You’re in the process of finalizing your fitness franchise deal. Congratulations. Now it’s time for the real work to begin. The period between signing your franchise agreement and opening day is critical to the success of your gym. And, it’s also often a real wake-up call for new franchisees.

“A lot of franchisees will say, ‘You know, I’m buying a franchise and paying upfront money for the franchise, and the franchisor is gonna help me all along the way and I can just sit back and do very little. That is not the case,” Leonard Briskman, a SCORE mentor based in Washington, D.C., told Athletech News. “Once you open for business and you start that first week or the first two weeks, chances are the franchisor is not going to be readily available for you, unless you have an operational problem.”

Briskman has been on both sides of the franchise relationship. First, purchasing a lighting retail chain with 27 franchisees and later as a franchisee operating 42 athletic footwear stores.

For Briskman, the franchisor’s training program was immensely helpful, mainly due to the coaching he received but also because it gave him the opportunity to build relationships with other franchisees that were also going through the onboarding process. 

But a classroom setting can only teach you so much. Briskman advises new fitness franchisees to spend time in an existing gym to get a feel for how things work behind the scenes.

“They ought to spend several days or maybe a week or more at another franchisee’s operation, especially if it’s within the same city just to acclimate to what’s happening in the business and what you can expect,” he said.

While every business is different, one thing is universal, once you sign on to open a fitness franchise, you are taking on a host of financial and operational responsibilities, many of which require immediate attention. 

Here, we highlight three main milestones leading up to and immediately following signing your franchise agreement. 

Secure Funding

It’s going to take a lot of investment to bring your gym or studio to life. It’s best to get your loan approved ahead of signing your franchise agreement. Because, of course, there’ll be no business if you can’t secure the capital but also you need to account for the lead time inherent in getting the funds, which could be up to 90 days. 

You also need to make sure your lender is willing to finance a deal with the fitness franchisor you’ve selected.

“The SBA typically has a list of franchisors who they’re prepared to work with and franchisors who they will not work with,” Briskman said. “The best-case scenario is the lender and franchisor have worked together before, which will help expedite your loan process.” 

While franchisees can opt for a traditional commercial loan, Briskman says an SBA-guaranteed loan has a lot of advantages that often makes it more attractive. For loans under $500,000, you qualify for the SBA’s Express Loan Program. Not only would that help you get going on your new business faster, but it would also be less likely that you’d need to put up collateral like your home in order to secure the funds. 

Briskman said an SBA-guaranteed loan also typically offers a longer payback window than a traditional bank loan — for instance, 10 years versus seven. Plus, the borrower can put down less money toward the deal by going the SBA route.

Develop a Budget

Developing your budget is one key area in which your franchisor will be instrumental. Pay close attention during your training sessions to this part of the discussion so you’re aware of where the money’s going and you don’t end up making costly mistakes. 

The list of expenditures you can expect to make long before you open your doors include: annual insurance premiums, real estate attorney fees, your lease, your contractor, permits, licenses, equipment, advertising and staffing.

“It’s nerve-racking, because all of these expenses are going out, but they should be budgeted for before you’re spending the money so nothing comes through as a surprise,” Briskman advised. “I would say you’re looking at probably something in the area of anywhere from eight months to 12 months before you’re able to open.”

When building your timeline alongside your budget, you need to factor in time for loan approval, lease negotiations, location scouting, location build-out and permitting. 

Pick a Location

With funding and budget in hand, it’s time to pick your location. Again, Briskman said, your franchisor will be instrumental in helping to advise you on the area and the type of structure that will work for your fitness franchise.  

In some cases, the franchisor may have a real estate team that can lend a hand. If not, you’ll need to work with a broker to find a location that offers the demographic, size and environment that best matches the franchisor’s suggestions. 

Once you think you’ve found the best spot, it’s time to engage a real estate attorney who can negotiate a lease that will work for your gym or studio.

From there, it’s time to turn that empty space into your new business. One advantage of opening a franchise is your franchisor has a set aesthetic for its brand, which they’ll provide plans for. You and your contractor will need to work together to bring that vision to life in your new space.

It’s crucial that you ensure the contractor sticks with your agreed upon timeline. Every day that you’re not open is costing you. Also, you’ll want to work backward from your build-out date to determine when to start advertising and the best timing for onboarding your staff.

“If your contractor says, ‘I can complete this whole thing in 60 days,’ you have to hold that contractor to that 60-day period. Otherwise, there should be some kind of a penalty involved,” Briskman said.

The stakes are high in those critical first days. Remember, every decision you make will help lay the groundwork for your new studio. 

“You’re operating the business,” he said. “You have to make sure that you have the best possible people who are assisting you. And you have to go out and advertise and provide [your clients] with an environment that they want to come back to.”

The post The 3 Keys to Starting Your Fitness Franchise appeared first on Athletech News.

In the fitness space, there’s always a new trend. Whether it’s novel workouts, new medications or updated technology, each threatens to make existing brands stale, or worse, obsolete.

