for seating, amenities, and potential expansion for a full redemption arcade in the future if one is not already designed into your project.
The trampoline-related equipment/attractions take up 50% to over 55% of total facility floor space. The smartest owners/franchisees already know that starting out, or in the near future, they will need the flexibility to morph into a trampoline anchored family entertainment center. This new model can double the length of stay and easily add an additional $1M in revenue to the current trampoline park financial model.
The Securing Part
Negotiate a lease that is in your favor including any tenant improvements (TI) that the landlord is willing to provide. Don’t be fooled by that appealing initial free rent period (think of it as ‘fools’ gold’) that is not free at all but built into your sq. ft. rent figure. Landlords like to offer free rent for terms of up to 6 months because it is financially beneficial to them to lock you into a long-term lease, as compared to them having to borrow money and pay interest on any TI.
Try to include expansion options for adjacent space if you should decide to expand in the future. Try to get an exclusive on not only trampoline-related activities/attractions, but also on coin/debit card operated amusement games and other attractions. These may include regulation bowling, to make sure that this strong closely related industry segment category doesn’t come to the strip center, mall, or complex and siphon off the ‘real gold’, the customers. Have an industry professional assist in negotiating the lease. This is not a time to puff out your chest and show the world what a great negotiator you are unless that is what you actually do for a living.
Secure the desired location for 90 days with a refundable deposit should you decide to walk away from this deal, if possible, and complete due diligence. This includes updating the feasibility study, business plan projections and operating costs, including the construction budget. The last step in this process is to actually sign the lease.
Finalize the Funding
The next step is to finalize the funding package and have some of the funds available to move forward ‘when’ it is time to start disbursing the smallest deposits you can negotiate with the chosen franchisor, builder, and equipment suppliers.
Spending the Funding and Completing the Project
Next up, is securing the best builder. The builder provides the engineering drawings, initial equipment and fees, and any other expenses for the buildout. Typically, this will be about 50% of the total cost of the trampoline park. Once you have secured your builder, get a solid construction map, any required building permits and a schedule to hold entire team accountable. This will ensure that the project will stay on track and within budget.
Next comes the best contractor (could be the best builder’s contractor or your own local one). The contractor provides the final computer aided, engineered stamped drawings. Based on your design ideas, the contractor will often have designs completed in one or two weeks. At that point, the blueprints can be refined and adjusted. Finally, these drawings will be approved, fabricated, and construction can begin.
An Alternative for Starting a Trampoline Park: Purchasing an Established Park
If you don’t want to deal with building your own brand new trampoline center, you can simply buy an established one. Typically, the center you would be considering purchasing has a specific record of revenues and expenses. Even if the business is losing money, if you can buy it at a fraction of the cost, (I can’t help using this phrase) and be jumping for joy and turning a profit within a week of closing on the deal.
Startups, on the other hand, can take one or more years to show a profit. Additionally, well-established centers may already be functioning optimally, efficiently, and with excellent reviews. They’ll also be easier to finance since they have historical earnings documentation and assets you can show to investors and funding sources.
‘3F-4E’ Trampoline Parks: A Fun-Family-Friendly, Exciting, Entertaining Exercising Experience
3F-4E also provides great exercise. Starting a trampoline park business is an excellent way to provide a great form of entertainment to your customers. You can charge by the hour, and provide discounts based on special events such as dodgeball tournaments and fitness classes. Party packages are another great special that brings in a lot of customers. Your business plan should allow for 30-45 employees, or more, depending on future expansion opportunities.
As long as you’ve followed most of the above recommendations, you are well on your way to operating a successful long term trampoline park business that should produce a 20+% return on investment (ROI). In today’s business economy, that ranks up there with the best small business models. Forgive me once again, but the phrase ‘Jump for Joy’ still best sums up this entire article no matter if you are the owner, the customer, or the staff.