Episode #41

Andy Peat on How Franchises Are Navigating a Transformed Fitness Industry

Eamonn_Curley
Eamonn Curley
20 August 20
30 min listen
Andy-Peat

In this episode, we talk to Andy Peat, the Chief Product Officer of Lift Brands Inc. which includes SNAP Fitness and the 9Round International Franchise. In this episode Andy talks about his career to date, rising to the top of a large franchise, how SNAP and 9Round dealt with closing down during COVID-19 and how the fitness industry has changed as they open back up. 

Episode Link

This episode of The Fitness Founders Podcast can be found on Spotify, Apple Podcasts, and anywhere you get your podcasts.

Transcript

Kevin: How is it going everyone?  Welcome to The Fitness Founders Podcast. I’m Kevin Mannion, VP Marketing here at Glofox. This week we talk to Andy Peat, the Chief Product Officer of Lift Brands Incorporated, Snap Fitness and the 9Round national franchise. In this episode, Andy talks about his career to date, rising to the top of a large franchise, how Snap and 9Round deal with closing down during COVID-19, and how the fitness industry has changed as they open back up. Let’s have a listen. 

Okay, Andy Peat, welcome to the show. 

Andy: Thank you.

Kevin: Andy, really excited to have you on. You are running a part of a very big franchise, so maybe just tell us a little bit about first what you do now, and then just a little bit about your background. 

Andy: We are a multi brand business who specializes in fitness franchises. We’ve got Snap Fitness, 9Round Fitness, and Fitness on Demand which is a technology platform for virtual training. We spread across the Asia Pacific region, and predominantly in Australia and New Zealand and Southeast Asia is our growth market.    

Yeah, myself, so I’ve been with fitness industry for 15 years now. I’ve been work the Snap brand for just coming on 11. I was actually the very first employee for Snap Fitness New Zealand as a club manager. I somehow managed to work my way up into a CEO pretty early within 5 years. I think I was 25 when I took on the CEO of Australia role. Throughout that time, I’ve own franchises, I’ve owned supply chains, and was fortunate enough to work with the master franchise all group for a number of years who successfully exited out of the business two years ago. Ever since then I’ve worked closely with the global office based out of Minneapolis in America. Yeah, started to grow the region, and grow the continent. It’s been a lot of fun. 

Kevin: Awesome. Obviously, you’ve moved, had a pretty strong career progress. Before we dive into the detail of the podcast, what would you say is different about how you view the world of fitness that maybe helped you move into the role that you are in now? 

Andy: It’s a great question. I always would get to the next step and then picture what the next step was after that. I guess one of my faults as a teenager mostly in sport was I never goal to get to a certain team and once I got there that was sort of job done. I live to regret that so in my business career I didn’t want to do that. An example of that is once I’ve became a club manager, I think I was 20 years old something like that, I realized one day that my life was dictated by the operating hours sticker on the door. I was there from 10am until 7pm. When I realized that a sticker ran my life, there had to be something further than I was doing. I like the 24-hour model. It made sense to me. I accidentally seen the financials to the club by the accountant. I realized these things did pretty well, so I printed them off and went and found a couple of friends who had some money and we opened up our own ones. I ended up doing pretty good doing that, so the corporate guys decided to bring me in on as a Franchise Sales Rep, and expand the business in New Zealand. And then I was fortunate enough to get the opportunity to be the CEO for Australia which to be honest I have no right to that. I think I was 24 when we were talking about it. Ultimately I had to sell myself into the role and then prove it once I got in there. 

To answer your question, I’d say that the fitness industry is really unlimited in its potential and the way you can go as a person, as an employee, or as a business owner. You just have to be creative enough to think of what your next step could be and have the courage enough to speak it and be brave enough to do it I guess is probably the main thing. But whether you are a PT or an Executive you can now own your gym pretty easy. It’s just about going out there and finding the ways to do it. That would be the answer. 

Kevin: Good answer. Okay, so let’s move in to the topic of today which is your survival strategy for lockdown and then what the future is going to be like. We’ll start with lockdown survival. Tell us a little bit around how you approach things with Snap and with Lift as the lockdown started and what did you do?

