A Primer on Buying, Selling Used Fitness Equipment
Anne B. McDonnell
Meet the expertsMark Clayton, President
Fitness Equipment Source
Roy Greenberg, Vice President
Global Fitness Equipment
Nicholas S. Pugh, President & CEO
How and where do you get the equipment to remanufacture?Pugh: Fit4sale purchases equipment from such places as health club bankruptcies, trade-ins from clubs as they upgrade ... or from the manufacturer as a referral from the sales people trying to make the deal better for their customer. ... Like the automobile business, used equipment is the same basic principal as trading in a used car or returning it after the lease is up. ... In order for the manufacturer to offer a maximum discount, the health club needs to trade in their equipment after a certain period of time and re-lease or purchase new again. This typically takes place every 36 months for cardio equipment, ... and every 60 months for strength equipment. ... [This system is] good for all in the industry: The customer gets new equipment at a good price every three to four years, the manufacturer has a guaranteed sale every three to four years, the used equipment vendor gets current-model equipment with low miles and the resale customer gets current-model equipment at an average savings of 50 percent off new.
Clayton: Fitness Equipment Source gets most of its equipment from lease backs, trade-ins, bankruptcies, mergers and corporate closures.
Greenberg: Global Fitness has aligned itself with leading suppliers and large club chains to facilitate a consistent product supply. ... This enables us to [take advantage of] large trade-ins, repossessions, facility closures and other means of acquiring used equipment. ... We have also been able to make some ... large used equipment acquisitions, ... which consisted of more than 1,000 machines at one time.
Do you have a system that allows fitness centers to sell and/or exchange their old equipment?Clayton: Any facility can call in or email equipment lists for sale, as well as email a list of what is needed. If selling, we need to know the approximate age, condition and model number in order to give a quote on the [price we will pay]. Fitness Equipment Source has three- and five-year review processes and leasing programs that help to identify when the equipment should be traded out, or if we can remanufacture that same equipment again.
Greenberg: Global Fitness has a web-based and fax-based system to acquire products and for trade-in/sale-related information from sellers. ... We [have] ... established "blue book" pricing standards, and we revisit and adjust the pricing on a quarterly basis to ensure that the trade-in pricing appraisals are accurate. Pricing fluctuates based on age and condition, and whether a newer model or version has been introduced or is pending release. This is a very similar system to that utilized by the automobile industry.
Pugh: Fit4sale ... [does] accept trade-ins on equipment. ... However, we cannot resell everything we take in on trade, and even the customers cannot give it away due to its age or bulkiness. Therefore, we can offer customers a fair trade-in value in the form of discounts or value toward their purchase, or we have a donation plan that can be beneficial to the customer as a tax write off. If the equipment is worth the resale value after we have shipped it back to our facilities in California, it is worth us purchasing or offering a trade-in. ... If the equipment ... has no resale value based on the market and/or shipping costs, we will recommend that the customer try to sell the equipment locally, or we will try to sell it for them by listing it on ... such sites as Ebay or Craigs List, or by listing it in their local paper. ... Old equipment that has no resale value can be very costly to extract from any facility, especially if it involves labor in removing it and then shipping costs.
How do you decide what equipment can be refurbished?Greenberg: Most equipment can be remanufactured or refurbished. Global Fitness' standards ... comply with the standards of the top manufacturers in the industry. Through our skilled and educated team, as well as [our] equipment and infrastructure, we are able to remanufacture [almost] all cardio and strength equipment.
Pugh: We do not remanufacture or refurbish any equipment that either is so old that we cannot find or make replacement parts, or any equipment that costs too much for replacement parts and does not warrant a profit. An example of this [is] a group cycle; if remanufactured or refurbished properly, the total cost would almost be what the resale value would be. If priced too high for resale, then ... [it] would be more cost effective to purchase a new unit. Some other specific equipment pieces we cannot remanufacture or refurbish [is] anything with material that cannot be replaced in a cost-effective way, such as a piece of equipment with a wood finish, or [equipment that has] a break in a frame that would make it defective and therefore a liability.
Clayton: Fitness Equipment Source refurbishes all equipment, with the exception of demo units or one-year-old equipment with little or no use. We replace all wear components, and replace graphics and repaint. We use factory manufacturing guidelines and factory components.
