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Health Club Franchising: A Response to Fitness Industry Growth

Listening to their own unique market segment, industry franchisers respond to an ever more selective customer base.

There was a time in the not-so-distant past when owning a fitness club was easy. The market was clear – 18-to-35 year-olds, who wanted hard bodies and weren’t afraid to sweat. Not coincidentally, the market was small and predominantly male.

Whether that was a misinterpretation of the market at that time or whether increased awareness about the role fitness plays in health has expanded the market (as well as the diversity within it) is a question for another article. The fact is that today the fitness club market is large and made up of many segments. The most successful clubs understand that and build their operations as well as their sales and marketing strategies to take advantage of it. Some of the key drivers for today’s market are:
  • A large, aging world population
  • Growing obesity rates, not only in the US, but in the UK, Japan and China, as well
  • Busy lifestyles
  • Insurance companies incentivizing their insured to exercise regularly with offers of lower employer insurance ratings (3-10%) and direct club fee reimbursements
  • Growing awareness about the role of exercise in a healthy lifestyle (most Americans, and a growing portion of the world population, are aware that exercise is good for them, yet only ~15% belong to health clubs)

The point is that fitness operations need to understand how to appeal to busy, business men and women, who are looking to increase their energy and live longer. Moms, who are trying to squeeze in some time for themselves between dropping kids off at school, doing the grocery shopping and getting the evening’s dinner started. Shift workers, who want access to the facility at odd hours.

These market segments aren’t interested only in the mechanics of your top-of-the-line weight training equipment and cardio machines. They want a fitness club that understands them. That helps them envision the goodness regular exercise will bring. Many want a gym that helps them stay motivated, without costing more. They want fitness on their schedule. They want convenient, nearby locations. Some want a social atmosphere. Others want a no-frills club that makes fitness affordable. And all want a club that caters to people like them – working people, moms, and other individuals who have limited time to exercise and whose goals center around health and wellness rather than merely building big muscles.

There is a growing group of clubs that have been listening carefully to their constituents, and they are earning big profits from it.

Planet Fitness World Gym

Ben Midgley, president of Planet Fitness World Gym, who co-wrote the book Golden Circle Secrets, a how-to guide for selling and listening to your customers, has seen his franchise operation quintuple in just three short years.

"One thing I've learned is that you shouldn't over-think this business," Midgely says. "If you're doing things that work for the customers and the franchisees, then you'll be successful.”

Planet Fitness recognized the desire of their target customer to fit a quick workout into a busy schedule. Unlike body builders and aerobics savants, these customers wanted a no-frills club that was close to home, easy to get to, with top notch equipment. They also wanted a fair price point and 24x7 access. Planet Fitness World Gym responded with their 14/40 program that offers small-footprint clubs that can be housed in strip malls, next to grocery stores, and placed just up the road. And their marketing efforts are designed to set them apart from the competition with off-the-charts colors and images of “regular” people exercising and living well.

Snap Fitness

Snap Fitness has its own strategy of meeting the demands of the fitness market with an innovative idea called “key card clubs” that allows members secure, around-the-clock club access by virtue of an encrypted HID membership card and security badge. Each member’s health and safety are monitored while carrying their “safe-and-secure” badge – any time, day or night.

“We’ve taken all the things big box clubs offer and scaled them down to make our clubs accessible in any neighborhood,” says Michael Wickman, vice president of operations for Snap Fitness. “We offer top-quality equipment, nutritional and exercise programming, as well as personal training -- all at no additional cost.”

But what may stand out most with these successful clubs is the innovative and ongoing support they lend to their franchisees. Both Snap Fitness and Planet Fitness have found ways reduce overhead by moving services to Web-based programs. In fact, Snap kicked off a new program in January of this year, called the Fitness Challenge that leverages their web site and simple in-club tracking capabilities to keep members engaged in their fitness program and coming back.

And it is paying off. Snap Fitness was ranked No. 1 in 2008 among ALL franchise offerings by Franchise Market Magazine’s listing of the “Top 100 New Franchises.” Entrepreneur Magazine placed eight fitness club franchises in its Top 500 franchise list. And at No. 24, Snap is tops among fitness clubs on the fastest-growing franchise list this year.1

Gold’s Gym

On the other end of the spectrum is Gold’s Gym, one of the oldest and largest franchise fitness companies in the world. Established in 1965, the name is recognized the world over, and their brand promise is about supporting a lifetime of fitness for their members. They offer extensive fitness options on a large scale. And they continually generate innovative ways to keep their members motivated long term.

One example of such innovation is something called “cardio cinema.” Just imagine yourself after a long day at the office, perhaps tired, perhaps agitated over a personnel issue or paycheck problem. Rather than going home, you walk into a movie theater to relax. Only instead of reclining seats and sticky floors, the room is full of Arc Trainers, treadmills and other cardio equipment. There’s a super-sized screen playing a current movie and a bevy of other patrons all relaxing and rejuvenating under dim lights and refreshing air conditioning.

But that’s not all. Like other successful franchises, Gold’s clientele also live busy lives. Gold’s addresses that reality by providing highly trained, on-site fitness staff, who offer hands-on exercise and lifestyle counseling to every member.

“Our members need a time-efficient, effective program to help them get the most out of the limited time they have to work out,” says Keith R. Albright, Senior Vice President – Franchising. “Our franchise owners and expert staff provide custom fitness programs that maximize results, and our top-quality facilities give them the means to reach their goals.”

With 475 franchise gyms in the US, 65 company owned gyms, 130 franchise gyms in 27+ different countries, it appears Gold’s understands its customers very, very well. And they’ve created a winning formula that keeps them growing.

Putting it All Together

While each of the franchise operations is successful, they are successful in different ways and in different markets. What they have in common is that they each understand their market segment at a very deep level. And they deliver solutions that meet the very specific needs of that segment. They do that by providing quality fitness facilities, listening to customers, and supporting franchisees with information, training and on-target sales & marketing strategies.

If you are considering a franchise opportunity in the fitness industry, remember the most successful operations know their customers. They design their operations and their sales and marketing strategies to meet the needs of those customers. They also have a track record of success. So do your homework. Talk to existing franchisees. Find out what kind of “real” success the franchises are having before you invest.


1 Franchise Fitness Make Top 500 List; Fitness Business Pro, Pamela Kufahl. Feb 2008.