Sky Zone

## Executive Summary

Sky Zone is the worlds largest indoor trampoline park franchise, with over 300 locations across 27 states and more than a dozen countries. Founded in 2004 in Las Vegas and franchising since 2009, the brand achieved record growth in 2024 with 27.3% sales increase to $642 million systemwide. The franchise model requires significant investment ($2.2M-$4.7M) but delivers strong returns with $2.2M average unit volume. With 800,000+ active members, 300,000+ annual birthday parties, and ambitious plans to reach 500 parks by 2027, Sky Zone represents a compelling opportunity in the active entertainment sector for well-capitalized investors seeking scalable, community-focused businesses.

## The Business

Sky Zone operates indoor trampoline parks featuring wall-to-wall trampolines, dodgeball courts, obstacle courses, foam pits, and various other attractions. The concept originated as an attempt to create a new trampoline sport but evolved into a family entertainment destination. Parks typically range from 30,000-35,000 square feet, with the largest planned facility at 60,000 square feet in Brooklyn. Revenue streams include general admission, birthday parties (300,000+ annually), memberships (800,000+ active), group events, and fitness programming. The brand positions itself as an active entertainment alternative to passive screen time.

## The Numbers

| Metric | Value | |--------|-------| | Initial Investment | $2,178,000 - $4,723,000 | | Franchise Fee | $75,000 | | Royalty Fee | 6% of gross sales | | Marketing Fee | 2% of gross sales | | Average Unit Volume | $2,200,000 | | 2024 System Sales | $642,000,000 | | Sales Growth (2024) | 27.3% | | Total Locations | 300+ | | Active Members | 800,000+ | | Annual Birthday Parties | 300,000+ | | Typical Park Size | 30,000 - 35,000 sq ft | | Franchising Since | 2009 |

## System Health

**Growth Indicators:** - 2024 was a record year for growth - 27.3% sales growth in 2024 (jumped 28 spots on Franchise Times Top 400) - 48+ new parks planned by end of 2025 (vs 8 in 2024) - Target: 300 parks by end of 2025, 500 by 2027 - Currently 265+ parks with large majority in North America

**Major Development Activity:** - 13 new Texas locations signed (22+ total agreements in Texas) - New Frisco, Texas location: 40,000 sq ft flagship - 60,000 sq ft Brooklyn park under construction (largest in system) - Expansion markets: Austin, Seattle, Henderson, Brooklyn, Atlanta metro

**Multi-Unit Growth:** - Roger Duncan (Ex Nihilo Capital): 24 locations + 4 in development - Usman Rao: 7 parks + 10 in development across CA, NJ, CT, NYC - Strong multi-unit operator commitment indicates franchisee confidence

**Industry Recognition:** - #120 on Franchise Times Top 400 (2024) - Featured on Franchise Times Fast & Serious list - Entrepreneur Franchise 500 recognition

## Franchisee Experience

**Training and Support:** - 40+ hour training program at certified training franchise locations - One week classroom, online, and on-the-job training at corporate location - Up to 5 days on-site training around opening - Assigned Franchise Performance Coach for ongoing support - Management team training required (minimum 3 managers + 1 leader)

**Comprehensive Support Areas:** - Real estate search and selection assistance - Construction and park design support - Marketing and advertising programs - Ongoing field support and business advisory

**Franchisee Testimonials:** - Owners cite unwavering support from communities and franchisor - Scalability highlighted as major attraction - Structure with freedom balance appreciated - Mission alignment with family entertainment values resonates

**Veteran Benefits:** - 10-20% discount on initial franchise fee for veterans - Third-party financing assistance available

## Risk Assessment

**Concerns:** 1. Very high investment requirement ($2.2M-$4.7M) limits candidate pool 2. Large real estate footprint (30,000+ sq ft) challenges site selection 3. Active entertainment carries inherent injury/liability risks 4. Seasonal fluctuations in attendance patterns 5. Competition increasing in trampoline/entertainment segment 6. Economic sensitivity for discretionary entertainment spending

**Mitigating Factors:** 1. Strong AUV ($2.2M) supports investment level 2. Multiple revenue streams (admissions, memberships, parties, events) 3. 800,000+ active members provide recurring revenue base 4. Backed by Palladium Equity Partners (institutional support) 5. Largest brand in category provides competitive moat 6. Experienced franchisees expanding aggressively indicates confidence 7. New attractions driving same-store sales growth

## Competitive Position

**Primary Competitors:** - Urban Air Adventure Park - Launch Trampoline Park - Altitude Trampoline Park - DEFY Trampoline Parks - Local/regional entertainment centers

**Competitive Advantages:** - Largest indoor trampoline park franchise globally - Strongest brand recognition in category - Institutional backing (Palladium Equity Partners) - Multiple proven multi-unit operators - Diversified revenue (memberships, parties, general admission) - Continuous attraction innovation

**Competitive Disadvantages:** - Highest investment level among trampoline franchises - Large footprint limits site availability - Some markets reaching saturation - Commoditization risk in trampoline attractions

## Validation Questions

1. What is the typical ramp-up period to reach AUV and breakeven? 2. How do membership retention rates compare year-over-year? 3. What percentage of revenue comes from memberships vs. walk-ins vs. parties? 4. How are liability and insurance costs trending? 5. What new attractions have driven recent same-store sales growth? 6. How does performance vary by park size and market type? 7. What is the typical franchisee background (prior experience required)?

## Data Gaps

- Detailed Item 19 financial performance by park size - Profit margins and EBITDA benchmarks - Franchisee satisfaction survey data - Insurance cost trends and claims history - Seasonal revenue distribution - Membership churn rates - Detailed training program curriculum - Construction timeline benchmarks