Andy: Sure. In Australia and New Zealand, I don’t think we took COVID as serious as we should have it at the very start. It was heavy in China, starting to grow in Europe. We thought little of New Zealand and Australia. We’ll sort of going to be okay because we are isolated at the bottom of the world. As it started to build up momentum, the writings on the wall, we knew lockdown was going to come. Preparation went into how to close out our 326 franchises safely and correctly. A lot of that was ensuring that we were on point with what the government mandates were. That’s across all countries, dealing with our master franchise or franchises in the Asian regions. In Australia, every state would have a different governing body as well. 

First thing was producing essentially our mechanics on how to close. And that was firstly how to communicate to members, certainly how to close the gym safely from a mechanical standpoint – lock the doors, turn on the cameras, make sure the cameras are on. All the basics that you would think is common sense but in franchising you have to outline everything. You have to do a lot of checklist. That was some really, really important decisions to make. The biggest one was what do you do with your members? Do you build your members or do you not build your members? And there was no government to say, “If you are not trading you have to stop building your members.” It was a decision that had to be made as company executives. I’m glad to say I believe we made the right one. We cease our building as soon as we cease trading. It was the right thing to do in our mind. Other chains did not and they caught a lot of hate for it. We just believe if the doors are shut to our facilities we won’t build our members. 

Actually, the process of turning those off and then switching off the 24 access was the big one, and then ensuring that all franchisees from a pure process and mechanical standpoint closed correctly and safely. And then of course, you’ve got the emotional side to it as well. You’ve got franchisees whose livelihood be a life savings, everything that they’ve worked for is tied up, and something that I have no control of. A lot of the times it’s just mitigating there. The first question you get asked is a franchisor is, “Are you going to build any franchise phase one and close. That became another crucial decision. Of course, if you can’t build members then we are not going to build you as a franchisor. I think that we’ve dealt with that pretty well. But it was ultimately just about ensuring that the franchisees knew how to close down. We were interpreting the government mandates for them if it was a little bit complex or you get a government speech and it can be interpreted a thousand ways. We would then have to put outlier and rules and regulations on top of that. We close everyone in a couple of days across both countries. Yeah, I’ve been attuned to the next focus really.

Kevin: Yeah, that’s pretty comprehensive. Now, yes, what’s the next focus then? Literally, what did you do while you were closed?

Andy: When we first closed the attention globally for us across the globe was there was a bit of panic, not panic for us, but franchisees more so around well we need to give our members something. I think within three days of closure we had used Fitness on Demand business which is the virtual training platform. They had a product called Stay Fit which is part of Flix Fit which is a home gym offering. It is essentially a platform with a library of workouts. We got that out within 3 days. It was something to get the brand at home with the members which was important. Our attention then turned to how do we create revenue streams for our business. COVID is a unique crisis where you shut your membership building off but you are still incurring cost like rents, and wages, and things like that. We came out with a plan on how to create a revenue stream for members and essentially have that payment gateway which was done on a form of a 28-day at home challenge. We produced an app that we’d use for the last couple of years in Australia and New Zealand. We put that in six countries across the world for Snap. Mostly it was in English. It was really, really well received from the people who jumped on there. It was interesting for us. It was our first dive into more of an e-commerce on demand sales type thing. We are bricks and mortar we’ve never done that before. If I had my time again, we charge a dollar a day because it was a really new stream for franchisees. It was $28 and we ended up getting over 5,000 people. I think that if I’ve had my time again I’d rather do it for free because from a technical standpoint fitness apps during COVID you are competing with. Chris Hemsworth did something for free, and Nike did something for free. Our app is pretty great but I can’t give people Thor. We did that as a revenue stream and some clubs did extremely well out of it. Some clubs didn’t really push it much… so it was focus #2. 

Focus #3 came in the form of alright keeping franchisees and managers engage during lockdown whilst we at corporate got ready for an inevitable re open, and that came in the form of education. We produced, across our two brands, we produced around 50 educational pieces. We just covered everything sales, marketing, onboarding trainers, leadership, everything. And that go to our corporate stuff, good alignment, and things to do as well as everyone was working from home. Like everyone, we use Zoom a lot. Lots of team meetings, lots of franchisee get togethers just keep them engage, keep them positive. I thought to myself that I could come out of COVID better off than when they went it in terms of our knowledge at the same point being job well done. That was really the focus. 

