Emerging brands learn lessons after hiring headaches
When most of your employees are working in the gym and “have to be outgoing and energetic at 5 in the morning,” it makes sense for a company to focus on creating a positive culture.
That’s the case at Blink Fitness, where President Todd Magazine says the core function of human resources is to manage employee relationships. It all starts with hiring the right people, something Blink has gotten better at as it’s expanded its corporate-owned footprint before opening franchise locations. The franchise, part of the low-price fitness market, has 55 gyms open, and Magazine says the goal now is to share best practices and provide resources as it brings on its first ‘zees.
“We experimented with different positions in the gym,” Magazine explains, and kept coming back to the question of, “How do you have the right number of people in the gym to focus on the member experience, and how much can you automate?”
They determined that the employees hired to work in the gym—“we call them mood-lifters, not associates”—had to really buy into the Blink brand of a “passion for health and wellness and improving communities” and would focus on member interactions versus the more transactional needs. Those tasks, such as providing pricing information or signing up members, are handled at kiosks.
“Turnover’s your worst enemy, especially for a company that prides itself on member experience, so we’re really focused on that.” —Todd Magazine, Blink Fitness
While that approach helps Blink manage labor, it inadvertently amplified another challenge: turnover.
“Turnover’s your worst enemy, especially for a company that prides itself on member experience, so we’re really focused on that,” says Magazine. One of the ways Blink combats that enemy is to cultivate talent from within and provide a growth path for employees. Entry-level workers can become club managers; the next level, complex manager, oversees the gym and two or three additional locations. Up another rung is a regional manager who oversees 12 locations.
Though it’s the child of luxury fitness club Equinox, Blink Fitness doesn’t share any human resource functions with its parent company. An in-house HR team handles recruiting, training and development, and other standard functions. As Blink prepares to open its first franchised gyms the company will further define its role in those areas, particularly, Magazine says, as franchisees recruit and hire their own employees.
Accelerated growth may seem like a good problem to have for an emerging franchise, but as Spray-Net founder and CEO Carmelo Marsala is learning, it’s not without its headaches—particularly in the area of human resources. With its company framework of separate legal entities in the Canadian provinces and an HR structure that charges franchisees on a pro-rated basis for shared services, it’s a complex setup but one Marsala expects will work in the long run.
“The last 18 months have been go, go, go—sometimes you don’t have time to evaluate every single thing,” says Marsala. “Is it the best structure? Looking back, maybe not, but it’s what we have and we plan to grow into the structure.”
“The last 18 months have been go, go, go—sometimes you don’t have time to evaluate every single thing.” —Carmelo Marsala, Spray-Net
In business since 2013, exterior painting service Spray-Net has been labeled the fastest-growing Canadian home improvement franchise and won the International Franchise Association’s 2016 NextGen in Franchising global competition. It has three corporate-owned locations and 47 franchised but this spring pulled back from planned expansion into the United States as it rebuilds its corporate team with the expectation of relaunching those efforts in the fall.
“I didn’t know exactly how to hire and who to hire,” says Marsala, “so we made a couple bad hires” at the corporate level. “We got interest from high-level execs and they were the wrong people and we paid for it. They knew how to structure their contracts. Now we’re in the process of cleaning up.”
On the franchisee selection side, the company determined it wants those with an intrapreneur approach versus that of an entrepreneur. “Someone with a COO profile, not a CEO,” says Marsala. “We want someone who can take our operating system and execute it successfully. And we don’t want investors unless they have an operator who lives in the territory and have an equity stake.”
A software revamp and adjustments to the training program and operations manual are also in the works, and Marsala is excited about Spray-Net’s use of gamification in HR, wherein employees can achieve “superhuman” status and earn various rewards such as Spray-Net apparel. “We’re starting to look like a real franchisor,” says Marsala.
A defined separation between franchisor and franchisee helps keep human resources a simpler issue for Watermill Express, where Lani Dolifka says the franchise owner is better suited to make decisions.
Blink Fitness kiosks handle transactional tasks so employees can focus on the experience.
“We do very little HR support for our franchisees,” says Dolifka, CEO of the Colorado-based drive-up drinking water and ice franchise. “We’re very much an oddball franchisor in that we’re mostly company-owned. For the company we have in-house human resources … for franchisees, we feel they’re the expert and know how to run their business.”
Just five franchisees own Watermill Express’s 310 franchise sites, while the other 984 are corporate-owned. Thanks to technology that provides 24-hour monitoring and automated data reports for each filling station, labor is efficient and a franchisee with about 100 kiosks employs 20-30 people.
With offices throughout the country, however, Dolifka acknowledges the challenges the HR department faces when communicating with corporate employees, particularly “if English isn’t your first language, it can be intimidating to understand benefits.”
Watermill Express recently added bilingual videos to its corporate intranet and Dolifka says the next goal is to eliminate the layers that messages have to go through.
Dolifka anticipates adding six new franchise locations this year. While the opening of 15 to 20 franchise units was the original hope at the start of 2017, “we’re not going to make decisions that aren’t right just to make a goal,” she says.