The 24-hour fitness center is one of the fastest-growing fitness franchises, billing itself as an alternative to oversized and overpriced health clubs. So often, I am asked by my clients about whether or not the “new-24-hour-key-card-access-franchise-type-outfit” that has just opened down the street from them will make it in the long run. What are their chances for survival? I am asked this so often that it is clearly on the minds of a lot of operators — and for good reason.
Why is the model attractive to the consumer? Whether or not the facility offers 24-hour access, most franchise models offer streamlined products, services and programs that allow them to create the perception or the reality in the consumer's mind of low price and high value. If the consumer does not want court sports or a pool or group fitness classes, then they do not have to pay for them. If the facility is a 24-hour-access facility, then it offers an added measure of convenience for consumers because consumers can use it on their time — not just during limited club hours. For consumers who are not looking for the social value of a club, the 24-hour key-card club facilities offer that alternative for someone who wants to simply exercise and not engage with others.
Some consumers don't like the model. Most of the franchised facilities are smaller (2,500 square feet to 15,000 square feet), which means limited facilities, programs and services. Additionally, key-card franchise models have fewer staffed hours of operation, which may be unattractive to newer exercisers who need more instruction and supervision.
For some club operators, the model is attractive because of the smaller size of the facilities and the lack of services and programs that translate to simplicity of operation and lower operating costs. Staffing demands are not as high since technology can often do what staff does, which also lowers operating costs. These elements create an ease of entry into the market as well as an opportunity to own the market with multiple franchised units, especially in communities that have a large population of shift workers or in smaller communities where larger clubs will not go. The clubs are often niche oriented because of their smaller scope of services, programs and facilities. Operational direction and assistance from the franchisor (when proven and available) is also attractive.
However, the model is unattractive to some operators. The explosion of 24-hour-access franchised facilities has raised concerns about whether people should be working out in a fitness facility unsupervised, especially late at night. This setup can be a possible liability from the perspective of injury, crime and abuse. Some states do not allow facilities to operate without an automated external defibrillator or staff on the premises. If these franchise operators decide to do business in these states and an incident occurs, it could change the playing field all over the country. The fact that the facilities are smaller also limits profit potential unless the franchisee opens multiple facilities.
The economic law of supply and demand will determine whether or not these models will survive. If the market demands something and it can be supplied at a profit, it will survive. Clearly, some suppliers do a better job than others and enjoy a larger market share. Those who do not last will perish because they are not fulfilling the need as well as other suppliers. The bottom line for all of us as suppliers/club operators of any kind is to constantly evaluate our strengths, weaknesses, opportunities and threats, and to act upon them to be able to not only survive but also to thrive.
Karen Woodard-Chavez is president of Premium Performance Training, Boulder, CO, and Ixtapa, Mexico. Woodard consults and trains clubs throughout the world. She can be reached at 303-417-0653 or at karen@karenwoodard.com.