In 2018 alone, the fitness franchise industry made over $4 billion in revenue. It might not be a lot when compared to the $756 billion accrued by other franchises, but it definitely means that there’s huge potential.
Big names like Club Pilates, Planet Fitness, and Fyzical Therapy & Balance Centers have shown us how lucrative fitness franchises are. A 2021 report shows that four of the top twenty fastest-growing franchises globally are in the fitness domain.
In this article, we’ll answer the question of how to franchise your fitness business. Let’s start with some basics. In the franchising model of running businesses, an organization allows its intellectual property to be used by other organizations for a franchise fee, and at times, royalties. The business owner who lends the idea is known as the franchisor, and the one that executes it is known as the franchisee.
Before getting into the steps involved in franchising, let’s understand why you should consider becoming a franchisor.
Skip ahead to:
- Why should you start franchising your fitness business?
- 10 steps to start your journey as a fitness franchisor
Why should you start franchising your fitness business?
Your fitness business is the talk of the town. It has many unique offerings, and the locals love it. So, why opt to sell your franchise’s concept?
Here are three reasons why you should start franchising your fitness business.
Think about why you’re in the fitness business in the first place. At some level, it’s a vision to make the world a fitter and healthier place. You had a unique fitness proposition to offer, and that resulted in a great business. Now, this is your opportunity to bank on its success.
Whether you offer special training drills, a lesser-known fitness technique, or just great culture, people across states will make the most of it. This way, you get to touch more lives and increase revenue by multiple folds.
2. Reduced budget and risks
While it cannot be said that being a franchisor is absolutely risk-free, there is considerably less amount of financial investment required. The franchisees will take care of rental, operational, and wage-related costs.
Besides, you don’t have to worry about the day-to-day activities of the branches since franchisees and their respective managers will take care of it. As long as you are wary of the liabilities and your responsibilities, the franchise system is bound to work for you.
McDonald’s, 7-Eleven, Planet Fitness, Great Clips — after a point, all these companies grew exponentially instead of one store at a time. If you want to scale within a short period, franchising is the best way. You’ll be able to fast-track your business goals and achieve growth targets in no time.
In the next section, we’ll look at the steps you need to follow to kickstart your journey as a fitness franchisor.
10 steps to start your journey as a fitness franchisor
Becoming a fitness franchisor can be an arduous journey if you don’t plan well. There are many business and legal requirements that you have to meet before starting. Here are the ten essential steps that will help you get started.
1. Assess your current business needs
The first and foremost step is to find out if you really want to venture into the franchising territory. While it’ll help you scale your business quickly, it also requires a lot of management and coordination effort. Talk to your employees and investors if they are ready to take the plunge.
Conduct a thorough assessment of your current business model. Find out if it’s scalable, there’s enough demand for your offerings, and the profit margins are adequate. After all, there’s no point in starting an aerobics or a Zumba fitness franchise if there are very few takers for such sessions.
2. Fulfil regulatory requirements
If you’re approaching prospective franchisees, you’ll need a franchise agreement and a franchise disclosure document (FDD). These documents establish the terms of the relationship between you and the franchise. Duration of the contract, revenue sharing, procedures, and more ensure you cover all essential aspects of the agreement. The federal government requires all franchisors to share an FDD.
Apart from the federal laws, every state has its own compliance requirements for franchisors. They might include registering the franchise, filing a notice, and securing other business approvals. If it’s getting too overwhelming, you might want to take help from a franchise consultant or an attorney.
3. Register trademarks and file patents
This is the most important step in the process of becoming a franchisor. Imagine what would have happened if Gold’s Gym started franchising its brand without getting a federal trademark for its iconic logo and other branding material. Get a federal trademark so that your franchisees can use your logo and other material across the country.
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Additionally, if you’re using a unique technology or have a trade secret, file a patent to protect it. By registering your trademarks and getting patents, you’ll save yourself from future legal and compliance issues.
