Winning the Franchise Fight

Growing up, my father would always ask me, "If all your friends jumped off the Brooklyn Bridge, would you jump, too?" I always thought that adage was for kids. You know, don't follow the crowd, think for yourself. It occurred to me only recently that it applies to the health club business, as well. Take the proliferation of the low-price and/or 24-hour chains, and consider this: What if all of these companies jumping into the low-price/24-hour model are wrong?

An independent perspective

Gasp! Am I allowed to say that? All of these franchise companies must be right because there are so many of them. Franchisors are finding more franchisees willing to buy into these concepts. And, the fitness industry media can't get enough of these guys, as their every move is followed with rapt attention. So, they all must be right. I wonder if anyone remembers lifetime pricing. Everyone was doing that at one point, so it must have been right.

Thirty-minute express franchises were going to take over the world just a few years ago. Curves wasn't enough. We needed more women's places, then we needed men's places. Independent facilities needed to respond by building circuits and creating women-only areas. We just won't discuss Cuts, 1-2-3 Fit and the other franchises that are now struggling or out of business.

Today, it's all about the low-priced franchises like Planet Fitness and Retro Fitness, and the 24-hour clubs like Anytime, Snap and World Gym 1440. They must be right, and they will surely take over the fitness world, because a) franchisees can't throw their money at these concepts fast enough, b) the media can't cover them enough, and c) independent facility owners cannot, or don't know how to, compete.

When to worry

I worry about option C. As the mania grows and these franchises appear in every community, independent fitness centers must be prepared. We need to know why our facilities are unique, and we must understand the competition. What we must not do is panic when one or more of these guys comes to town.

If your club does not have a defensible market position, then you should be worried. If you have not maintained your equipment, if you have not trained your staff, if you do not keep your facility clean and functional, then you should be worried. If you cannot give me your "elevator pitch" (the summary of your club's uniqueness as discussed during a brief elevator ride), then you should be worried. If your business is not financially healthy, then you should be worried.

However, if you have any of these problems now, it doesn't really matter whether a franchise competitor moves in or not. Sooner or later, your business will be in trouble.

Get your gloves on

Franchises are shiny and new when they open, and they are kept very clean. They charge almost nothing, and they convince the marketplace that fitness is worth almost nothing. They have easy-to-understand elevator pitches and cookie-cutter staff. They attract two ends of the membership spectrum: the motivated exerciser who simply wants a place to work out, and the non-exerciser who thinks that all fitness centers are the same, so they join the cheapest and most convenient one.

As a facility owner, ask yourself, "What if these franchises are wrong?" and "What if they execute poorly?" Do you really want to turn your business upside down in reaction to them? Many of these franchisors protect so little territory for their franchisees that the locations cannibalize each other. Some of these would-be juggernauts are revealing attrition rates that are no better than industry averages, with decreasing membership and revenue. Maybe a key precept of their business model — "We'll sell memberships so cheap that nobody will ever cancel" — doesn't hold true. Maybe your community can support one or two 24-hour, no-frills clubs, but will it support one on every corner?

At the local level, these franchises are just more fitness centers that independent facilities need to compete with. They all do "cheap" really well, so don't try to be the low-price operator in your market. The 24-hour model is expensive to execute without using the techniques implemented by the 24-hour franchises, so you might not be able to go head-to-head by matching their hours, either. But, beyond clean, cheap and maybe open-all-the-time, what's so exciting?

The challenge for independent facility owners is to be prepared for these franchises, or for any competition. The other challenge is just to give things time. I, for one, don't think that clean, cheap and open-all-the-time makes for much of a business model. At least, not a business model that is going to take over my world.

The views expressed in this column are those of the author, and do not necessarily reflect the views of Fitness Management magazine.

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