The Blitz

Scott Smith, founder

At one time, a circuit training facility was a novel idea but not anymore. The Blitz, a 20-minute circuit training facility for men, has been around for more than two years. The club now has 115 locations around the world and recently expanded into the Middle East with a club in Bahrain. Plans include more Middle Eastern clubs in Kuwait, Saudi Arabia and surrounding countries and expansion into Taiwan.

The company's founder, Scott Smith, has been a broker for Dean Witter Morgan Stanley and owner of a distribution company that marketed for Fortune 100 companies. He owned two martial arts schools but currently owns two Curves franchises and two tanning salons in addition to The Blitz.

Ci: Why did you start your franchise?

Smith: Men die earlier than women on average. Obesity is at epidemic proportions. Men are more susceptible to chronic illness, heart disease and top the charts in all 15 leading causes of death. They are time starved and needed an efficient workout that gets results.

Ci: What were some of the challenges you faced when starting your franchise?

Smith: Whenever you're the first to walk through a minefield, there are bound to be some challenges. No one had attempted to market exclusively to men on any large scale. As the first organization to pave the way and pioneer the men's market, we were constantly being told it wouldn't work. We are still being told that.

Early on, I decided to stay debt free so operating 100 percent on cash was a bit challenging. So far we have managed quite well. Also, finding the right fabricator for my equipment and the correct hydraulic cylinder was no easy task.

Another problem was that we were unable to register in some states because of our lack of capital.

Ci: What are some of the challenges you face now with your franchise?

Smith: Actually, things are running quite smoothly. One of the challenges that potential franchisees have is finding available places to lease. The increased cost of oil and steel has created a small challenge for production and delivery. With our expansion overseas we face a few new challenges.

Ci: Why would a franchisee open a franchised health club vs. their own club?

Smith: Franchising gives entrepreneurs the opportunity to be in business for themselves but not by themselves. The operating system, trademarks and business plan have already been tested and proven. Consumers prefer “name brands” and like the assurance of consistency. They associate franchises with value and reliability.

Ci: What do you see for the future of franchised clubs?

Smith: I believe franchised clubs will continue to grow and do well. However, the clubs offering the biggest bang for the buck will do extremely well. If we can keep big government out of the way, everyone will benefit. Overall, I think the future is bright for franchising. I believe we will see more global expansion than we have in the past.

Healthy Inspirations

Casey Conrad, founder

Healthy Inspirations is a women-only turnkey weight loss and lifestyle program. Opened in 1999 as a licensing program, the company was converted in March 2004 to a franchise program. About one-third of the 70 locations worldwide are in-club and the other two-thirds are stand-alone. Casey Conrad, the founder, has 22 years of experience in the fitness industry including work in various capacities at clubs and as a consultant in sales and marketing.

Ci: Why did you start your franchise?

Conrad: I was sick of traveling 20+ days a month with my consulting business and, as a result, wanted to start my own small chain of women-only centers that combined nutrition, exercise and lifestyle programs under one roof. When some of my long-term clients heard about the concept, they asked me if I would license the intellectual property to them. Once that was done, it took on a life of its own.

I converted to a franchise program because the number of centers was getting to a critical level that required a greater level of control to ensure consistent quality. Also, to offer long-term value to operators (and me), its business structure needed to offer the opportunity for multiple locations and an easy sale when someone retired.

Ci: What were some of the challenges you faced when starting your franchise?

Conrad: Our first corporate challenge was ensuring the development of high-quality training materials for franchisees. We also needed to create and deliver a training program for employees who didn't attend the one-week training program at our corporate offices.

The other corporate challenge was balancing growth of locations with delivery of corporate support. To avoid the problems that come with growth that is too quick, I kept the growth of our centers at a slower pace.

Another challenge was creating a selection process for licensees/franchisees. Successful operators are your best source of referrals for future franchisees.

The franchisee challenges included keeping the franchisees in check with the systems and policing their centers to ensure they weren't doing something that wasn't permitted under the licensing or franchising agreement.

Ci: What are some of the challenges you face now with your franchise?

Conrad: The first is taking training programs to another level to provide advanced training for long-term centers and employees to help them grow and develop. The next challenge is creating a branding program that allows us to get pinpoint clarity on our market and then refine our marketing and sales materials to match the brand with our target market.