This is not news to Self Esteem Brands. As its studio and gym franchises continue to grow, the leadership team remains focused on evolving the brands to meet the ever-changing needs of its fitness-conscious consumers. And that’s good news for the many franchisees with Anytime Fitness, Basecamp Fitness, The Bar Method and Waxing the City locations—as well as other entrepreneurs who may have designs on joining the fold.

With more than 5,000 Anytime Fitness locations alone, the company is unique in the fitness franchise space. The sheer number of users across brands translates into a constant flow of customer feedback and insights, which the team uses to evolve their concepts and bring new ideas online. 

Here, Stacy Anderson, global brand president, Anytime Fitness, and Nick Herrild, president – studio division/Waxing the City, share how Self Esteem Brands leverages its size and scale to keep its franchise brands relevant and its franchisees profitable.

Athletech News: The conversation around fitness changes a lot. How does Self Esteem Brands evolve its studio concepts to keep them relevant for your franchisees?

Nick Herrild: It’s absolutely something that we try to keep track of. And we do look at trends in the fitness industry and beyond to understand what’s happening and how can we stay ahead of it, but we adapt along the way. We often talk about how a concept will have a core essence that will be true for a long time, but the brand will evolve over the next three to five years so the brands will look different. 

I’ll use The Bar Method as an example. There’s a lot of focus on strength right now. And I think that at the baseline, The Bar Method does have a strength focus, but we’ve been able to make fitness modalities that really focus on the strength essence of getting into the trends that consumers are looking for. We try to evolve over time to match up with what consumers need without losing the essence of the brand.

ATN: How do you determine what consumers at each of your concepts will want next?

NH: The fact that Anytime Fitness is so big and has been able to guide us in building capabilities has given us more access to resources we wouldn’t have in our small brands. It gives us really two things: not only resourcing but also data and thought around the consumer in order to match up the right concept with what we’re trying to do in the marketplace. 

When we think about SEB [Self Esteem Brands] as a shared service matrix, that means that if you’re working in marketing for any one of our brands, you’re still laddering up to the capability that we’re building at the SEB level of stronger marketing function. That helps us evolve. So, we know what they’re looking for. We understand what the trends are in the marketplace. We think of ways to apply those trends to the work that we’re doing within the brand as well as what we believe is core to each brand.

ATN: For a concept like Basecamp Fitness, which is in growth mode, what’s the difference between a concept that has 10 locations versus one with 100 locations from the franchisees’ perspective?

NH: We’ve got 10-20 locations, when you think about the idea of the work that you need to go into the brand at this point at 22 locations for Basecamp, you’re very involved. You’re in the studio. We’re working through details with the franchisees that are out there. They understand that when a brand is young like that, we’re going to be really good at some things, and we have to figure out some other things.

When you get out to 40 to 60 locations, you’re getting to a place where you’re really thinking ‘Okay, we need to make decisions that help us scale.’ So, we can’t do any one-off things. And then as you move towards 100 locations, everything needs to scale, and you’ve got a lot more of the system and process put into place in a way that’s replicable and then that gives you the chance to unlock. It is very hard in those early stages. But you gradually get to a place where you’re thinking more and more about scale and success metrics.

ATN: Consumers now have a lot of fitness options, including working out at home. How does Self Esteem differentiate its brands from competitors?

Stacy Anderson: The reality is, the community you create in your club environment is probably the stickiest thing you can do in terms of customer loyalty. And the good news is [mobile phones are] probably your most important piece of workout equipment. It’s also the hub of your connection to your clubs, and your connection to your members.

We talk about care coaching and connecting at this company quite a bit, and that is really the secret sauce for creating community that drives business results and loyalty or I always say irrational loyalty. You might always have a cheaper concept come into the market, but the relationships you have are that thing that really binds both your staff and your membership together in a way that creates insulation around your business.

ATN: Where do you see the fitness industry heading over the next five years?

NH: It’s only going to become more important to people to have a full, holistic outlook on their health and wellbeing. That’s probably an advantage or tailwind for us. We’re thinking about different ways to give them more out of their memberships or their experiences in the studio or the club to be able, to find coaching if they need that, to be able to have in Waxing the City more holistic beauty services to think about their healthy skin versus just hair removal.

We’re using technology a lot because regardless of what product we’re offering and how we think about how our brands or our workouts or our services come be life, the technology piece of it is going to become more and more important to our consumers. And so, we’re using technology to reduce friction points for them. Your phone is a great avenue to get people to connect with brands in an efficient way.

ATN: How do fitness and wellness fit together, and how is Self Esteem pursuing opportunities at this convergence?

SA: Everybody’s talking about Wegovy and Ozempic, and clearly all those medications have an impact on people’s jumpstart to their wellness journey. I think personally that that’s a great thing. Whatever you need to get started to be able to move yourself forward is really incredible. The reality is the side effect of some of those drugs is that you’re losing some of your strength and you’re losing some of your muscle, and I think gyms and wellness services are going to play a really big part. That’s just another tailwind that’s going to be behind us as a larger population is going to feel like, “Oh gosh I can do this.”