Kevin: Unless these all the training you always wanted to do but never have the time to do with the franchisees. 

Andy: Yeah, like, we actually do a lot of education. We do a lot of online but we are very big on face to face training. We train them a lot and we do a lot of the face to face education. It was something that, yes, having the content sitting on our development platform we wanted to have for a while and this speeded it up. This definitely speeded it up.   

Kevin: While we are on the topic of training, what are the key areas of training that you think are most important for your franchisees to be successful?

Andy: It’s a great question. I always look it into three… There’s really three fundamentals to being a successful gym operator and it’s knowing how to get more leads, get more sales, and then keep more members. I try and get my team to work everything and ask themselves the question of whatever they are doing, “Does it fit into one of those three things?” If you do those three things well ultimately for us it leads to our fourth pillar which is open more clubs. 

Training people on getting more leads means it’s marketing, it’s outreaching, it’s talking to humans and it’s both paid and non-paid lead generation. Get more members is all about the sale side of things. How do you overcome objections? Are you asking the right questions? The 24-hour industry in Australia and New Zealand boomed so quickly and it was so easy to get members… pretty poor sales, so refining it. And then, keep more members is one of our huge focus is right now which is retention. 

Kevin: Got it. Okay, maybe we’ll cover a little bit more when we talk about the future. But, we’ll move on a little bit then, it sounds like you turned, reacted as quickly and got value out of the time when you had some downtimes. Let’s talk a little bit around opening up and how did you approach or how are you approaching that right now? 

Andy: Yeah, for sure. Again, it’s been different across the different states and countries. The first to open was New Zealand, and the northern territories in Australia. New Zealand was a little bit easier because the country worked on a staged approach and that outlined at the start of lockdown what those stages were, so Levels 1, 2, 3 and 4. When we went to Level 3 I think it was and then we were allowed to open but we had a mandate of 1.5 meters social distancing. Personal trainers had to wear PPE. There was a restriction on usage in the club but it didn’t really affect our model so that was good. We are very fortunate and the government was extremely clear on the guidelines, and so for us it was working backwards from that. Again, producing the document, producing the mechanics that was our bible for our franchisees to be able to referred to. Then it was ensuring that the social distancing was being met in the clubs. It was then doing the reverse of what we’ve done to close – getting the door exits turn back on, getting member building turn back on, communicating to members that we will be opening with the government changes and this is what it means for your membership. No one really knew what the response would be like. But New Zealand opening first was a good indication for us in Australia which was then staged across different states. Australia was a little bit harder because some places allowed us to open 24/7 and some places didn’t. Some places had 20 occupancy limits, some places didn’t. We had to be extremely adaptable to the local governments and it ended up changing up your reopening process. Nearly for every state was different. And then it becomes the [unclear – 15:11] how many people come back. The great thing was the month of June and by the start of July was a tremendous response. We were down like every gym would have been down during COVID due to the cancellations and the freezes pre-lockdown and then during lockdown. To see it rise back up on its way back to normality has been extremely boosting.  

Kevin: Yeah, that’s good to hear. It must be difficult to implement these changes in the clubs without actually being able to visit them and walk around them. How did you get around that?

Andy: Technology is a good thing. I’ll use 9Round for example, so 9Round is a boutique offering that we own and operate. It’s a 30-minute workout that changes every day that is structured around 9 stations. Each station needed to be take off to show a little bubble that someone could stay and it allowed for us to ensure social distancing being met. We would make sure every club had to produce images of the taking off. It was one way of doing it. We ended up getting a bit of media coverage as well in different areas with just on how we were reopening and spacing out of the treadmills and things. So those particular franchisees had to do it right because they are going to be on national news. 

But to answer your question we’ve got a really strong operating team who, essentially our managers for our clubs and they would just own the franchisee. So franchisees had to produce photos. They actually had to sign something to say that they had adhered to the reopening process before we allowed them to open because we put a stance in place at corporate of we are not just going to risk this. If we feel like a club has not followed the proper processes, they weren’t be opening because this is serious as it gets. It only takes one bad example to shut down the industry. We didn’t want to be that example, so we took that risk. Franchisees were given clear, clear guidelines and they had to be accountable to show that they understood those guidelines before they could open.  

