The differences in finances, marketing, culture and other operational facets of operating a studio franchise compared to a big-box franchise must be considered when you are trying to decide which type of franchise you are best suited to operate.
Which type of franchise is better for you: a studio or big-box club? Find out some of the differences. (Photo by Thinkstock.)
We have all heard the expression "the calm before the storm," a peaceful lull in the atmosphere that precedes the turbulent oncoming of aggressive weather. That appears to be where I find myself at the moment in the opening of my franchise fitness studio. (For more on Cicci's journey starting a franchise, read his previous columns.)
With a signed letter of intent out of the way, I now am negotiating through the actual lease document with the building landlord. This process can take a frustrating and agonizing two or more weeks of back and forth while every small but important detail gets hammered out. Throughout the process, other administrative tasks are happening behind the scenes. Those tasks include studio design, creation of the employee handbook, ramping up the initial marketing outline for presale activities and building local relationships.
So, while I await the impending storm that is the pre-opening rush, allow me to take this opportunity to share with you what I see as the differentiating factors between the two types of fitness franchise opportunities: small studios and large big-box club chains. Both comfortably reside under the heading of health and fitness business, but everything from finances, marketing, culture and almost every other operational facet couldn't be more different.
Start-up costs. The big question for every potential franchisee is, how much does it cost to open? As you can imagine, the start-up numbers can range from as little as $4,200 for a Jazzercise facility to as much as $4 million for a Gold's Gym. These are mostly all-in costs, meaning they include franchise fees, training costs, equipment, construction/build-out, several months of operating expenses and more. Obviously, the qualification process will rule out some potential owners from certain concepts, but it's important to note that these numbers are just estimates. More often than not, it will take far more capital to get through the first year than originally thought.
Location size. The business type says it all. Studio vs. big-box implies that one has a relatively small footprint while the other occupies the space of a small Walmart. Studios, depending on the type of fitness offering, generally range in size from 1,500 to 7,500 square feet. Usually, amenities such as offices, juice bars, pro shops and even showers can be left out of the design. Contrast that to the 30,000-square-foot average size of Planet Fitness, and you see my point. For new franchisees, every square foot means more in monthly rent and property taxes, and with a larger facility comes more potential for costly maintenance issues.
Equipment needs. After start-up costs, this category is perhaps the starkest difference when comparing the two. Studios typically have smaller equipment needs by way of both their size and their inherent offerings. Whereby the large big-box outfits require massive amounts of equipment to serve the masses that its membership model is built to attract. We are talking mostly cardio here, but the weight run has to be extensive in some cases as well. With more equipment comes more opportunity for damage, maintenance needs and general upkeep and cleaning, all of which are major considerations when looking at overall costs.
Royalty payments. This one is a "push," as pretty much any franchise business model requires somewhere between 3 percent and 9 percent royalty payments. Some companies stipulate a flat dollar amount, and others that take the lesser of a flat number or revenue percentage. But for the most part, the fee is typically a predetermined percentage as outlined in the franchise disclosure document.
Membership price point. Many small studio concepts are premium brands offering premium services. Therefore, the monthly, annual or per class fee typically is higher than that of a gym or fitness center. As for the monthly membership fees at the franchise chains, the low-price models banking on volume over service and experience now dominate the industry. It has become commonplace to see $10, $8 and even $5 monthly fees. The debate rages on as to the impact this has on the industry both with value and perception, but one thing is clear: the market has a capacity to support both franchise models.
Staffing. This is a hard category to nail down by the very fact that some of the 24/7 big box facilities are purposely built to run on skeleton crews. Therefore, despite the size and operating hours, the staffing requirements could possible be lower than a typical 5,000-square-foot all-day studio. By and large, however, most studios are run with less than 10 employees (many part time), and even those are primarily instructors who you could argue pay for themselves with sufficient class attendance. My feeling is that turnover tends to be higher with the larger franchise model and that leads to much more training and development.
There you have it. This is by no means a definitive list of the differences between the two types of franchises, but rather a Cliff's notes version for anyone looking to make the plunge who can't decide where their professional skills and business acumen align with the current fitness options. Keep in mind that these are ballpark figures and summaries that change with each particular franchise. At the very least, it demonstrates the variability in the franchise concept and the opportunity available for fitness professionals to run their own business.
Matthew Cicci is a freelance fitness writer and small business owner in the Chicago area. With more than 15 years of experience in the health and fitness industry, Cicci has operated businesses in the not-for-profit, commercial, private, franchise and residential fitness environments in the New York market. Cicci has held several industry-wide certifications, has a bachelor's of science degree in management and studied under the master's program for exercise science at Syracuse University. He can be reached at firstname.lastname@example.org.