The Franchise That Owns Franchises That Are Buying Each Other

The strangest thing about Crunch Fitness is not that it is a gym chain. It is that Crunch is now a machine for creating machines. Leonard Green & Partners — a private equity firm — owns Crunch corporate. PE-backed franchise groups like Fitness Ventures and CR Fitness operate nearly all the locations. And those groups are buying each other's gyms at a pace that would be remarkable in any industry.

The basic point is that when a franchise system is majority-owned by one private equity firm while its biggest franchisees are majority-owned by others, the whole thing becomes a layered rollup. Someone is always consolidating something. The royalties from the layer below flow to the layer above. The question is just which PE firm gets which cut.

Let's start with Crunch corporate itself. As of April 2025, Leonard Green & Partners acquired a majority interest in Crunch Holdings from TPG Growth, at a deal value exceeding $1.5 billion. Crunch went from roughly 325 gyms when TPG entered in 2019 to more than 575 now, with over 3.5 million members. The stated target is 1,000 units. That kind of growth — 90 percent over three years, enough to land on the Inc. 5000 list — makes Crunch look like a story about a gym brand that figured out low-price membership.

It is partly that. It is also a story about a franchise system in which 92 percent of locations are franchise-owned. Crunch corporate doesn't build gyms. Franchisees do. Crunch collects royalties — typically 5 to 8 percent of gross revenue at fitness concepts like this — and a marketing fee on top. Leonard Green's payoff doesn't come from operating clubs; it comes from the systemwide royalty stream as the unit count and membership base expand.

Now the second layer. The franchisees themselves are no longer Mom-and-Pop operators. Fitness Ventures, backed by PE firm Meaningful Partners (which acquired Fitness Ventures in August 2024), grew from 16 locations to 115 in about 14 months. It just surpassed CR Fitness as the largest Crunch franchisee, after acquiring 22 gyms from Harman Fitness in Texas and Southern California. Fitness Ventures is committing roughly $50 million to renovate about half of those locations to the new Crunch 3.0 standard.

CR Fitness, the previous #1 franchisee, operates nearly 90 clubs across five states. It received a $350 million strategic growth investment from Sixth Street in October 2025, with North Castle Partners remaining the largest shareholder. CR Fitness has also bought 24 Hour Fitness locations in Florida, converting them to Crunch under the same brand.

So the structure is: Leonard Green owns the franchisor. Meaningful Partners, Sixth Street, and North Castle Partners own the biggest franchise groups. Those groups acquire smaller franchisees and roll them up. Meanwhile, Crunch corporate pushes the 3.0 remodel, the 1,000-unit goal, and fresh leasing — 4.27 million square feet signed in 2025, a nearly 50 percent jump year over year.

Everyone in this stack wants unit count to go up. The franchisor gets more royalties. The franchise groups get economies of scale, centralized marketing, and a platform that looks attractive to their PE backer. The PE firms at both levels get exit options on a growing systemwide sales base that Crunch expects to exceed $2 billion this year, up from $1.2 billion in 2024. This is not a coincidence. It is an aligned incentive structure, which is why the dealmaking machine is humming.

This is basically old-school franchise rollup logic in a new PE costume. You can find the same dynamic in fast food, auto service, and hair salons: the brand stays franchised, the franchisees consolidate into regional platforms, and PE sits at every node collecting a percentage of top-line growth. The novelty here is the density of the PE ownership. Leonard Green at the top, Meaningful Partners and Sixth Street in the middle — and a wave of multi-unit acquisitions feeding upward through the royalty pipeline.

Now, about the headline. "Crunch Fitness deepens Bay Area presence with acquisition of Bay Area Crunchers locations" suggests Crunch corporate is buying something directly. That is almost certainly not what is happening. Crunch is a franchise system. The "acquisition" is more likely a franchisee-to-franchisee transaction, or a transfer of operating rights within the Crunch network. Bay Area Crunchers appears to be a Bay Area franchise operator, and Crunch has a new 18,000-square-foot facility opening in San Rafael this summer — the first to feature the Crunch 3.0 design.

I could not find a filed deal term sheet, press release, or acquisition agreement specifically naming Bay Area Crunchers as a seller. What I found is a broader pattern of Crunch franchisees being absorbed by larger PE-backed groups, with Fitness Ventures having already moved into Southern California and CR Fitness looking to expand its footprint. The Bay Area Crunchers deal fits that mold. Whether the buyer is Fitness Ventures, CR Fitness, another multi-unit group, or a new entrant, the mechanics are the same: the franchisor approves the transfer, the new operator takes over the lease and membership contracts, and the royalty stream keeps flowing to Leonard Green's Crunch corporate.

The important detail is who benefits. A small franchisee selling out gives up ongoing cash flow for a lump sum. The buyer gains scale and density, which lowers per-unit operating costs and gives it more leverage with suppliers and real estate brokers. Crunch corporate gets a more professional operator in a high-cost, high-rent market like the Bay Area, which reduces the risk of franchisee failure and brand damage. Leonard Green gets a more stable royalty base. Sixth Street, Meaningful Partners, and their portfolio companies get a bigger platform to grow.

In practice, this is not a story about Crunch going deeper into the Bay Area. It is a story about a franchise system that has become so good at selling itself that PE firms at every level are willing to fund the next layer of consolidation. The gym in San Rafael is just the latest node in a network that was designed from the start to grow without corporate capital. Someone else leases the space. Someone else buys the equipment. Someone else hires the staff. Crunch collects the percentage, and Leonard Green collects the multiple.

The risk, as always in these structures, is at the bottom. The franchisee bears the lease, the payroll, the equipment depreciation, and the membership churn. When the model works, the franchisee makes a decent spread. When rent goes up or a competitor opens next door, the franchisee eats the difference. The PE firms at the top have already diversified across the system. The franchisee has one building in one market.

The machine is elegant. The incentives are clear. The question that never quite gets asked is whether there is room in the Bay Area for another Crunch gym at $29.99 a month when rent runs at levels that would make a Manhattan landlord blush. The dealmaking does not depend on the answer to that question. The dealmaking just depends on someone being willing to take the lease.