Should You Buy a Fitness Franchise? 4 Questions To Ask
Franchising can be an amazing business model. Here’s how to know if it’s right for you
The fitness industry is booming with no sign of slowing down as consumers are increasingly focused on their health and wellbeing. And with new fitness studio and gym concepts entering the market all the time, there are many ways to get involved.
Now is a great time to consider opportunities in the fitness space, and franchising offers myriad benefits. But owning a franchise is not for everyone. It’s a specific type of business with advantages and restrictions. So, before you entertain opening a fitness franchise location, it’s best to practice some introspection to determine if the model is ideal for your personality, skills and goals.
Below, Athletech News shares some questions you should ask yourself to help you decide whether opening a fitness franchise is right for you.
Is Entrepreneurship Right for Me?
Figuring out which fitness brand is the best fit for you can be challenging. But Tom Spadea, franchise attorney at Spadea Lignana, said there’s one question you should ask yourself first.
“If you want to buy a franchise, you’re making two decisions. Are you emotionally ready for the journey of owning your own business? And then, which franchise would I like to buy?” Spadea said. “I think people skip the first step.”
Entrepreneurship comes with a lot of unknowns and there’s no straight line to success—even as a franchise owner.
The reality is, when you own a fitness franchise, you’re responsible for all aspects of your business. Consider the difference between renting your home and owning it. When you rent, someone else pays the taxes and replaces the HVAC when it goes out. When you own, you’re now on the hook for all insurance, taxes and upkeep headaches. In business speak, that means managing employees, driving memberships, maintaining the studio and everything in between. And just like in life, it’s rare to have everything go smoothly. In fact, there’s likely to be a fire to put out in one area of your business or another at all times.
While the franchise model helps—a good franchisor should provide a playbook for you to follow and act as a consultant when you have questions—it’s still ultimately your business, and your livelihood.
What’s My Risk Tolerance?
Franchising is often the first step for people wanting to become an entrepreneur because the established brand name and operating plan help streamline the process. But all franchises aren’t created equal. There’s a big difference between opening a gym or studio that has hundreds of locations across the country and starting one in a franchise that’s in its initial growth phase.
Franchisors with fewer locations are often still trying to fine-tune their operations. This means, as a franchisee, you’ll be learning alongside them. That’s a plus if you want to have more autonomy and input into how the system evolves over time. But remember, these new franchises won’t have the name recognition or the data on past performance and customer preferences that a mature chain could share.
While established franchises are less flexible in their deal points and their expectations, most can offer a more experienced team to support you and a tried-and-true playbook for success. Take note that these benefits can come with higher royalties and fewer options as to where you can open your gym if the market is becoming saturated. But for someone who’s new to business ownership and willing to execute in the way the franchisor prescribes, it might be a better fit.
For Red Boswell, president of the International Franchise Professionals Group, the ideal franchise lands right in the middle with around 50 locations.
“[At that size,] they’ve stepped on the landmines and messed up. They closed a few but now they’re in a rhythm. That to me is a nice hybrid. You’ve got open territory. You can still be an influencer in the early stages, but you’re not a pioneer with arrows in the back,” he said.
What skill Set Do I Need?
The skills needed to open and run a fitness franchise vary widely from one gym to the next.
But one thing to keep in mind is that fitness is a people business. You should assess your ability to work with clients—both those who are happy and those who have had a bad experience. It’s just one of the many aspects of your personality and abilities that you’ll need to evaluate to determine whether a particular fitness brand and business is right for you.
Often everything you need to know about what it takes to be successful will be revealed in your preliminary conversations with the franchisor and its current franchisees, according to Spadea.
“If the franchisor tells you, look, this business is about sales. Listen to them,” he said. “If you don’t feel you’re a salesperson, don’t gloss over that.”
Spadea also advises prospective franchisees to inquire about the franchisees who didn’t perform well to learn what went wrong. If you’re identifying more with those business owners’ traits, he said, that’s a sign that that business may not be right for you.
It comes down to being realistic with yourself. The more you understand your likes, dislikes, expertise, budget and long-term strategy, the better your ability to assess if the long hours and sweat equity will be worth it for you, Boswell said.
“If I had a tattoo on my arm, it would say, ‘Know Thyself.’ Really know your strengths, weaknesses and what you’re into,” he said. “That’ll help you more than anything.”
Can I Keep My Day Job?
While opening a franchise affords entrepreneurs a lot of benefits, it’s not an off-the-shelf solution. Your gym or studio will not run itself no matter how supportive and knowledgeable the franchisor operation is. So, you’ll need to be aligned with the time commitment inherent in running your business.
Boswell said it’s very tempting to think you can set it and forget it. “A lot of buyers incorrectly think there are passive—or absentee—opportunities. They don’t exist,” he said.
In fact, only about half of the franchises his organization works with will even allow a semi-absentee arrangement in which the business owner isn’t involved 100 percent of the time. And the ones that do typically come with restrictions. For instance, they may allow a more passive approach to ownership after a set amount of time or once the business has hit a particular revenue goal or if the manager who’s there day to day also has a stake in the company.
One reason why franchisors aren’t keen on this model is they’re looking for franchisees who know the community and their clients and can be the face of the brand locally, Spadea said.
“They’re looking for the human capital, and that’s what the person brings to the table,” he said. “If it was just about financing, they could go to private equity and raise $50 million tomorrow and open up 100 gyms.”