4. Prepare a sales and procurement strategy
Why prepare a new sales strategy? It’s because the equation has now changed. There are additional bills like logistics, royalties, marketing, and the likes with new franchisees coming in. This means you have to re-adjust your sales targets and profit margins to achieve your business goals.
You might have to sign new deals with vendors for equipment, maintenance, and marketing material. Choose your vendors carefully since your entire sales and expansion plan would rest on their shoulders. Have a robust contingency mechanism for when your regular vendors are unable to fulfill their commitments on time.
5. Draft a standard operating procedure
Ever wondered how franchise businesses use the same collateral in all their locations? It’s because they have a standard operating procedure or an operations manual. A document of this kind will help in maintaining consistency and guide staff members across franchise units.
An exhaustive operations manual covers everything from daily management to safety and emergency procedures. That said, it doesn’t have to be etched in stone. You can make changes to it periodically or as business needs change. The idea is to have a handy document that will help franchisees carry out their day-to-day tasks without hassle.
6. Start publicizing and vetting
Let the world know about your exciting franchise opportunity. Use all marketing methods such as LinkedIn, Google Ads, hoardings, flyers, and the likes. Another excellent place to publicize your fitness franchise is your existing branches. It’s a live demo of how an ideal franchise would like!
Once you gain traction and receive inquiries, start vetting your prospective franchisors. While it’s good they have prior business experience, what’s even more important is integrity and a vision for your brand.
7. Conduct training sessions for franchisees
Your business is doing well because of certain operational standards, culture, and ethos. You need to impart the same values to your new franchisees.
Host training sessions for your franchisees regularly. Prepare them to handle an excessive workload, emergencies, and new circumstances. If in-person training isn’t feasible, you can conduct virtual or external training. Also, hold annual meet-ups to keep their morale up and help them learn the ropes of the business better.
8. Conduct regular audits
Think of a franchise like a mini version of you, but at a different location! Anything wrong in terms of quality or service would mean that fingers would be pointed at you. You can avoid such scenarios by regularly checking financial statements, hygiene standards, and efficiency.
You could step this up a notch by rewarding the well-performing branches. This would foster healthy competition, and the franchisees would be motivated to perform better.
9. Design a growth plan
Now that your first few franchisees are ready, what next? Do you want to target local markets, only the high footfall regions, or go all-in from coast to coast? You’ll need a growth strategy to prepare for the franchise’s future. Keep updating the growth strategy document to reflect the happenings in the organization.
Factor in everything while preparing a growth plan. Is the demand for fitness services high in all the proposed locations? Will you be able to manage them? Will too many branches affect the quality or brand name in any way? Growth is great, but it should happen at the right time and in the right way.
10. Gather regular feedback
Understand their needs and concerns. They’re likely facing challenges in the initial phases. Have a robust feedback mechanism to hear their concerns and grievances. Listen to their ideas for improving operational efficiency, customer experience, employee satisfaction, and profits. Keep a tab on the communication, training, quality assurance, and supply chain aspects.
Your first franchisee will help your chart the course of your franchising business. Their feedback is key for growing across territories. Not meeting franchisee expectations will hurt your brand’s image and negatively impact the chances of expansion.
Go for it if you have conducted thorough research and think that the time is ripe to start franchising. Remember that, even as you grow, your fitness offerings have to be consistent and generate profits regularly.
Here’s a round-up of everything we covered in the article:
- Evaluate if this is the right time for your business to start franchising
- Check with your franchise attorney if all legal compliances are being met
- Have a rigorous training program for all your franchisees
- Prepare an FDD to outline all terms like royalty fees, start-up costs, and trademark usage
- Update your business plans to reflect the fitness franchise’s growth rate
- Consulting frequent audits and getting regular feedback is the key to building a successful franchise
Planning to build a world-class fitness franchise from the ground up? Listen to Russ Harrison, the managing director of Spartans Boxing Club, on The Fitness Founders Podcast. He talks about starting a community-focussed boxing club and expanding using the franchise model.