Experience

5 Steps to Becoming a Fitness Franchisor

Lucy Connor
02 March 20
10 min read
how-to-become-a-franchisor

Right now, fitness franchises are booming. Over the last few years, a host of successful fitness entrepreneurs have managed to turn their businesses into lucrative franchise ventures.

If you’re like most fitness business owners, you’re always hungry for more. You like to think big, and you always have your eyes open for new ways to grow your business.

So, it’s likely that the idea of taking your single studio or gym and becoming the next Barry’s Bootcamp or F45 has crossed your mind. Especially when you consider that four of the 10 Fastest-Growing Franchises in 2017 were fitness-related and this area continues to thrive.

However, becoming a franchisor is no walk in the park. There’s a lot to consider – from legal requirements to financing – you’re sure to encounter challenges along the way.

This article will guide you through the unknown territory and provide all of the information you need to make the first moves towards building your fitness empire. Skip ahead to:

What is Franchising?

Franchising, in its simplest definition, is a business opportunity that allows a franchisee to start a business by legally using someone else’s expertise, ideas, and processes.

Essentially, as a franchisor, you’d be allowing another entrepreneur to use your brand, ideas, and your marketing and business protocols to start their own business. 

 Both parties stand to gain from this model; your franchisee gets to leverage your reputation and business expertise, and you can expand your business to new locations, markets, and audiences. Of course, you’ll also collect a share of the profit generated by your franchisee’s efforts.

Franchised businesses are very common. According to the International Franchise Association, the industry employs 18 million Americans and generates more than 2.1 trillion dollars.

The Benefits Of Franchising Your Fitness Business 

Creating a franchise business offers many attractive benefits to a fitness entrepreneur.

Faster Business Growth

The most obvious benefit of becoming a franchisor is that it allows you to scale up your business rapidly. A team of franchisees can do more work than you ever could on your own. As you grow your franchise program, you’ll see your revenue climb at a rapid rate. It’s high time for fitness franchising too – Between 2014-2019, the fitness industry has seen an annual growth of 3.7% – but franchises have grown at almost double the rate at 6.3%. 

Pool Resources For Marketing

The more revenue you have coming in, the more you can reinvest in marketing and outreach campaigns. With just a few locations, you’ll have started building a brand that’s recognizable in the marketplace. Franchising also allows you to pool talent between multiple entrepreneurs, which will help your overall business grow with speed.

Reach More Customers

You’re passionate about your method and fitness philosophy, and creating a franchise business empowers other entrepreneurs to spread that same message. Franchising allows you to positively impact the lives of people on a larger scale than a single studio ever could.

The Challenges Of Franchising Your Fitness Business 

Franchising is a proven route to business growth. But becoming a franchisor is no walk in the park, especially in a challenging economy. Here are some of the challenges you’ll face along the way. 

Increased Financial and Legal Risk

Starting a franchise requires a significant upfront investment. But the financial hurdles don’t end there – you’ll also have increased insurance and operating costs as your business expands. Because of its inherent risky nature, becoming a franchisor requires a good deal of wading through legal papers too.

Brand Consistency

For many fitness entrepreneurs, their business is their baby. Becoming a franchisor means that you’re going to be handing parts of the reputation and standards you’ve spent years building to somebody else. It can be a challenge to ensure that your franchisors maintain the level of service and passion you have for the business.

Increased Time Commitment

Running a single successful business is already a time-consuming task, but this becomes a more significant challenge for franchisors, especially in the early stages. You’ll need to learn how to manage a larger team, delegate tasks, and maybe even miss a training session now and then. Turning your gym into a successful franchise will involve at least as much effort as it took to start your business in the first place.

5 Steps to Becoming a Fitness Franchisor

If you’re considering becoming a franchisor, there are five necessary steps you’ll need to take to get started.

1. Decide if Your Business is Ready

The first question to ask yourself is if your fitness business is ready to expand. Think about the reasons why you want to start a franchise and write them down. Dig into the deeper motivations you have and ask yourself if a franchise venture is what you want and note the reasons why.

Next, consider if your fitness concept is suitable for franchising. Think about whether your studio or gym will appeal to both consumers and prospective franchisees. Is your current business something that can be easily systemized and replicated?

Once you’re sure you can clone your existing success, it’s time to assess the financial side of franchising.

Before going all-in, how confident are you that your franchise will be a success? Have you already opened a studio in another location? It’s a sure-fire way to validate the demand for your fitness business.

