If you are looking to become a gym franchisor, then you are confident and secure in your business model. So first think about why you formed your business model the way you did. Doing this requires that you ask a long list of questions about your business. Here are some starter questions that you should ponder before making any financial decisions.
What does your business structure rely on? Who does your gym attract? What kind of area is your gym located in? What are the demographics of your customers and the surrounding area’s residents? What is your gym successful in providing to your customers? What aspects of your gym do customers not like? What do your employees appreciate about working at your gym? What do they not appreciate? What benefits do your employees receive? How can those benefits be a company standard upon becoming a franchisor? Do you have a team of professionals that you trust to aid you in the process of becoming a franchisor? If not, how do you plan on finding and hiring those people?
That is just a small portion of the questions that you will have to ask of yourself and your business getting started. Along the way, you will have to do more evaluation and reevaluation, but try to cover all the bases initially to make becoming a franchisor a smoother process.
What are the overall benefits of becoming a franchisor?
The best part about franchising your gym will be the empowerment you give to other fitness buffs. Your core values for starting a gym will be passed along to other entrepreneurs and fitness professionals. Franchising provides an opportunity for more people to have access to jobs and places to exercise.
In terms of business growth, the fitness franchise is one of the fastest-growing in the world right now. In a previous blog, you can find information for some of the top franchises in the last year and see a comparison of the net worth required to buy in and the total initial investment needed.
Do a comparative analysis of the successful franchises and see how they have structured their franchise agreements. Also, gather information on what the competitive rates are for buying into a franchise.
As your business grows, you will find that your involvement is reduced and you have less liability for the day-to-day operations. All the initial stress and workload will pay off tremendously when you can start making money almost hands free.
How scalable is your business model?
Scalability is extremely important. Understand how to replicate your business in different locations with different employees and different customers. Therefore, you have to gauge how effective your model will be on the low end of budget and startup and how effective it can be on the high end of the budget and startup. Figuring out the costs of the startup can be easy if you have kept all records of the purchases you made for your gym from the beginning.
You will have to hash out a budget for interior design, equipment, employees, startup promotions, advertising, business licenses, and more. Franchisees cannot afford to run into any unaccounted for hiccups or major additional expenses. They are most likely putting their life savings on the line as well as their business partners’.
Detail everything it took to start your gym and the steps you took to become successful enough to want to franchise. Detailing this will help you map out your franchise agreement.
Where can you improve your gym before becoming a franchisor?
Feedback from your clients and current employees is really important to understand the critical factors that have made your business successful. The questions you ask yourself can also double as survey questions for your employees and customers. Testimonials and reviews are absolute gold for businesses, so make sure that this feedback aligns with your financial success. You could be generating a good bit of revenue, but there could be other hidden problems that would affect you in the franchisor process.
Franchising is about being able to sell your business model and brand. Have people shown interest in your brand before?
Improving brand awareness before becoming a franchisor is imperative. You have to hash out a 6-12 month plan for increasing brand awareness. This includes running intensive campaigns on social media and even on television if your budget calls for it.
First, develop a brand story about why you opened your first gym and why you want to allow others to do the same. A story gives much more value to your brand and gym; it gives a personalized feel to your brand for more remembrance value.
What is your USP for selling franchises?
You’d be crazy to think that the market for franchising gyms is easy to be successful in. There are exactly 489 gym and fitness club franchises in the U.S. as of this year. Many of these franchises have over a thousand locations.
Granted, all of the fitness industry is taking a major hit this year because of the pandemic. However, the gym franchise market will be wide open when the pandemic becomes less of an issue. Now is the ideal time to start planning on how you will develop a franchise out of your gym.
This means that your gym has to have a unique factor that helps it stand out as a better prospect than your competitors. This can be difficult without much credibility and brand awareness. Although that’s why it is important to focus on your marketing strategy.
