High standard of living attracts attention in Taiwan
The Raohe Street Night Market in Taipei, Taiwan’s capital city, where 2.6 million people live and U.S. franchise brands have a robust presence.
With the word “world” in its company name, it’s no surprise international development is a priority for World Gym. And with its continued expansion in Taiwan, the Los Angeles-based company’s international presence has overtaken its U.S. portfolio in the past two years and shows no signs of slowing down.
“The U.S. is a very mature market in terms of fitness,” said Jim Teatum, head of international development for World Gym, which has more than 200 gyms worldwide. “Our growth going forward will continue to come from international expansion,” and Taiwan consumers have embraced the sense of community the brand aims to cultivate at its locations.
“They don’t want to just join a gym, but they want to join a community,” said Teatum, as he noted the strategy of offering more classes at the clubs in cities such as Taipei and Taichung to appeal to that mindset. He called World Gym Taiwan franchisees John Caraccio and Michael Sanciprian “fantastic operators” who have perfected the model there as they play up the social side of fitness.
“They’re able to look at a population, determine what it wants and provide something really cool,” said Teatum. Personal trainers play a big role in marketing and have been featured in GQ Taiwan as part of the strategy to position World Gym as an influential brand—something consumers in Taiwan are especially receptive to.
Franchising revenue growing
U.S. franchising brands are perceived positively in Taiwan, particularly those with well-known brand names, as Taiwan’s consumers enjoy a high standard of living and pay attention to high-end concepts and new products hitting the market. The franchising industry itself is growing, as the Taiwan Chain Stores and Franchise Association reported total revenue reached $40 billion in 2015, up 20 percent from the previous year.
According to the U.S. Commercial Service, Taiwan is an attractive market for franchisors, with consumers “often willing to line up for hours at internationally recognized franchises that are new to Taiwan.”
Local competition from concepts such as 85C Bakery Café, Chatime tea shops and Family Mart convenience stores is also strong.
Business relationships in Taiwan are based on respect and trust, and a high level of support is integral to World Gym’s success there, Teatum noted, as the company focuses on a close relationship with its partners and functions under area development deals versus master franchising contracts.
“I believe the individual franchisee wants that,” said Teatum. “It makes them feel an important part of the brand with direct access to the executive team while reducing attrition.”
Given its strategic location off the southeastern coast of China and its well-developed infrastructure, Tawain is also an attractive option for foreign franchisors to test their concepts and gauge acceptance in mainland China and elsewhere in Asia.
It’s the approach taken by Caraccio and Sanciprian, who after building their Taiwan business to nearly 50 clubs—the largest gym chain in Taiwan—have begun development in Hong Kong and Macau.
It’s important to note, however, that while their economies are connected, relations between Taiwan and the People’s Republic of China are sensitive and debate continues over Taiwan becoming a separate, independent country.