Beyond just different modalities of inside and outside the club, digital versus physical, we’re thinking about nutrition. We have Stronger U, a nutrition service that is a direct-to-consumer business of ours. We’re working on training programming that’s expanded to different populations. We’re working on recovery programming. We’re even getting into the mental health side of things, knowing that so much of your health has to do with your headspace and where you’re at there. I think as we go forward, you’re going to see a lot more partnerships. We just started one with Apple Fitness+ that allows all of our [Anytime Fitness] members to have access to Apple Fitness+ as part of their membership.

The post How Self Esteem Brands Stays Ahead of Fitness Trends appeared first on Athletech News.

Orangetheory Fitness has experienced robust growth right along with the fitness industry at large. Today, the company has more than 1,500 locations in 24 countries all while staying true to the science-based approach that put it on the map.

Rich Armstrong, chief development officer of Orangetheory Fitness, credits the company’s success to three things. 

“Larger concepts such as Orangetheory transcend local boundaries due to their widespread appeal, expert corporate guidance and passionate franchise operators who share the same vision on a global scale,” he said.

With franchising at the core of its business model, Orangetheory is mindful of its franchise partners’ desire for a strong concept, continuous support and a commitment to staying on the forefront of fitness trends.

Here, Armstrong shares with Athletech News why Orangetheory’s franchisees are so dedicated to the brand, how the company strives to enhance its member experience and what it means to have a “one brand” mindset.

The following conversation has been lightly edited for clarity and length.

Athletech News: What makes Orangetheory Fitness a concept ideal for franchising?

Rich Armstrong: Orangetheory Fitness distinguishes itself in franchising with its unique blend of science-backed workouts, innovative technology and expert coaching. Our franchise offers an accessible entry point, a streamlined operational model and the potential for attractive returns. Our scale provides exceptional support, leverage and brand development opportunities, setting us apart in the fitness industry.

ATN: What makes someone an ideal Orangetheory Fitness franchisee?

RA: We seek franchisees who are passionate about the Orangetheory brand and committed to helping people achieve their fitness goals. Financial stability and real estate expertise are important, but a strong cultural alignment with our brand values is essential.

ATN: What differentiates top-performing franchisees from those on the bottom?

RA: The key differentiator is passion. Franchisees who genuinely engage with their community and embody our brand’s ethos often experience greater success. This authentic, hands-on approach fosters a stronger community and drives the brand forward.

ATN: Why should someone pursue an Orangetheory franchise instead of another fitness concept? 

RA: Someone should pursue Orangetheory for three main reasons: the concept, the support and the model. Our workouts are the pinnacle of a holistic fitness experience, blending endurance, strength and power training, all under the guidance of certified coaches. The support from our headquarters at The Grove covers every aspect of operations, from site selection to marketing and innovation, ensuring our franchisees are always at the forefront of the fitness industry.

ATN: How do you meet the challenge of evolving a concept as times and member needs change?

RA: Our commitment to helping members live a more vibrant life drives us to evolve continuously. We’re more than just responsive to fitness trends; we’re pioneers, setting the bar for boutique fitness excellence. Our approach is visionary, anticipating and shaping the future of fitness before it becomes a member need. With a team of expert fitness and science professionals, we stay ahead of the curve, crafting innovative and effective fitness experiences that define industry standards and exceed member expectations.

Orangetheory remains true to its core concept by focusing on delivering a balanced and scientifically-backed workout experience. Even as trends shift in the fitness world, from weight loss to mental well-being, our approach continues to provide a holistic workout that caters to all aspects of health. This consistency in our mission allows us to adapt while staying true to our foundational principles.

ATN: What can franchisees expect when working with Orangetheory? 

RA: The relationship between our franchisees and corporate is built on mutual trust, clear communication and shared input. We maintain close connections, fostering an environment of authentic listening and collaboration. This ‘one brand’ mindset allows us to stay attuned to the needs and feedback of our members, ensuring we evolve in alignment with their aspirations.

ATN: What do others who are considering building their businesses via a franchise model need to know before they start?

RA: It’s important to recognize that while contractual requirements are essential, the best franchisors view the arrangement as a long-term relationship rather than just a legal agreement. At Orangetheory, we believe that strong support and collaboration lead to satisfied and passionate franchisees, which is key to a successful business endeavor.

ATN: What’s the value of a brand name in the fitness space?

RA: Having a strong brand name carries immense value. It not only aids in marketing and attracting new members but also assures quality and consistency. Orangetheory Fitness is synonymous with a positive fitness experience, a powerful tool for building trust and loyalty among our members.

ATN: How has the fitness industry and fitness franchising changed since 2010?

RA: Since 2010, the fitness industry and franchising landscape have evolved dramatically. There’s been a significant shift towards more personalized, science-based fitness experiences. Orangetheory has been at the forefront of this transformation, offering effective and adaptable workouts to individual needs and fitness abilities. The rise of digital platforms and the increasing importance of community and wellness in fitness have also been key trends shaping the industry.

ATN: What’s your outlook on the fitness market over the next five years?

RA: The next five years in the fitness market are prepared for innovative growth. We anticipate a continued focus on personalized, technology-driven experiences while integrating wellness into everyday life. Orangetheory aims to be at the forefront of this evolution, continually adapting to meet the needs of our members.

The post Orangetheory’s ‘Exceptional’ Take on Building a Global Franchise appeared first on Athletech News.

