LAS VEGAS -- Franchisees of both Planet Fitness and World Gym clubs met with Planet Fitness executives Thursday during an information forum at the Rio All-Suite Hotel & Casino in Las Vegas. Some franchisees, especially those of World Gym clubs, left the forum with some unanswered questions.
Planet Fitness bought World Gym last year for more than $10 million, taking ownership at the time of 300 World Gym clubs. (Through August, the company had 170 Planet Fitnesses and 236 World Gyms, with franchise agreements with 40 more Planet Fitnesses and 25 more World Gyms.) Since the purchase was finalized, efforts to homogenize World Gym under one look and logo have left some franchisees confused.
The panel of Planet Fitness executives sitting under both the Planet Fitness “thumbs up” logo and the new World Gym “W” logo consisted of Mike Grondahl, CEO; Chris Rondeau, CEO of franchising for World Gym; Marc Grondahl, chief financial officer for Planet Fitness; Ben Midgley, president of Planet Fitness and World Gym; and Mike Uretz, former CEO of World Gym and now a consultant for Planet Fitness. Alongside the panel were Planet Fitness owners who had switched over from World Gym.
“At the end of the day, we’re all going to look alike,” Rondeau told the group of more than 150 owners, about half of whom were Planet Fitness franchisees, with the other half World Gym franchisees.
Rondeau’s statement was directed mostly toward the World Gym franchisees, who asked the majority of the questions after a brief introductory period by the panel. One franchisee asked if Planet Fitness and World Gym would become more like McDonald’s and Burger King or more like McDonald’s and Pizza Hut. Rondeau said the two brands would be more like McDonald’s and Pizza Hut, meaning Planet Fitness and World Gym will both serve health club goers, just different types of health club goers.
Planet Fitness has prided itself on being a judgment-free zone, where “lunkheads” are not appreciated and are exposed in the club by a lunkhead alarm. The new World Gym motto is “An intelligent approach to fitness.” Grondahl wants World Gym to be a step ahead of Planet Fitness for the more serious health club members.
Many of the questions dealt with the size of clubs and the pricing of clubs. Planet Fitness is famous for its low-end, $10-a-month membership. World Gym franchisees wondered if they needed to lower their membership to as low as $29 a month. Midgley told the owners that not every World Gym will be priced the same and that they will not be forced to lower their prices.
Some heated discussion began when a World Gym operator from Long Island, NY, who has large clubs with features such as tennis courts and swimming pools and a high price range between $49 and $89 a month, asked what was going to happen to his World Gym once his license agreement ends.
“We’ve made World Gym what it is in my community,” he told the Planet Fitness executives. “I can’t operate these clubs at $25 a month.”
Mike Grondahl replied to the operator, “I don’t think the World Gym brand is doing you a service.”
A World Gym operator from Georgia, who has two clubs, each of which has more than 40,000 square feet, took offense to Grondahl’s reply, saying, “That’s not cool. I’m a little shocked at your comment.”
When Grondahl later explained that he simply doesn’t want to work with clubs that large, the Georgia operator said, “That’s a better answer.”
“I’m slow. I’m not that bright,” Grondahl said, easing the tension and igniting laughter in the room.
Many of the larger World Gym operators said they are still taking a wait-and-see approach with the new ownership. Others don’t want to wait any longer.
Manny Kaye, who owns a two-story, 16,600-square-foot World Gym in Monrovia, CA, came away from the forum with mixed feelings.
“I don’t think anybody has any answers in details,” Kaye said. “Every time somebody did ask a question in detail, [Planet Fitness executives] said, ‘We’re not sure. We’ll look into it.’ It’s kind of disturbing to me. This is the first meeting that we’ve had. We should have had a meeting prior to this. Time is of the essence. In a business, you’re here today, gone tomorrow. There’s no urgency from their end of it.”
Kaye, a former district manager for Bally Total Fitness, said that despite his frustrations at waiting to meet the Planet Fitness executives, he wouldn’t be opposed to switching his World Gym to Planet Fitness.
“From what I observed, they’re going to take all the small clubs and convert them to Planet Fitness,” Kaye said. “If I’m going to have a $120,000 EFT based on $10 a month, which I think is a very good concept, I will switch it tomorrow. It depends on what kind of expenses is going to be involved. I’m a business guy at the end of the day. Let’s not kid each other. The bottom line is we’ve got to make money.”
Joe Talmadge owns a 40,000-square-foot World Gym in the heart of San Francisco. Talmadge said he was a little disappointed with the forum but was pleased that franchisees and company executives at least came together and discussed their issues.
“I was hoping to have more of a substantive conversation,” Talmadge said. “It was somewhat informative, but not enough detail went into some of the responses of our questions. This is still a very transitional period. It’s a relatively new marriage between the two branded companies, so I think things will shake out more definitively in the next six to 12 months. For now, I’m going to be patient and allow the natural process to take its course and go from there.”
Kris McNeil came to the forum wearing a World Gym T-shirt with the old gorilla logo on it. McNeil had the shirt from the time he was a manager at a World Gym in Harrisburg, PA. That World Gym has converted to a Planet Fitness, and McNeil, who now lives in Albuquerque, NM, hopes to open a Planet Fitness, despite his nostalgia for the gorilla.
“[The forum] made me that much more excited to try to open a Planet Fitness in New Mexico,” McNeil said. “I think Planet Fitness gets a bad rap sometimes. They hate bodybuilders, this and that. But it’s a different business. You’re marketing gyms to different people.”
Rondeau said the forum exceeded his expectations.
“We had a lot of eye-opening happening,” Rondeau said. “We had a lot of great questions that need to be answered for people to hear in person, which is worth more than on the phone or in e-mail. The biggest thing I wanted to accomplish was getting [World Gym owners] to all use the right vendor channels because even if we get them to do that, that in itself will start to create the uniformity of the brand.”
Grondahl said that Planet Fitness is not the same Planet Fitness it was when the first club opened in 1992. With that in mind, Midgley said it might take two or three years before the World Gym look and feel is more or less the same.
“I think the owners understand that we’re 100 percent committed to them,” said Midgley, who has been with the company for only a month after serving as a sales executive with 24 Hour Fitness. “There’s got to be a lot of worries on their mind. A new company comes in and purchases their brand. It’s going to affect their business one way or another. It’s obvious to me that we need to do a lot more for the World owners. They have a lot of unanswered questions. We’re going to do some work on that.”
More information about the purchase of World Gym by Planet Fitness can be found in the September issue of Club Industry’s Fitness Business Pro.