Many of you will someday own your own business. One rapidly growing opportunity is no$-$frills workout centers. Such centers attract

customers who want to take advantage of state$-$of$-$the$-$art fitness equipment but do not need the other amenities of full$-$service health clubs.

One way to own your own fitness business is to buy a franchise. Snap Fitness is a Minnesota$-$based business that offers franchise

opportunities. For a very low monthly fee $($ $$26,$ without an annual contract$),$ customers can access a Snap Fitness center $24$ hours a day.

The Snap Fitness website indicates start$-$up costs range from $$60,000$ to $$184,000.$ This initial investment covers pre$-$opening costs: franchise

fee, grand opening marketing, leasehold improvements, utility$/$rent deposits, and training.

Instructions

a$.$ Suppose that Snap Fitness estimates each location incurs $$4,000$ per month in fixed operating expenses plus $$1,460$ to lease

equipment. A recent newspaper article describing no$-$frills fitness centers indicated that a Snap Fitness site might require only $300$

members to break even. Using the information provided above and your knowledge of CVP analysis, estimate the amount of variable

costs. $($When performing your analysis, assume that the only fixed costs are the estimated monthly operating expenses and the

equipment lease.$)$

b$.$ Using the information from part $($a$),$ what would monthly sales in members and dollars be to achieve a monthly target net income of

$$3,640?$

c$.$ Provide five examples of variable costs for a fitness center.

d$.$ Go to a fitness$-$business website, such as Curves, Snap Fitness, Planet Fitness, or Anytime Fitness, and find information about

purchasing a franchise. Summarize the franchise information needed to decide whether entering a franchise agreement would be a good