Self Esteem Brands’ portfolio spans a wide range of fitness and wellness concepts, which include Anytime Fitness, Basecamp Fitness, The Bar Method and Waxing the City. The company attributes its continued success to the hard work of its many franchisees. 

Whether they’re part of a mega brand like the 5,000-plus Anytime Fitness locations or an emerging concept like the 22-studio Basecamp model, Self Esteem Brands is equally committed to providing these entrepreneurs with the tools and support they need to win. 

“We own some of the parts of helping them to go from never owning a business perhaps all the way to being a successful business owner in a successful franchise, regardless of which brand it is,” Nick Herrild, president – studio division, Waxing the City, told Athletech News.

Ultimately though, it’s up to the franchisees to use those resources to build their businesses. 

Here, Herrild and Stacy Anderson, global brand president, Anytime Fitness, share their tips for finding success as a fitness franchisee. 

Know Your ‘Why’

Business ownership can be challenging no matter what industry you enter and fitness is no different. What gets you through the tough times, Anderson said, is a genuine love for the space. 

“Ultimately, it comes back to a values alignment. We talk about people, purpose, profits and play here,” Anderson said. “We care about franchisees that have purpose, that care about what they’re doing. You could go into a QSR and probably make more money than you would with a fitness franchise. We care about people that want to improve the health of the community.”

In her experience, franchisees who align with this mindset are better positioned to achieve their business goals. 

Select the Right Brand

Once you’re sure a career in fitness or wellness is for you, the next step is to find the brand and leadership team that best match your working style and needs. Every franchisor operates differently and each offers a different level and type of support. Anderson advises that prospective franchisees really tune into what makes a specific franchisor tick.

“I think it’s really important to understand their relationship with the franchisor and whether or not they have open dialogue, what that culture is like, if it’s a high-performance culture. You should get a sense of who you’re working with because ultimately, you’re business partners and it’s a symbiotic relationship,” Anderson said. “You should get to know the people and feel confident in who they are. And if you don’t, that should be a warning sign that maybe that isn’t the right fit for you.” 

Look for a team that has your best interests at heart and sees you as more than a revenue generator, she added.

Be Coachable

Look for a brand that has enough experience to provide you with a playbook for success—and be prepared to follow it. 

“It’s on us as a franchisor to help a franchisee build baseline skills and to be able to figure out their financial acumen and to help them become business operators. And so, we look for owners that are willing to be coachable and follow the system, and that’s a broad diverse range of people,” Herrild said. “If we say, ‘Hey, the best way to do this is to add two cups of flour,’ and you add three, you’re making it real hard for yourself, and you don’t need to do that.”

One of the main advantages of opening a fitness franchise is there is a business model already in place. Herrild said it’s counterproductive to ignore it.

Tap Into Your Support System

The franchise business model comes with a built-in community made up of both cohorts and consultants. Herrild and Anderson said franchisees that flourish are often the ones that capitalize on the wisdom of both the franchisor and their fellow business owners. 

“When you have tough times, the great news about being in a franchise is you can look up and talk to your franchise business consultants. We’re here as kind of your support network” Anderson said.

“I also think that franchisees who become part of that franchise community in a positive way, use the resources [and] help new franchisees once they become more experienced, build a culture,” Herrild added.

Don’t forget to lean into that ecosystem when you face a challenge. Chances are it’s not unique to your location and others may have advice that can help.

Be Self Aware

It’s really important to know your strengths and the areas that might present more of a challenge for you personally. This self-awareness will help you select the right brand as well as build a team that speaks to all of the needs of your business. 

“This is a service business and if you don’t happen to be (customer service oriented) as a franchisee, then you hire somebody who is. You can teach just about anyone to run a gym or a HITT franchise, but you can’t teach them to be people people generally.” Anderson said, by way of example.

To achieve success, you’ll either need to bring or hire all of the skills, talents and traits your fitness franchise will need to excel.

The post Self Esteem Brands Shares 5 Keys to Franchise Success  appeared first on Athletech News.

As more people head back to the gym, private equity firms are seeing an opportunity to stake their claim in fast-growing fitness franchise groups in 2024. 

Multiple gym franchises, ranging from no-frills fitness centers to children’s gyms have seen an influx of private equity dollars, and that trend stands to continue — just as confidence in at-home workouts like Peloton continue their downward spiral.

“There has been a sizable infusion of private equity cash over the last couple of years in the franchise space. This has been especially evident in subscription-based businesses such as fitness centers,” said Carolyn Collins, franchise fitness vice president of sales, Mitsubishi HC Capital America. 

But with more investment also comes more competition, and fitness franchises will be up against other similar concepts when they’re aiming for private equity attention. How can they stand out as the right franchise to invest in and what’s inspiring private equity firms to invest in fitness right now? Here are five factors that are leading the wave.

Proof of Concept

“PE firms focused on control leveraged buyout (LBO) are generally looking for at least $3 million of earnings before interest, taxes, depreciation, and amortization (EBITDA) achieved through proof of concept across enough locations in different geographies to support management’s forecast,” explained Jon Canarick, managing partner at North Castle Partners. 