One new challenge is conveying to potential operators how Healthy Inspirations differs from other fitness franchise opportunities. Because the 30-minute exercise component is one part of our weight loss program, people confuse us with other 30-minute fitness programs. However, Healthy Inspirations is a weight loss program with fitness as one of the components. Because of this and the infrastructure of the build-out, it is more expensive. When people don't take the time to research the difference, they make a choice based solely on initial start-up costs.

Ci: Why would a franchisee open a franchised health club vs. their own club?

Conrad: The primary reason is so that they don't have to re-invent the wheel. Operating a business is a lot of work and most people who are looking for a franchise opportunity do not have all the necessary skills. Being part of a franchise system allows you access to successful systems and the ongoing support necessary.

Ci: What do you see for the future of franchised health clubs?

Conrad: Because of the saturation of these 30-minute fitness facilities, we will go through a “purging” of locations in the next few years. In the long run the franchising of health clubs and weight loss programs will be a good thing.

Powerhouse

Henry Dabish, CEO

Fitness runs in the genes at Powerhouse Gyms, which started up in 1974 in Highland Park, MI. The club began licensing in the early 1980s and expanded rapidly in the early 1990s growing now to 320 licensees in 10 countries and 38 states.

Henry Dabish, CEO, grew up watching his father William and uncle Norman, who founded Powerhouse together, at meetings and in the clubs. He began working in the gyms at the age of 14 and later began operating corporate facilities. He has been working in the corporate offices for the last seven years, combining that experience with a formal education.

Ci: Why did your family start your franchise?

Dabish: William and Norman Dabish began training intensely in martial arts at the ages of 11 and 12. They developed a following in their local neighborhood and began training neighbors using milk crates as bench presses.

Ci: What were some of the challenges your family faced when starting the franchise?

Dabish: There were many growing pains at first because they were starting the business on their own as teenagers. They were forced into supporting their family at a young age after their father's heart problems forced him into an early retirement. Their first task was to figure out a name and logo. William decided on the name Powerhouse Gym, and Norman designed the logo.

Ci: What are some of the challenges you face now with your franchise?

Dabish: We have established ourselves as one of the largest gym chains in the world, and the challenge is to continue to grow in a more competitive market.

Ci: Why would a franchisee open a franchised health club vs. their own club?

Dabish: Becoming a licensee or franchisee is worth the minimal investment. It gives a club instant credibility, surrounds you with professionals, and allows you to capitalize on consumer-demanded items. It is better to go to bat with a group of trusted, knowledgeable individuals instead of on your own. Also, there is buying power with a large group that can save you thousands of dollars.

Ci: What do you see for the future of franchised clubs?

Dabish: I think that the industry is continuing to evolve and your chances of being a successful health club operator are drastically increased if choosing to go with a brand name.

Slim and Tone

Betsy Ludlow, founder

Betsy Ludlow may not have a fitness background, but her business sense led her to believe that there was room for another women-only circuit training franchise. She launched four fitness clubs in 2002 and then launched the Slim and Tone franchise in early 2003. Since then, the franchise has grown to 120 clubs including five outside the continental United States.

Ludlow has an MBA and worked in marketing at several divisions within American Express from 1982-2000. Her last position was senior vice president-marketing-corporate services.

Ci: Why did you start your franchise?

Ludlow: I saw an opportunity to leverage a strong and growing trend in the market: a fitness program for women of all ages. I believed there was an opportunity to improve the concept and differentiate our offering vis a vis competitors.

Ci: What were some of the challenges you faced when starting your franchise?

Ludlow: Selling the first several franchises based solely on the experience of owning four company-owned clubs. I had little history to draw upon or credibility at that point.

Ci: What are some of the challenges you face now with your franchise?

Ludlow: Continuing the pace of growth (sales) and at the same time servicing the growing number of clubs in our network. Also, adding infrastructure at the appropriate rate so expenses don't outpace revenues.

Ci: Why would a franchisee open a franchised health club vs. their own club?

Ludlow: Franchising is the way to go. Statistics have shown that franchise entities have a far better chance of success than independents because franchisees are given the blueprint that has been tested, refined and implemented by countless before them. If they implement the blueprint according to the instructions, they are likely to succeed. All their efforts can go into implementation because the development work has been done for them. This is the biggest disadvantage for the independent — having to do development and implementation to launch and operate their business. Few independents are truly up to this challenge in my opinion.

Ci: What do you see for the future of franchised clubs?

Ludlow: I think the interest in franchising is going to continue to see phenomenal growth. Defectors from the corporate environment — wanting a change/wanting to be their own boss/but wanting some structure and certainty — are likely to fuel this growth.