China’s next as Anytime Fitness tackles world
Anytime Fitness has about 140 gyms in the UK, including this one in London.
Fitness is an international language, says Chuck Runyon, and if the numbers are any indication, it’s one Anytime Fitness speaks fluently.
With more than 3,500 gyms in 27 countries on five continents serving nearly 3 million members, the company Runyon and co-founder David Mortensen launched in 2002 with one location in Cambridge, Minnesota, calls itself the fastest-growing fitness club franchise in the world. Considering it took McDonald’s 20 years and Dunkin’ Donuts 37 years to reach the 3,000-unit market, while Anytime Fitness did it in 13, the business is likely in contention for a record-breaking growth title.
From that first international location—gym No. 77 in Halifax, Nova Scotia, in 2005—to its most recent master franchise agreement in China, Anytime Fitness has been intentional in its global growth plan, first analyzing the market potential in any given country but not moving forward until the right franchise partner is identified.
“We’re very careful to ensure we have the right people. Even if we love a country, we won’t go there if we don’t have the right person,” says Runyon.
Speaking in his office, part of the 40-acre campus Anytime Fitness opened in the Minneapolis suburb of Woodbury, Runyon, the company’s CEO, says appealing to members is “the easy part.”
“The aspiration for people to achieve better health is universal in every country,” he continues.
Access, chimes in Mortensen, Anytime’s president, is what’s lacking in many foreign markets, making the franchise’s community-based model an ideal fit for regions without high gym membership penetration. The convenience of its 24/7 operating hours and flexible approach to real estate that allows smaller locations to open in suburban and rural areas, along with major metropolitan markets, are key to Anytime’s international growth.
Maurice Levine, above, has most recently added China to his duties as Anytime Fitness master franchisee.
“Don’t say small, I prefer intimately sized,” says Maurice Levine, referring to the footprint of his Anytime Fitness gyms, which are around 2,000 to 2,500 square feet versus the 20,000-square-foot-or-more facilities of other big-box clubs. “They’re the right size for that location.”
The franchise’s real estate strategy was one of the things that first stood out to Levine, who signed on as Anytime Fitness’s master franchisee in Singapore in 2013 and now owns the rights for Malaysia, the Philippines, Taiwan and China.
“When I first started looking at locations in Singapore, I was shown a 50,000-square foot location on Orchard Road—it’s this major retail area, shopping, everything—and so I asked, ‘Where wouldn’t you locate,’” he recalls, noting, as Mortensen did, the community-based model. “I was told the Woodlands because ‘people don’t workout there,’ and that’s where we went.”
A community center was being built in the mostly residential area and Levine was able to work with the developers to open his first Anytime Fitness as part of the complex. Within four months he says the location reached the operational breakeven point and had 900 members. “It’s about convenience, we’re always within walking distance from where people live,” Levine says from his office in the Philippines. “It’s the hours, we cater to members. And we’re not a big-box gym, so we’re not chasing wallets … we’re not geared so heavily to monthly sales goals.”
Since 2013 Levine has grown Anytime Fitness Asia in more than 170 territories, and in China, where Anytime recently became the first U.S.-based fitness franchise to get a license, he sees potential for more than 300 gyms. The company reports that less than one-half percent of Chinese engage in a fitness system, “so the opportunity is immense,” he says.
A “born-and-bred New Yorker,” Levine’s knowledge of markets across Asia came from his years leading worldwide learning and development firm CMC Global and as CEO for Gold Buyers, where he established the retail brand with more than 60 stores across Asia.
“Asia is a 24-hour place,” says Levine, but it was without a 24-hour gym network. And while that means Anytime Fitness has plenty of room for growth, it also means educating novice gym-goers, something Levine says Anytime does extremely well.
“We really take the time to orient them, make them feel comfortable,” he explains. “We don’t take ourselves so seriously, we really stress personal relationships and an exciting culture that’s dynamic and fun.”
“My competitors really are laziness and people not wanting to work out or not understanding health and wellness,” Levine continues, something his franchisees combat with lots of social media engagement and the hosting of community events such as fun runs. These franchisees, he stresses, are really the ones driving growth, making it crucial to find partners who “have a passion and genuinely care.”
“You can find high net worth individuals in Asia, they’re everywhere,” Levine says. “So I really look for the right attitude and that emotional connection.”
On the operations side, Levine has worked to extend the franchisor support of Anytime Fitness in the U.S., which includes bringing franchisees to Minnesota for training, and the creation of a pan-Asia finance network to assist ‘zees with equipment financing.
“Everything here is about figuring out the way,” he says of operating in Asia. “We’re writing the book, it hasn’t been written before.”
Anytime Fitness locations
UK and Australia
By contrast, Australia’s fitness market is more mature and franchising is a popular model, says Justin McDonell, who owns the master franchise rights and has bulked up Anytime Fitness to 460 locations there since 2008. His Sydney-based Collective Wellness Group is also behind the expansion of Massage Envy and Orangetheory Fitness in Australia.
He, too, cites Anytime’s community-focused real estate strategy as a winner, noting his franchisees started with “more country towns, smaller towns to test the market and as we got more confident we started opening in more cities.” They’ve also been aggressive about working with developers to locate near planned supermarkets.
“Our No. 1 location is next to a grocery store,” says McDonell. “Our biggest selling point of the membership is convenience. Yes, you can go to any location in the world, but it’s also that ability of being close to home. We have to make it as easy as possible” or people will find any excuse not to go to the gym.
What further differentiates Anytime from local competitors such as Fitness First and U.S.-based Snap Fitness, which has about 200 locations in Australia, is the combination of “really good quality equipment, clean facilities, and affordable prices,” says McDonell, adding franchisees are required to refresh their facilities every five years.
In the United Kingdom, education has been focused on the franchise community, “to demonstrate this was a viable proposition” for the market, says Andy Thompson, chairman of Anytime Fitness UK.
Franchise sales were slow initially, Thompson acknowledges, mostly to single-unit owners because those with the resources to open multiple gyms “were probably not interested in investing in us so early because we were still establishing ourselves.”
Now with a more mature network—Thompson expects to finish 2017 with about 140 gyms—he’s looking to expand beyond single units.
Germany is next up
Back in Minnesota, Runyon and Mortensen next have their eyes on Germany, which Runyon notes just surpassed 10 million members for its 8,500 private health and fitness clubs.
The International Health, Racquet & Sportsclub Association reports Anytime tops its annual Global 25 list in five-year revenue and five-year growth metrics, while Planet Fitness leads in overall revenue at $1.9 billion, along with its industry-leading 8.9 million members. New Hampshire-based Planet Fitness franchises globally in just two countries, Canada (20 clubs) and the Dominican Republic (two clubs). Snap Fitness, meanwhile, is making its own international push in 2017, signing master franchise agreements in the United Arab Emirates, Ireland, Saudia Arabia, Indonesia and, most recently, with Talwalkars Better Value Fitness, Ltd., a health club chain in South Asia.
Snap has about 470 locations outside the U.S.
The global market, says Anytime’s Mortensen, “is ripe and ready for us. So now it’s about taking steps to grow smart instead of just growing fast.”