Generally, they aren’t looking for a high-risk investment in this space. This is a proven market and, for an investment to be worth their time and funds, it needs to have shown that it can succeed in a crowded marketplace. 

Multiple Revenue Opportunities

Opening new locations generally is not enough to attract serious private equity cash. There have to be other revenue streams available within this opportunity.

“I would like to see a viable path to a minimum of $500 million of system-wide revenue, such that at a 7% royalty there is a minimum of $35 million of recurring royalty revenue supported by other revenue opportunities beyond the initial franchise sale,” said Canarick. He explained that Orangetheory not only has their business model with workout classes, they also make money off of the heart rate monitors they sell. 

“You want to believe a business can generate at least $15mm of EBITDA and be enticing to a consolidator or an exit path,” added Canarick.

Successful Franchisees With Viable Returns

The best way to determine viability to $500 million is to see a proven track record of successful franchisees, with Canarick noting that translates to at least 85% of franchisees as successful. 

“I want to see a strong return on invested capital, which could be making $150,000 per year. This would in theory allow the franchise to hire a new general manager while they open a second location so that they can build a real business,” said Canarick. 

Low average EBITDA models generally won’t tempt private equity investors, and $150,000 is a general minimum to get a meeting. Three hundred thousand dollars is going to be more appealing to most private equity firms, though that is not required. 

What doesn’t count as successful? Canarick noted that spending $250,000 to open a location and making $50-$75,000 a year is not good enough for private equity investment. 

Large Enough Sample Set of Locations

“In terms of locations, we like to see a large enough sample set in enough varied geographies to have confidence that the franchise can continue to grow,” said Mark Grabowski, managing partner at Snapdragon Capital Partners. 

Multiple locations in the same city may not be enough to attract a private equity investor since they can’t be confident this is not a niche product that’s only serving a small geographic region. They want to see proven success across multiple cities, ideally across diverse locations.

Qualitative Validation

Not everything will come down to numbers. Some of the reasons to invest will come from personally believing in the product and hearing that the consumers have also bought in. 

“It all starts with the consumer. Do you have a business that delivers a great value proposition to the consumer? We look for quantitative and qualitative validation of consumer affinity for the brand,” said Grabowski.

He wants to see profitability, of course, but you can’t necessarily measure customer satisfaction and whether they love the experience, franchisee relationships, or a franchisor’s interest in growing — and all of these play a critical role in how successful an investment will be.

“We want to hear what franchisees are saying about the franchisor and their experience with the brand,” added Grabowski.

Bringing It All Together

When all of these factors come together, that’s when a private equity firm will decide it’s worth having a conversation and entertaining the idea of investing in a fitness franchise. And, in 2024, there will be many more of these conversations, but also many more competitors. Those who focus on strengthening each of these areas will rise to the top.

The post What Private Equity Firms Look for in Fitness Franchise Groups appeared first on Athletech News.

Knowing what to expect in your first year as a fitness franchisee can help pave the way for your success.

Your first year operating a fitness franchise can be both rewarding and very challenging, and the amount of success achieved will be a direct result of the amount of time and energy you spend on building a solid foundation from which your fitness franchise will continue to grow and thrive in your local marketplace. You can expect to spend significant time working in and leading two core parts of your business—building an initial membership base and working and troubleshooting various potential operational challenges. 

Build Your Membership Base 

One of the most critical aspects of your first year of operations is building and maintaining your membership base, and one of the best tactics you can leverage to start strong right from day one comes down to how you select and train your team. Knowing that you will not be the one to take care of all of the members in your fitness club, it’s vital to hire and train the best member-focused, fitness-minded individuals you can find; it’s the single most crucial part of how you will deliver excellent service in the vital first year of your operations.

Once you’ve hired and trained the best possible team, it’s crucial to ensure that you actively lead them every day and every shift. Set clear expectations for how you want your members’ experience to come to life and then role-model that behavior for them whenever you are in the club interacting with your members.

“If you want to be the best in the industry, you can expect to spend up to sixty percent of every day communicating with your team. This is where time is best spent as a fitness business owner—investing time, energy, and resources into the team—helping them however you can,” says Jamie Weeks, the 2017 Orangetheory franchisee of the year.

Navigate Operational Challenges

It’s wise to expect your first year of operations to be a little bumpy and have some stressful moments. If you selected a strong fitness franchise, you will have experienced robust onboarding and training from your franchisor before you arrive at your grand opening day. While this training will have helped you build a strong foundation, you cannot expect to become an expert operator during the training period.

On top of the stress you may experience while you get up to speed on your fitness franchise programs, systems, and tools, you’ll also need to build and execute a recruiting and training program to get your employees up to speed. That’s a lot of newness in your first year as a franchisee, and it’s wise to anticipate some friction along the way.

“The first year as a franchisee can often be the toughest as you get up to speed on the franchisor’s business model, build your customer base, and recruit employees,” says the expert team at Franchise Business Review.

While you may have already anticipated that there will be a steep learning curve for both you and your new team during the all-important first year, what you may not have expected are some of the additional operational challenges that you may be unprepared for. 