Kevin: What are you learning about the consumer or what feedback have you got around how they’ve changed, or how they are seeing going to the gym, and what do you know so far?

Andy: I think it’s been really interesting. We’ve definitely done our first year of surveys to new members who have joined post lockdown. I guess the biggest thing I’d say, and I’ll say it because I don’t believe it is a secret to us. Every gym will probably be experiencing something similar and that’s the reason for people joining throughout my career has been 99% weight loss. Weight loss is 3rd on the list now behind general wellness is number one, and strength is number two. I think that lockdown has got more people out moving because they had nothing else to do and they wanted to get out of the house, get away from their wives, get away from their husbands, take the kids on a walk. Particularly on our part of the world the widow was really fortunate for that. I think the news in the media around the pandemic and immunity has mean that people now have a more conscious awareness towards just general health. Being a little bit fatter means that you shouldn’t fear being sick less. It’s all about the fear of being sick these days and getting COVID and whatnot. General well-being I believe has been sped up. I always knew that fitness industry would heed towards to a more of a well-rounded wellness need and like a feeling good over weight loss. I think COVID sped it up maybe 4 or 5 years.  

Kevin: Wow! Well, if that’s a permanent real change that makes such a difference for everything from marketing to retention to every how you talk about your gym, like, everything. 

Andy: Everything, yeah, everything. If you look marketing in the last 10 years it used to the really perfect bodies and images, the guys wanted to be big and bulky, and the girls wanted just to be skinny. I mean it has changed. I think crossfit changed a bit, guys now wanted to be more athletic. They wanted the arms, they want to be athletic. The biggest change has come from females. They’ve gone from the treadmill to the squat rack. Social media has a lot of that but they’d rather be strong and feel good and look a bit more strong than being firm, and that’s got to change the marketing. What we’ve seen lately in the last 3 or 4 years is more of a trend towards general movement, feeling better like high energy levels. It is a huge mental health component that comes with physical fitness now. It is slowly but surely becoming more well-rounded. I think you’ll start to see a lot more marketing towards get away from that perfect looking physique more to a lifestyle based. We are also seeing an ageing population moving towards into the gym. That changes things completely as well. I think we are going through a few changes for sure.

Kevin: Yeah, well. Okay, that’s very interesting. I think moving on to the changes in the industry. Specifically, for 24-hour clubs, where do you see the emphasis moving? What do you see the challenges being and how do you see what you offer changing over time? 

Andy: I think that 24-hour clubs, particularly the larger franchise ones, have a decision to make right now and that’s whether they move towards more of a higher value service offering on top of the general look and feel of the club. 24-hour fitness was traditionally just you could come 24 hours a day, this equipment, if you want a trainer you can get a trainer. I think that clubs now will either have to choose between being like a low price operator and not have too many services or being what I call a medium yield operator, so you’re not the most expensive but you’re not the cheapest. You sit in the middle and you’ve got a really modern product. You offer some sort of coach led training. You’ve got technology to inspire have a creation and reward members for progress and things like that. I think innovation will be really, really important going forward. Just with the rise of technology in general is how the fitness industry is going to adapt technology is going to be really interesting. I think that with millennials as well they want everything for nothing but they want it all on their phone, and they want loyalty and rewards, and pats on the back, and information. I think gyms will have a big fight soon as to who can retain members the best, and that comes down to who can onboard members the best, and who can create the habits for people who aren’t in the habit of coming to the gym. 

Kevin: How are you I suppose addressing that in your business? What kind of things have you got coming to do that?

Andy: That’s a great question. I have to be careful now of that I say. I’m not sure who listens but certainly our competitors will be listening so I won’t give all the secrets away. I think we are one of the more innovative companies and no one knows that yet, but they will soon. The way that we are doing that in terms of retention is it’s all about the data. You have to have good data otherwise you’re just guessing. In the fitness, we are traditionally very good sales people and you have to be a good salesperson. The business is a database business at the end of the day as well and you have to be able to maintain the database. How do you maintain it? You either offer such a low price that no one even notices that they’ve got a membership or you keep them coming back, and you keep them coming back enough that they just are getting results and they don’t want to leave. I think it all stems back for us to how to create healthy habits that last and that means something different for every person. You can’t be everything for everyone but you can certainly get pretty close. 

