Leaks in the Franchise Bubble

The failure of some franchises is inevitable, and welcome news for independent facility owners.

Our industry is finally starting to recognize the flaws of fitness franchises. Some franchises are closing down completely, while others are seeing increasing numbers of facility closings. As an independent club owner, I hope I don't sound too nasty when I say, "good!"

No business in this business

The explosion of fitness franchises is nothing less than a bubble. The proliferation of "express" facilities owned by individuals with neither a fitness nor business background has been a formula for, if not disaster, at least upheaval, in our industry. My business partner and I have a distrust of franchisors, and a distaste for the proliferation of franchisees. The scenario that seems to be playing out now is something we all should have seen coming, and there will be repercussions for our industry.

Please don't think I am reveling in the reported troubles of other business owners. While there's no joy in others' failures, I never believed the explosion of fitness facilities could be supported by market realities. Many of the franchisees who are failing or will fail had no business entering the fitness field to begin with (see Please Don't Open a Health Club, Fitness Management, June 2007, p.51). Franchisors who claim they can train new business owners in "everything" they need to know about running a fitness business - and actually do it in a week or two! - should be ashamed of themselves.

Me too, me too!

While some new franchises do serve legitimate niches, and have therefore appealed to people who otherwise might not have joined a fitness center, too many of them are "me too" facilities that offer nothing by way of differentiation. As a result, too few potential customers have been divvied up among too many facilities, which has hurt everybody. Now, as these facilities start to close, another generation of consumers will feel ripped off by our industry, and the myth that health clubs are not to be trusted is perpetuated.

I am proud to be a club owner who is also a degreed fitness professional. I am proud that the trainers in my facility are fitness professionals who have, or are working toward, their degrees. Our group fitness instructors have certifications and experience our members appreciate. I even have a business partner who can go toe-to-toe with bankers and accountants. In short, we take our business seriously, and we hold ourselves to a high standard. None of that means that my business might not fail some day - it could. But, we are at least trying to do things the "right" way, and we're taking responsibility for ourselves, our business and our members. We never stop trying to learn about what could make us more successful.

The express fitness franchises always inspire a variety of reactions in me. I am insulted when I read yet another article in a local or national publication that celebrates the success of a formerly deconditioned person who is now training other deconditioned people at the latest franchise. As someone who considers himself an expert in my field, am I supposed to be glad that someone with no qualifications is helping at-risk exercisers?

In lighter moments, I try to be helpful. When I talk with owners of fitness franchises, I encourage them to find some way to differentiate their businesses other than on price and esoteric differences in equipment that the general public does not understand or care about. I ask them, "Why should I come to your franchise and not the one down the street?" I hope, for their sakes, they have an answer.

Other times, I'm bemused, such as when existing fitness centers decide to compete with the franchises head-on. They knock down walls and spend thousands of dollars to offer express workout circuits without even knowing if their members or prospects care about such a thing.

Reality check

Mostly, I'm just glad reality is starting to sink in throughout our industry. We don't need the same club on every corner. And, fitness centers that are not unique or well-run will need to fail in order for our industry to move forward. It should also be obvious by now that running a fitness facility means running a real business. Franchisors who say they can teach it all are lying. Franchisees who think they can learn it all should remember that something that sounds too good to be true probably is.