Typical fitness facilities have an extensive suite of equipment that must be well taken care of to ensure you get the maximum life span from this large portion of your upfront investment. You’ll also need to ensure that any classes offered in your facility are well organized and that instructors do a great job working with and engaging your members.

“As an active operator, I also spend a significant part of each day running the business – from broken air conditioners to managing the class schedule, overseeing marketing campaigns, and engaging with our clients,” says Weeks

The best fitness franchisors in the industry understand the complexity that often comes during the first year in business for their newest franchisees and will have a strong support plan in place to help you adapt to any challenges that come your way. 

Plan for Some Long Hours

While you will surely experience many rewarding moments in your first year as a fitness franchisee, the best advice is to prepare yourself for a bit of adversity. Be ready to invest many hours working alongside your new team to ensure an excellent member experience is delivered right from the start; this will go a long way when it comes time for the first members of your club to renew.

“When it comes to running a successful fitness franchise, there are no shortcuts to the top. Instead, you’ve got to put in the work and be patient,” says Rick May, founder and CEO of Alloy Personal Training Center, with over 2000 locations worldwide.

The post What To Expect in Year 1 as a Fitness Franchisee appeared first on Athletech News.

Knowing what not to look for in a fitness franchise partner is just as important as knowing what to look for.

It can be overwhelming to find the best-in-class fitness franchise that will help you on your way to becoming a successful franchisee in this space. In my experience, potential franchisees should investigate five significant areas for potential red flags before selecting their franchise partner: communication, onboarding, marketing, franchisee management and the growth plan. 

Let’s take a closer look at all five.

Lack of Two-Way Communication Between Franchisees & Franchisors

Effective communication between franchisees and franchisors is critical to a productive and successful partnership of stakeholders. Franchisees’ quarterly, bi-annual, or annual meetings are among the most common tactics to share upcoming business initiatives and results with franchisees. Signs of collaborative franchisee meetings with their franchisor should include multiple opportunities for you to have a two-way dialogue and offer feedback. 

During your due diligence phase, ask current franchisees if these meetings are nothing more than a ‘parade of PowerPoint’ presentations, where the head of each department merely downloads the information they deem relevant to franchisees and nothing more. This type of meeting does little to build a collaborative working culture between franchisees and their franchisor.

A broader business update followed by smaller roundtable sessions is much better suited to ensure meaningful collaboration with the system’s franchisees takes place.

When comparing your potential fitness franchise partners, ensure you have a robust discussion about how and when the franchisor looks to seek feedback and engage directly with their franchisees.

No Formal New Franchisee Training Programs

The best fitness franchisors know that showing new franchisees what right looks like as it relates to the operations of the business model is essential to their brand’s success. A learning approach like this often comes in an immersive on-the-job training experience ranging from several weeks to several months, depending on the brand and the complexity of its operations. The training will either occur in a franchise location that consistently ranks among the chain’s top performers or at a franchisor-owned and operated site.

Regardless of who conducts the training, corporate or franchise employees, getting the absolute most of this experience is vital to your success.

When considering the purchase of a franchise, understanding their process for training new franchisees and if there is an opportunity to bring key staff with you is essential. New franchisee training will set the foundation for understanding how the business model operates and familiarize you with the systems and tools required to run a top-performing location for your members.

A Lack of Focus on Attracting Gen Z

By 2026, Gen Z will be the largest consumer demographic in the US. Ensuring your chosen fitness franchisor has a marketing plan that captures them in their decision-making process about which fitness center to join will be essential to your success as a franchisee. 

A survey by CivicScience reveals that nearly 50% of Gen Z adults exercise several times weekly, which is above average compared to the general population, so ensuring that your franchisor understands this demographic and what they are looking for in a fitness center is critical. The same study also revealed that Gen Z likes a variety of fitness activities, so make sure you choose a franchise partner that can offer a variety of fitness classes and activities to keep your Gen Z members engaged, as it will be vital in ensuring you can capitalize on this growing and soon to be number one, consumer demographic.

No Management of Underperforming Franchisees 

One of the main reasons entrepreneurs invest in buying a franchise fitness business is the well-designed operating system that has proven successful in the minds of members and operators alike.

Investing in a franchise with a well-qualified team of professionals whose sole focus is the programs, systems, and tools required to operate the business is the driving force behind why many entrepreneurs end up in the franchise world.

As a franchise operations professional, I’ve always found it curious why franchisees would invest their money and time into buying a franchise with a proven operating system and then fail to follow the franchisor’s brand standards. If the system has proven successful and evolved into a franchise, not trusting the methods that helped it become successful seems counterintuitive. Yet, I saw it repeatedly across several franchised systems.

One of the most important things you can do as a franchisee is to dedicate as much time as is required to knowing your brand’s standards inside and out. What are the steps to deliver a member experience that will keep them returning repeatedly, helping you build a solid reputation in your community? 

Failing to execute the brand standards will jeopardize your members’ experience, community reputation, and ability to run a profitable business. It will also undermine the brand’s reputation and the investment and capital of every franchisee within the system.

The best franchisors take this commitment to brand standards very seriously. Asking potential franchisors for specific examples of how they have handled underperforming locations and franchisees in the past is an excellent way to get historical examples of how this has been managed.

