The latest greatest equipment, friendly staff and flexibility are the secrets to a successful gym franchise, according to Justin McDonell, who owns the master franchise for the Anytime Fitness chain of 24-hour gyms in Australia.
McDonell should know. In five years he's built the franchise into a national network of 260 gyms and is on track to reach 350 gyms by Christmas, with an ultimate goal of 400 gyms.
Not a bad result for a business that opened its first franchise in the New South Wales country town of Gunnedah in 2007, population 7888.
He says he chose Gunnedah as a test location for the network because the site fit the global business model - it was located next to a supermarket. The rent was also low, allowing him a relatively risk-free first foray into the market. Just two months later, he opened a second gym, in Wodonga on the NSW/Victorian border.
According to McDonell, who founded the business with his sister Jacinta McDonell-Jimenez, although it's easy to assume gyms are more city than country, rolling out the strategy throughout country towns initially allowed the pair to keep costs low and test the market.
When the siblings were considering taking the master franchise for Australia they looked at two different gym franchises that were already successful in the United States and also considered going it alone.
But being able to access the Anytime Fitness infrastructure, marketing and IT support, as well as the name, convinced them to go ahead with the agreement.
McDonell says the major sticking point when signing the master agreement was making sure it clearly stipulated exactly what they were getting for their money.
"We wanted a tight agreement and they came to the party. But they wanted to keep ongoing support [agreed the under arrangement] loose," he explains.
The Australian franchisees pay a monthly network fee of $900, of which a third goes back to the US parent. For that, franchisees receive support and access to a dashboard of metrics so they can tell how their business is performing. They are required under the terms of their five-year contracts to do a complete refit every five years to keep the gyms looking (and no doubt smelling) fresh.
"We also give franchisees support acquiring property or signing a lease," says McDonell, who explains franchisees also get access to an inhouse architect and the business's five-strong support team, as well as coaching.
He says so far none of the franchises has failed, although one agreement was terminated. McDonell bought back this business, which he says is now performing well.
One of the reasons the franchise has been so popular with franchisees is because it can be run by one or two people. Although every outlet is open 24/7, it doesn't have to be staffed around the clock. Cameras are mounted in every gym so franchisees can monitor cameras online when they're not on the premises. (Members are given a key and access code and can let themselves in.)
Most of the gyms are also located in residential areas with plenty of parking, so gym members can get in and out easily. Memberships can be used at more than 2000 gyms around the world.
As to how the business has managed to sustain such stellar growth since it launched, McDonell says many franchisees own multiple franchises - the top franchisee has 10 gyms - which has helped drive expansion.
"Growth has come from our internal networks and through referrals from existing franchisees," he says, explaining that when selecting potential franchisees what he looks for is a passion for health and fitness, good business acumen or previous sales and marketing experience.
"I've just been in a training session and we had accountants and personal trainers as well as people who have been involved with other franchises who are attracted to the low-staffing model," McDonell says.
In terms of the lessons he's learned since opening the business, he says if he had his time again he would have self-funded the enterprise - initially two partners were involved, of which one has since been bought out.
Right now McDonell is rolling out a new product through 60 gyms called "fitness on request", which involves rooms where members can dial up exercise classes. He's also trialling cost-effective personal trainers for small groups and new cardio equipment.
"We try to be driven by technology because we're very conscious that the product needs to keep evolving."
Here are his five tips for running a successful gym:
1. Make sure you have the latest technology and gadgets.
2. Offer members services others don't.
3. Be flexible - if members want to train at 8pm on a Sunday night, facilitate it.
4. Offer a friendly, professional service.
5. Keep the gym clean.
- Sydney Morning Herald