You have to really send home the notion that your gym provides a new and innovative experience that your employees and customers can attest to. Take Pure Barre, for example, this company became successful because of its unique niche for barre training and its clothing line. They are spot on with their target market and how they reach their target market.
Marketing to the right people is extremely important as your business grows and franchises out. This will aid in choosing the right locations and getting your franchisees some traction for signing clients up.
Collect data on the success of your current business model and gym. Client and employee testimonials provide for good leverage on your selling point. You will need the data to back up your claims to creating a successful model that people would want to buy into. Gathering this data can be done in local surveys, your engagement on social media, running the numbers on your revenue and expenditures, and getting the aforementioned testimonials.
What are the risks?
On credibility and brand awareness, you must ensure that the people who do purchase a franchise will run it in a way that represents your company well. Think about the policies and guidelines you want to establish and how you will enforce those. Ensuring success in becoming a franchisor relies on the good work done by the people who are buying in.
In the early stages of becoming a franchisor, your credibility is on a thin line. For companies like Planet Fitness, people know that the individual gym might not be completely representative of the whole company because there are over a thousand gyms associated.
Therefore, if customers have a poor experience at the gym level, then they are not as quick to reject the whole company. Now, if they go to corporate and corporate does nothing to right the wrongs, then there will be a much larger problem.
With this being said, you might want to look into building your public relations skills or hiring someone to manage PR. You never know when a crisis is going to happen and you want to be able to put any flame out as quickly as possible.
You will eventually have way too much on your plate to handle reputation management. Budget to hire people who can manage that for you.
Legal hoops and set up for the long term profits
Surround yourself with professionals who will advise you every step of the way. You will need help to properly document the process and budget for the new expenditures that come with becoming a franchisor. This is where friends who are attorneys, accountants, or marketers could really come in handy!
Hiring good legal counsel is especially important. This will be the time when you have to layout the contracts and policies that your franchisees must abide by. This will essentially come together in the franchise agreement.
What is a franchise agreement?
Franchise agreements define the legal relationship between the franchisor and the franchisee. This document outlines the nature of the relationship and the terms of the agreement between the two parties. It will be the most important reference point for either party for what to do and what not to do. Terms outlined in this agreement are usually guided by an attorney (or multiple) and are legally binding. Business structures are usually outlined in this agreement as well.
You must decide what business structure you want your franchisees to abide by when they file for their business license. When projecting the growth of your franchises, you will need to choose a franchise structure.
The franchise structure that is popular among emerging franchisors is conversion franchising. Your target audience for selling franchises would be gym owners who would be willing to convert their gym to your business model and brand. This is easier on you as the franchisor because you would see a large reduction in your franchisee’s startup costs.
Brace yourself and warn your loved ones to do the same
Lots of initial effort will be required to set yourself on a successful track! You will probably not be around too much for your friends and family in the early months of becoming a franchisor. The more effort you put in initially to get things set on the right track, the better off your business will be in the long run.
Clear and consistent communication is vital! This goes for your teammates, your family, and your friends. Your team must possess a clear understanding of your goals and expectations for franchising. This is the time that you will have little room for error. Make sure you have a clear budget for all expenses and a clear list of expectations for your team.
As for your friends and family, times get a little tough when you are making big business decisions and plans. Don’t be afraid to ask for their support and understanding for your stress levels. If you have friends who could even be of help in advising your business decisions, then seek their knowledge!
Becoming a franchisor means that you need thick skin and hard set goals for what you want. This is not a business venture for the weak, but it will benefit you and many communities in time.
Focus on what made your gym successful to begin with and carry those values through the process. Form the right group of counsel to help you make the most beneficial decisions along the way.
In terms of knowing when the right time to start franchising, stay updated daily on market statistics from IBIS World and other sources like Franchise Direct. Choosing the right time and the right method for spreading the word about your franchises will be important in the following year.
If you liked this article and want to read more, then check out the related blogs below! Feel free to leave us feedback in the comments as well.