No Strategic Plan for Growth

In my experience in the franchise world, one of the single greatest detractors of strong franchised unit economics has been when franchisors have no strategic guidance or insights into how their system will grow, as this often leads to situations where new locations open too close to existing franchises, which can lead to significant cannibalization of memberships. 

The leading franchisors in the fitness space understand that the best way to manage the system’s overall health is to ensure each franchisee’s success. When individual franchises have strong unit economics, meaning healthy profitability and strong membership growth year over year, the entire system will thrive. 

Understanding how growth happens within your franchised system is vital to your overall success. How are new locations selected? What tools or processes do they use to assess the viability of that location and its potential cannibalization of memberships on existing units?

Great franchisors have a scientific approach to making these decisions and should openly share that process with franchisees whom the new location may impact.

The post The 5 Red Flags To Look for in a Fitness Franchise appeared first on Athletech News.

Taking on private equity money isn’t always the right move for a fitness business. There are successful businesses that have grown and scaled on their own, without raising money from private equity investors. They’ve opened franchises across the country and even had successful exits. A private equity investor is not a necessity for everyone. 

However, it is a great strategic move for many fitness franchise businesses. The key to making it a successful relationship for you is to know whether or not it’s the right fit before you enter into a partnership and to understand the expectations on both sides. 

What should you expect from a private equity relationship? And what will they expect from you? Athletech News breaks down what you need to know:

Understand the Goal of Taking On Private Equity

Before you do anything else, reflect on why you want to take on a private equity partner. Is it because you need cash to grow and scale quickly? Are you looking for mentorship from someone who’s been through the process and successfully exited? Do you want to tap into resources in terms of expertise, talent, and skill from someone who’s been there before? All of these are excellent reasons. Just make sure you know your specific why.

Think About Your Collaboration Style

“A private equity partner will expect open and honest and regular communication,” Jon Canarick, managing partner at North Castle Partners, told Athletech News.  

How do you ideally want to collaborate with your private equity partner? Do you want someone that’s going to be a warm, inviting sounding board? Do you prefer someone who offers the tough advice? Every partner is going to be different, and if you know that you work in a certain collaborative style, then you can pick the right partner — but you can also decide whether that type of relationship isn’t what you want right now. Maybe moving forward without outside investment is the best decision for you in the moment.

Discuss Their Involvement With Your Team & Hiring Decisions

A private equity partner is going to want to make sure you have the most talented, knowledgeable people on your team. Set expectations early about how that will impact hiring and the team they currently have.

“Human capital is also a major component PE firms are looking at. Skilled workers and experienced leaders are invaluable as they are seen as the driving force behind the success of the company,” explained Carolyn Collins, franchise fitness vice president of sales, Mitsubishi HC Capital America.

Communicate About the Type of Mentorship Available

“You should expect a good partner. Someone who will work with you through your problems and help guide organizational growth. This is someone you want to have a drink or coffee with,” Canarick said.

Set these expectations early. If you’re going to take on a private equity partner, know what that mentorship relationship will look like. What do you want to get out of it? Is that a main goal of pursuing private equity investment for you?

Determine Whether You Would Benefit From the Support

PE might be the right decision if you’re looking to tap into expertise that goes beyond your skill set. Private equity could open doors for you in terms of franchise knowledge, marketing skills, networking, and more. But you also have to be open to that advice. 

“A partner will look for open-mindedness to change and adapt. If they speak from experience, the entrepreneur should recognize they don’t know what they don’t know while, of course, upholding the values that made their business successful in the first place,” explained Canarick.

Reflect on Your Desired Exit Strategy

If you don’t have a desired exit strategy right now, then private equity investment might not be the right answer. They will want to see a return on their investment. If you plan on staying in this business without selling or going public, then there’s no incentive for them to put up their capital. Discuss this early so no one is put in a situation where the expectations don’t meet reality, and one party ends up frustrated or feeling as if they were not given a clear vision of the future.

The Reality of Private Equity Investment

Taking on a private equity partner not only means they’re investing in you, you’re investing in them. You’re entering a true partnership, where you’re able to tap into the wealth of knowledge, resources, network, and expertise that they have to offer, and they believe investing their capital with you is going to be worth the risk. It can be an incredible opportunity on both sides. But you both have to be aligned, and these discussion topics can help you find that alignment.

The post Is Private Equity Right for Your Fitness Business? appeared first on Athletech News.

Before signing on the dotted line, you must closely examine your potential fitness franchise partners. Your research should center on determining how transparent and consistent they are—two factors that will speak to not only the franchise’s overall potential but the success of your individual unit. 

Here, Athletech News outlines five questions that will identify both opportunities and potential challenges with prospective franchise partners.

Does the franchisor share details about how the marketing funds are collected and spent within the franchise system?

Trust is essential in building collaborative relationships, even more so in a fitness franchise environment. When potential franchisees decide to enter into an agreement with a franchisor, they trust their investment will be well protected and supported. Likewise, when franchisors approve new franchisees into the system, they trust that the franchisee will adhere to all the operational brand standards, ensuring members have a consistent experience wherever they visit the brand. 