For us, again without giving it away, I think that we’re developing an extremely good onboarding process which is a combination of human interaction and technology. I think that we will use our brand in collaboration with some very large brands in the future that allows Snap Fitness and 9Round to leave outside the four walls of the gym. You are part of someone’s everyday life and we’ll do that through cost savings and essentially being everywhere. So onboarding, yeah, a couple of innovations around coach led training and also maybe combining the two brands together, so boutique offering and home offering. I think that would be pretty cool. 

Kevin: Interesting. I suppose without giving too much away either. Where do you see online going? Do you see it being a thing that is like a significant part of people’s routine or do you see it die away as the clubs open up? What do you think?

Andy: I think online will mean different things to different brands. I see a lot of brands putting out platforms that are just libraries of workouts, and it’s fine. There is YouTube that does that. Things like that. I see technology being in the online world co-existing with the bricks and mortar. I think that you have to nowadays. I think that if you’re going to be a major brand or even a really good local brand, this statement doesn’t just reside with the national players. It is more about what value do you give your member both in and outside of the gym. Outside of the gym the only way to deliver it is online and via your mobile device. It’s going to be a lot of AI that moves into this tech world and it is going to personalized content to match the member’s goal. A member joins a gym because they have a problem and it’s your job to give them a solution. Traditionally the solution is being gym equipment. It will, with technology, move into content that tells you how to solve your problem both in the gym and outside of gym which is of course how you work out, what you eat, and what you think and feel. 

I think online is here to stay. I think every business regardless of industry is essentially nearly a technology business these days. It’s going to be who adopts it the best and consistently. It’s one of those things, you try something or you launch something and you don’t get too much of it take up. That’s what really is the determining factor between good operators and great ones is people who try something an it doesn’t work out too well will cut off and stop. They’ll run out of energy and they’ll go back to focus on what they know. But the good ones you got to keep building it, keep offering it, and is it valuable because there is a lot of gimmicks out there. A lot of gimmicks that sound cool on paper but are they able to execute this. That’s going to be a big, big factor with all these things. 

Kevin: Got it. Andy, that’s been a really good run through of everything from lockdown to opening up to the future of the business. Before we go, just tell me what’s the biggest lesson that you learned in the last few months?

Andy: The biggest lesson… stock up on canned food. No. That’s a hard question. It’s probably not a lesson because I knew it but it is something that we have to put into practice would be adapt or die. I think COVID will… It would be very, very interesting not once everyone is at a lockdown. It’s what happens the 12 months after. You have to adapt in some way whether it would be adapting your financing structure and how you’re dealing with the banks or adapting your online offerings to members so that if the door shuts you can still deliver some sort of value to them, adapting how you treat your staff who now want to work from home. You have to adapt. I’d say don’t be afraid to ask dumb questions. That would probably be the biggest lesson because no one has been through this before so no once actually knows the answers and no one knows what’s going to happen. Anyone who tells you they know what’s going to happen is lying. So don’t be afraid to ask questions even if you feel like it is stupid because no one has been through this that we are all in the same boat. 

Kevin: Okay. Andy, that was really good. Just last question then before we go just tell people how they might follow you or get in touch and maybe someone wants to buy a couple of franchises, where do they go? 

Andy: Snap Fitness or 9Round Fitness. You can google it. Me personally, I’m just trying to think where you could find me without me saying my phone number. Probably if you look at Andy Peat on LinkedIn something will come up. If you want a franchise bio me, look me up, and we’ll do a deal. 

Kevin: Well, awesome. Okay, Andy, thank you very much for coming on the show. 

Andy: Thanks, man, pleasure. It’s been a pleasure. 

This podcast is brought you by Glofox a boutique fitness management software company. If you want to accelerate growth, work efficiently, and deliver a well branded boutique costumer experience, then find us at glofox.com.