What is the refurbishing process for strength equipment?Pugh: Our remanufacturing process is extensive. ... We first break every unit down into pieces, and dispose of any parts that may be defective, such as decals, pulleys or hardware. Next, we heat up all steel parts in special ovens that melt any existing paint or other materials, and then sand blast the pieces with high-pressure guns ... to strip the steel down to raw metal. ... We then powdercoat the frames and other related steel parts to the original factory colors, unless another [color] is specified by the customer. ... Once we have powdercoated the steel frames and parts, we start to rebuild the machine. ... We order parts either from the manufacturer direct (OEM) or use one of our many suppliers [that offer parts] of equivalent quality, or even better in some cases. Everything, including nuts, bolts, washers, bearings, cables, pillow blocks, decals, pulleys and upholstery, are replaced.
Clayton: We sand blast and anneal (a heating treatment) the steel, powdercoat twice and apply new graphics. Naugahyde-brand upholstery with double stitching is applied. Cables, pulleys, select pins, shrouds and knobs are replaced, as needed.
Greenberg: Strength equipment is relatively basic to remanufacture, and the equipment can be brought back to virtually new condition if done correctly. ... All metal frames and parts undergo a sand blasting and powdercoating; cables, belts and pulleys are replaced; wear items and cosmetic parts such as grips and decals are all replaced; weight stacks are painted; new weight pins are attached and the machines are completely re-upholstered with Naugahyde. All of this is done in-house. ... We can, therefore, offer clients their choice and combination of 160 different frame and upholstery colors and textures. We also typically upgrade the machines with the latest decals and attachments. ... When completed, the equipment looks and works "like new."
What is the process for refurbishing cardio equipment?Clayton: Cardio pieces are stripped to the frame, repainted and new graphics are applied. The motors, lift and drive are sent to an independent motor house for rebuilding or replacing. We replace the drive belt, walking belt, deck and overlay, as well as all needed electrical components.
Greenberg: All metal frames and parts undergo a sandblasting and powdercoating, as well as replacement and rebuilding of all the major components. Wear items and cosmetic parts are all replaced. ... Global Fitness [can also] formulate cosmetic updates and upgrades to older-generation machines ... to look and emulate the newer-generation equivalents.
Pugh: The most-common pieces of equipment Fit4sale remanufactures are treadmills and elliptical trainers. ... All units are stripped down to the bare frame and rebuilt from the ground up. ... Once we have received the equipment into our warehouse, we inspect every machine's operation and condition. ... We powdercoat all of the frames and respective parts ... unless they cannot be powdercoated, such as aluminum, plastics and some other materials. ... We then start to rebuild each machine, [including] the electrical wiring, moving bearings, bushings, nuts and bolts, drive motors and elevation motors. We replace every decal, overlay and instructional place cards, and running belts, drive belts and running decks, if needed.
What is the advantage to fitness facilities when 'buying used'?Greenberg: In these tough economic times, it is critical to keep as lean as possible, and to maximize investments. ... It is particularly important to ensure that astute business decisions are made to beat out the competition and [survive] the economic downturn. Used equipment is a perfect way to facilitate [this] by replacing or adding seemingly new equipment, which attracts new members and retains existing members, as well as saves the club owner/operator 30 to 70 percent [compared to new equipment].
Clayton: All buyers can benefit, from start-ups, to previous buyers, to small and large facilities. The main advantage is a substantial cost savings, up to 75 percent off list pricing, lowering monthly operating costs and increasing the ability to purchase more equipment.
Pugh: The only way to succeed is to decrease your overhead and increase your profit. ... Why limit yourself to a certain amount of new equipment with high interest rates, high lease payments and large buy outs? ... Smaller facilities or start-ups with limited budgets can start with remanufactured equipment in order to allocate limited funds to other aspects of the business. After all, 99 percent of your members would not know the difference between new and pre-owned equipment. ... Remanufactured equipment allows funds to be used in other areas. ... After two to three years of low overhead and high customer base due to affordable advertising and marketing, a club could now afford to trade-up from pre-owned to new equipment, with the benefits of the tax write-offs. ... Or, depending on the market, remanufacturing could always be the route to take!
Note: Photos supplied by Global Fitness Equipment.
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