Understanding the interdependent nature of the importance of trust within the franchise system is critical. Transparency, consistency, and communication are the most important aspects of trust in the franchisee-franchisor relationship; let’s take a closer look.

Transparency is often at the top of the list of characteristics needed to build trust in franchisee-franchisor relationships, and for good reason. The franchisee needs to have a clear understanding of two key areas before buying a franchise: how the marketing fund is managed and how franchisees who don’t follow the brand standards are addressed. 

It’s common in the fitness franchise world for franchisees to pay into a marketing fund on top of their franchise fee so it’s important to understand if the monies collected for the marketing or advertising fund are spent on building brand awareness and driving new members to the individual fitness locations. 

Prospective franchisees should also ask how much money collected from franchisees goes towards administrative costs and what those costs are. And specifically how the fund is divided amongst the markets where the brand operates. A good franchisor partner will fully summarize how these funds are spent annually. If they don’t, it should be a red flag around their willingness to be transparent and ability to promote and advertise the brand.

How does the franchisor monitor and assess brand standards and overall member satisfaction? 

The need for transparency extends to how the franchisor addresses non-compliant franchisees within the system. The main advantage of buying a franchise business is its significantly lower failure rate. A study by FranNet, one of North America’s most respected franchise brokers, found that 85% of franchised units still operate after five years of business operations. Fitness franchisors must take all necessary steps to protect this low failure rate. And that starts with protecting the brand’s reputation, which is built over time on their members’ trust in a consistent experience. 

How does the franchisor manage underperforming locations and franchisees within the system?

Franchisees who cut corners, fail to follow the brand standards, or treat their employees poorly risk negative publicity and a poor member experience that puts the entire system at risk, not to mention the investment dollars of every franchisee. All it takes is one poorly operated location and a lack of action by the franchisor to undermine the brand equity, especially for other units within the same local trading area. Ensuring you understand how the franchisor measures member satisfaction and adherence to brand standards is essential to your and the system’s success. 

It is also imperative for you to understand how the franchisor deals with franchisees who are non-compliant with the operating system, as other franchisees are largely powerless to correct the issues themselves.

How are new locations determined and awarded within the existing franchise system?

Consistency is another core principle of building trust in the franchisee-franchisor relationship, and its importance shows up in several critical areas of the business. The main area where consistency comes into play has to do with how the system grows. Not only as it relates to how system growth impacts the existing fitness franchise locations but also how those growth opportunities are awarded within the system of existing franchisees. A transparent approach to both, executed consistently across the system.

Unit growth is a core tenant of how franchisors measure the success of their brand and, when done sustainably, provides benefits to existing franchisees as well. The more locations the brand has, the more brand awareness the system generates amongst potential consumers, adding new memberships for the entire system. 

New unit growth can become a detraction on individual franchisee success when the franchisor undertakes a growth-at-all-cost mindset. Too many locations in the same trading area can negatively impact same-unit membership growth year-over-year. While the franchisor will likely continue to grow its top-line sales through increasing units, the individual franchisee could see their memberships decline if an additional unit is opened too close to their location. 

Ensuring you understand how growth is determined within your franchise system is important to your overall success. How are new locations selected? What tools or processes do they use to assess the viability of that location and its potential cannibalization of members on existing units? Great franchisors have a scientific approach to making these decisions and will openly share that process with their franchisees.

Also, franchisees must understand how growth opportunities are awarded within the system. All too often, ‘market deals’ with large multi-unit groups are the preferred approach to awarding new locations. But there still needs to be avenues where top-performing single-unit operators can expand from one fitness location to multiple should the franchisee aspire to grow. If this isn’t the case, you may forever find yourself as a single-unit operator. It’s worthwhile if you are keen to build a portfolio of fitness locations to explore these decision-making criteria with your franchisor. Asking for specific examples of how the franchisor helped single-unit operators grow in the past is an excellent way to judge if that potential exists within the system today.

Does the franchisor use two-way communication tactics to ensure the franchisees understand what’s happening in the business and have meaningful opportunities to share feedback about how the system performs at individual-unit levels?

Effective communication between franchisees and franchisors is the cornerstone of successful collaboration within a franchised system. Both franchisees and franchisors need to be able to talk with one another frequently to share information, knowledge, and ideas, which helps everyone move towards the common goal of system success. Understanding how communication happens in a franchised environment can help you choose to partner with a fitness franchise that values two-way communication. 

Look for fitness franchisors that leverage tactics like annual or biannual all-franchisee meetings, annual franchisee satisfaction surveys, a franchisee advisory committee, and easy access to leaders within the franchise system. As a franchisee, doing so will ensure that you have frequent opportunities to share feedback about how the franchise systems, programs, and tools perform at your unit level. 

Determining which fitness franchise to invest in can be overwhelming. The questions in this article can help you understand how the franchisor is working to promote a strong and healthy system for all of its franchisees. 

The post 4 Tough Questions You Must Ask Before Signing a Franchise Deal appeared first on Athletech News.

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.”

The post Should You Buy a Fitness Franchise? 4 Questions To Ask appeared first on Athletech News.