The Customer Engagement Playbook for Your Fitness Business

Customer engagement is the way in which a brand connects with its customers on a deeper level than a simple business and consumer relationship.
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It’s also essential to prepare for a change in the type of work you’ll be doing too. Becoming a franchisor means you’ll lead a very different life. Are you ready to primarily become a salesperson and business mentor as opposed to running your current fitness facility?

You need to evaluate all of these options before committing franchising your business. Depending on your situation, there may be other viable ways to grow your business in the first instance. If you’re not 100% ready to commit, consider testing the water by opening a new location, targeting new market segments, or partnering with other companies.

2. Work Out Legal Requirements & Franchise System Details

Different countries will have different legal requirements surrounding the selling of franchises. No matter where you are in the world, you can expect to tackle plenty of red-tape and legal paperwork.

In the United States, you must prepare a franchise agreement and a franchise disclosure document (FDD). Within these documents, you’ll need to make important decisions about things like:

  • The franchise fee and royalty percentage
  • The terms of your franchise agreement
  • The territory each franchisee will be granted
  • The training program you’ll be offering 
  • Where franchisees can buy equipment and supplies
  • The business requirements and finances franchisees need
  • Your marketing strategy for the business

First-time franchisors often don’t realize just how impactful these decisions can be further down the line. For example, say you’re debating between 6pc or 7pc in royalty fees – it doesn’t seem like much at the time.

But fast-forward three years when you’ve sold 40 franchises. Let’s say they each make an average of $300,000 a year, and suddenly your 1pc difference means you’re losing out on $120,000 every year.

To expedite the legal process and ensure everything is done by the book, it’s wise to hire an experienced franchise consultant or franchise attorney to help you through the process.

3. Build Your Team

Selling franchises to the right people is crucial. But it’s equally important to bring the right people on board to help you grow your new venture. 

Who you’ll need to hire will depend on your situation; do you need somebody to help train new franchisees? How about a marketing expert who can help craft your franchise story and bring in sales? Maybe a finance specialist with franchise experience?

Whoever you decide you need at the time, the key is to build a reliable team that can take some of the pressure off and helps you to scale your franchise successfully. The people that you hire are an extension of your brand, so choose wisely. For more advice on building a team to help you franchise, check out this episode of The Fitness Founders Podcast. Katie Daniel, founder of Ambition Fitness tells us how she’s built a franchise-ready studio in less than 12 months.

4. Develop a Sales Strategy

One aspect of becoming a franchisor that many fitness entrepreneurs find challenging is sales. As a franchisor, your success heavily depends on selling franchises to franchisees – and it’s not always easy.

Buying into your franchise system poses a significant risk for the franchisee, so you need to be able to tell a compelling story about your fitness business and present the value proposition in an enticing way.

Decide how you’re going to reach your potential customers too. Will it be paid social media ads, PPC, word of mouth, or something more traditional like print ads? According to Franchise Update Magazine, the average cost to recruit a single franchisee in 2010 was $13,019. That means if you’re looking to 20 new franchisees, you should expect to invest about $260,380.

Much like offering a referral program at your gym, in the early days of scouting for prospective franchisees, it might be cost-effective to provide a referral bonus to anyone who sends a prospect your way.

5. Support Your Franchisees

It takes a lot of hard work to sell your first franchise. But the success or failure of your franchise venture will ultimately come down to what you do to support your network of franchisees over the first few months of business.

Your training programs need to be spot on to ensure that your brand delivers a uniform experience time and time again. Consider setting up an online training course for your fitness franchise that provides ongoing relevant content and the best practice your franchisees need to succeed.

You’ll also need to support your franchisees by marketing your brand and driving customers to their doors. You’ll need to arm them with everything from logos, branded materials, uniforms, and digital assets to social media campaign guidelines.

Just as with the costs of acquiring a franchisee, many first-timers massively underestimate just how quickly these marketing costs add up, so allow a generous budget for best results.

In Summary

Turning your fitness concept into a franchise allows you to rapidly expand your business, increase your revenues, and reach more people.

With solid planning and a willingness to roll up your sleeves, it’s entirely possible to turn your gym or studio into a recognizable brand while empowering other fitness entrepreneurs to start their own businesses.

Becoming a successful franchisor is no easy feat, and you can expect many challenges along the way.

But if you can shape the business into a franchise-ready model, and hire the right people to help you, it’s a challenge that you’re ready to take on. 

The Customer Engagement Playbook for Your Fitness Business

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