|Originally Posted 03/29/10
probably never been stranger market conditions than exist now in the fitness
industry. If the old adage is true, that confused markets represent great
opportunity, then this must be the decade of vast fortune for those strong
enough to take risk.
this market confusion been more evident than in the franchise business, once
the future hope for the industry and now a highly polarizing segment of the
market with wars and issues all their own.
There was once a time that the mere name of the club could incite membership
and market strength.
early days of the Nautilus Fitness Centers, Gold’s Gyms, World Gyms and
Powerhouses. All of these were names that once drove market share and made the
independents shake from fear.
My how things have changed in this segment of the industry. Gold’s Gyms now,
for example, have clubs charging $9 in some markets, $19 in others and as high
as $50 plus in the Northeast. Visit a Gold’s and you might find beautiful
physical plants designed by Fabiano and just a few miles away find other Gold’s
that look like relics from the 1990’s with a central workout floor crammed with
equipment and a huge free weight area pushed up against the wall.
In the early
days of franchising, the name was the delivery system. Put a recognized name on
your building and almost everyone knew what to expect when you walked through
the front door. Gold’s and World’s, for example, represented the 1990’s style
body building gyms and were known for seas of equipment.
The name-only franchise faded, however, to be replaced by the franchise based
upon a delivery system. Out went the name-only guys and in came Curves (circuit
training), Anytime (first generation 24-hour concept) and Fitness Together
(small, multi-room training facilities). Of course the purest form of
franchise-based delivery system is Planet Fitness and the low-priced, value
generation of franchises left the previous generation in scramble mode. This is
no more evident than the fear that Planet Fitness inspires in most Gold’s
owners illustrated by the endless meetings they have up and down the east coast
focusing on competing against the low priced model.
Fitness is a logical concept that plays on the idea that most people just want
simple access to equipment and don’t want to pay a lot. These same members are
also tired of the posturing and insanity that existed in many clubs in the late
1990’s. PF is a good model and serves a purpose, but what makes them solid is
not so much the concept but the focus on a precise business model and marketing
base; something the Gold’s guys don’t currently have in their organization.
Many of the
clubs in most of the old-style franchises are nothing more than replicas of the
box clubs that existed in 1995. Average locker rooms, average group rooms and
as much equipment as can be squeezed into a 5000 square foot training space. In
fact, most of the ones opening today seem to be using the exact same equipment
lists they used to order in 1995, represented by the huge order of Hammer
Strength that most of them install but probably now appeals to about five
percent of your membership.
club, which exists in thousands of more clubs than just in Gold’s, has a low
penetration rate in its offerings that make if extremely vulnerable. For
example, these clubs might break down like this:
• 10 percent that just want to be left alone to do their own thing
• 10 percent that take part in the club’s group exercise programs
• Five percent that are one-on-one training clients
This totals 25 percent of the club’s memberships. This also means that 75
percent are just there walking slowly on a treadmill or going in circles
holding a big workout card and doing a circuit.
always cite how beautiful their clubs are. Good physical plants attract, but
don ‘t retain, and your highly finished gym really does nothing to keep the
members you worked so hard to attract. Even the Lifetime people, who build
their new clubs at about $30 million each, have found that they can attract
with this magnificent facilities but that they also have retention issues like
every other club. See previous blogs for ideas on this as well.
percent represents the members this club could lose if it faces a low-priced
value club. If all I am doing is walking on a treadmill, then why pay $49 per
month when I can go down the street and pay $10 to walk on the same brand of
owners fail to realize is that they aren’t getting beaten on the price; they
are getting beat by the concept and focus. PF and all its new imitators that it
is spawning work because they have a defined plan and focused concept and their
narrowly defined plan of who you are and what your represent to the consumer,
you tend to madly scramble when attacked. This is why you see incredible Gold’s
Gyms dropping their prices to stupid lows. If I don’t have a plan of my own to
compete, I will just copy yours.
This is not
new by the way. This surge and reaction phenomenon has been going on since the
1950’s. In those days, someone put in a tiny, kidney-shaped swimming pool and
every club then had to have one. Drive by a club and see a full parking lot and
the owner thinks: "It must be his pool that is making people crazy?”
would of course never think that the reason he is failing is that he is doing
something stupid and that it isn’t the pool that is killing him but his own
dog-poop business plan.
this trend continued during every generation: These are just a few of the
stupid things that one guy did, then claimed he made a million with this edge,
and then faded. Of course some of these did work well and did give the owner a
temporary edge, but the point is that every great idea was copied, diluted and
• The circuit
era in the late 60’s
• The Nautilus era in 70’s
• The first generation of Gold’s guys
• Aerobics and all its sub-groups in the 80’s
• The super-box franchise workout clubs in the 1990’s and the fear they spread
• The advent of the 24-Hour Fitness chain and the fear it spread
• Then came LA Fitness and the fear it spread
• Then came Anytime and its revolutionary 24-hour idea and the fear it spread
• Then the $19 dollar guys in the late 1990’s
• Then the $10 guys now
All of these
confused the market, forced strong reaction, were eventually copied and then
diluted, and it will be the same again today.
is know what your about and focus on your own plan. You are hard to hurt if you
have a solid plan that is working. You may need to adjust, such as offering a
$39 price against a $10 guy, but you have to learn to compete as an alternative
rather than just a cheap imitator.