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Entries in franchising (11)

Monday
Nov162009

Independent Club vs. Franchise

This week, experts Barry Klein, Amanda Oborne, and Constance Ruiz discuss the benefits of both independent start-ups and franchise businesses:

Q: “I am looking to invest in a start-up health club and trying to decide between an independent club and a franchise. What are the benefits of each?”

A: There are benefits and challenges to opening either an independent or franchise health club. Regardless, PLEASE gain all of the experience you can by at working at a club and studying business before jumping into ownership. Loving fitness is not enough. Having had personal success in a gym is not enough. You are opening a business that happens to be a health club, not just a health club business.

A well-run franchise can eliminate an enormous amount of risk to its franchisees with best practices, advertising, purchasing programs, mentoring, etc. This comes at a price with both up-front and recurring fees, as well as in giving up flexibility in how you run the business.

Both models can work, but it will be your experience, intelligence and hard work that will be most important. Independent gyms are the polar opposite. You can run your gym however you want, but there is no “mothership” to turn to – or pay - for coaching, best practices, advertising, or discounts. This is an emotional decision as much as a business decision.

Franchisers say that their franchisees have a higher rate of success. Independents point out the large number of failed franchises in our industry. Both models can work, but it will be your experience, intelligence and hard work that will be most important.

Barry Klein, Owner
Elevations Health Club
barry@elevationshealthclub.com
www.elevationshealthclub.com

A: Based on what I’ve learned working with the independent club owners who are members of the FitLife Club Network, the choice between independent and franchise really comes down to what kind of owner, and really what kind of person, you are.

Independent owners want to retain complete control over their brand, operating procedures and member experience. They are loathe to pay royalty fees for what amounts to a product created out of their own blood, sweat and tears. They also believe the buck stops with them and don’t want to be beholden to a centralized office that may or may not come through on promised support or make decisions that don’t fit their local needs.

That said, there are some very strong practical reasons for considering a franchise. The business model for a good franchise has already been proven, the brand is already known (there’s no underestimating how expensive it is to build a brand from scratch!), group purchasing lowers equipment and supplies costs, and it can be easier to recruit good staff to a known entity.

Many of the benefits of franchising are available to independents if they join a good regional trade association like the FitLife Club Network or one of the IHRSA regionals. Such associations offer education and networking opportunities, group purchasing offers and a backbone of support and information to assist the independent operator. Visit www.fitlifeclubs.com to learn more about regional associations.

Amanda Oborne, Executive Director
FitLife Club Network
amanda@fitlifeclubs.com
www.fitlifeclubs.com

A: An independent start-up is a good idea if you have two essential elements: knowledge of the industry, and knowledge to work “on” your business and not “in” your business. The book that explains this the best is the E-Myth by Michael Gerber. It is a mistake to be a good “technician” and believe that is the only skill set you need to be able to successfully run a business.

A fitness franchise business helps when either one of the two essential elements is missing. If you are from the industry and invest in a franchise, hopefully the systems and support are sufficient enough for the business to take-off. This will allow you the opportunity and time to invest on running the business including administration, marketing, and overseeing that all the processes are in place with the right people to carry them out. On the other hand, if you have management and business experience but don’t have the industry background, again franchising can teach you this.

The best case scenario is if you have both the above skill sets and invest in a credible fitness franchise that knows they are in the franchising business along with enough industry knowledge to make it work.

Constance Ruiz, President
Vivafit
281-732-9757
constance@vivafit.eu
www.vivafit.eu

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