So having worked with a number of Franchise brands over the past few years you would expect me to be a completely sold by the Franchise model that is sweeping the UK. Whilst they do have huge benefits for potential new business owners they are not always the right solution for everyone. I will try and cover the benefits of both angles as to to give you a better insight into what could be the best choice for you if you are thinking of setting up your own gym business
So lets start with what the Benefits of the Franchise model. Its important to note that these are the generic benefits and the quality of the service and support delivered can vary massively across the brands. Some for instance will provide you with a pre-sale manager to guide you through the site up process, others with provide you with telephone support. I will cover another time of what you should look for when doing your due diligence on a franchise business
Benefits of Joining a Fitness Franchise:
- Franchising has been proven to have a higher initial success rate than those businesses setting out on their own. With upwards of 70% of new businesses closing within the first 2 years this can be an important factor
- The Franchise will have already established a certain percentage of market share
- You have a brand name to use and promote
- Often no prior experience is needed
- You have access to a supplier network with pre-agreed favourable terms
- Many will provide national marketing initiative to drive the brand and company promotions
- Techniques, workouts and training methods will have already been created
- Operational guidelines, staffing structures, cost analysis etc will already be in place
- Funding channels will be in place to enable you to access leasing options for equipment. Banks and finance companies are more likely to lend to a Franchise supported business than as an individual
- Dedicated Franchise support
- Technically you don’t need any fitness experience.
Then disadvantages of a Franchise Model
- Your upfront investment is often higher than if were to research and find suppliers yourself
- You are restricted by the franchise model and so are expected to follow the model to the letter
- You are obliged to maintain the investment protocols they set
- There will be restrictions on the suppliers you can use and sometimes this actually leads to higher running costs
- You are restricted to the programs and activities you can perform
- Less opportunity to add your personality to the facility as the brand will always come first
- It is harder to create independent relationships with other businesses
- You may find over time that franchise support/audits become intrusive
- The inflexibility of a franchise model can restrict your ability tom adapt to local market conditions and changes
- Your vision for the future direction of the brand or business may differ and as you are not a shareholder in the main business your say is nothing more than just feedback
- Selling a franchise business does not yield the same returns as you do not own the intellectual property, the brand or ven the members.
The other things to remember:
- A Franchise will have commercial arrangements with almost all their key suppliers. This means that everyone from the builder to the software supplier is paying the Master franchisee a kick back to provide you a service
- You have to pay a significant fee upfront to purchase a territory as well as the monthly fee which is often a set fee or a percentage of your revenue
- Your upfront investments are almost always more expensive than originally quoted. This is not directly the Franchises fault as costs will vary depending on the location you get. However, I can guarantee that they will sell the package based on the lower estimate.
- Not all franchises have a national coverage and so a franchise business with a predominantly London set up is unlikely to have any brand presence up North. This being the case are you benefiting from being part of their brand? In fact the Franchise is probably gaining more out of the bargain than you
- Not all franchises invest in National marketing campaigns and use the franchise network growth as the way of growing their brand presence
- Don’t go into the process believing they are the best value for money. A successful independent club has the potential of making higher profits.
- Franchising is definitely not risk free and success is not guaranteed. Whilst the risk is lessened there are certainly may examples of Franchise businesses failing in all of the major Fitness Franchise chains.. Don’t convince yourself the Franchise will save you if you run into trouble as they simply wont as that is not their role
- While no experience in the chosen industry is essential it is recommended
I have worked with some amazingly successful franchise clubs who are incredibly happy with their decision to do so. I would also recommend anyone that does not have a fitness business background to open up communications with the variety of Franchise businesses to ascertain one that suits you best.
What I would say though is that you do your research, not only on the brand but on their future growth plans, what support you will receive and how much they invest on growing the brand themselves.
Franchises definitely have their place in the market and for many are great investments for the right people. However, if you want control on the brand, style of service you deliver and you have the business acumen and the experience in Fitness they may in fact not be the right choice for you..
Final thought is, if you have the confidence and desire to own your own fitness business then why be part of someone else’s success when you could create your own. I would strongly advise running your plan past a fitness business consultant who would happily advise on what they though was the best route for you and your experience.