Does it make sense to have a subscription business model with an on-permise application (e.g.

Does it make sense to have a subscription model software with an ON-PREMISE application? For example, a Spa, or a climbing gym?

Yes, it makes sense. That's what I'm building, it's called SportKeeper. https://sport-keeper.com

With Stripe Terminal you can swipe their card and start an in-person subscription.

We're going to start seeing a crop of new software popping up that will start to eliminate a lot of the PC based, enterprise level software that brick and mortar business' have typically used. I touched on this briefly:
https://dev.to/nphaskins/the-rise-of-cloud-based-point-of-sale-applications-5c9

I've been selling web based apps on a subscription basis since 2002.

It's doable. I provide free support, and I don't charge much for my apps, so my users are happy to pay the yearly fee.

I had one renew today that's been using it since 2006. He called and told me he loves it and doesn't want to upgrade :D

Adobe products, MS Office… There's also SetApp, which is a collection of paid Mac apps offered as one subscription package.

Speaking of indie products, my IRL friend made a font manager app (fontba.se) that has a paid version offered as a subscription. But I think he's working on bringing some service-like functionality to that app, so the subscription is justified.

From business perspective, yes, it makes sense because it creates continuous revenue flow, which allows you to keep working on the app. From users' perspective though... have yet to see one who would prefer subscriptions to one-time purchases for on-premise apps.