A spin around four fitness concepts
The workout: Trainer-led classes, group fitness, heartrate-monitored is how Dave Long describes OrangeTheory classes, with each athlete’s stats displayed on large monitors for all to see. (So much for hiding in the back, where the instructor can’t see you.)
The stats: OrangeTheory units are 3,000 square feet, and cost about $450,000 and up to build out and get open. It’s a membership model, with monthly dues ranging from $100 to $150, depending upon number of workouts. Since starting franchising in early 2011, they’ve just crossed 300 open locations worldwide, 90 percent of those in the U.S. Long expects 350 to 400 new locations in 2016.
The competitors: Long, co-founder of Ultimate Fitness Group, OrangeTheory’s parent, was VP at Massage Envy while the concept grew from 20 stores to 800. Another Ultimate Fitness brand, European Wax Center, zoomed from five stores to 200 locations under his watch. He swears by an area development model, which puts an area representative in about 70 markets and also reduces the franchisor’s royalty because a cut goes to those area reps. But he thinks it’s worth it “from a first-to-market standpoint, and just having everybody rowing in the same direction.”
The handicap: Long doesn’t worry much about competition; in fact, 60 percent of Orange-Theory’s members also have membership in big-box gyms, he says, and they do very well when they locate in the same center as a yoga studio or other boutique concept different from theirs. The race for real estate is tough, though, with such an aggressive growth rate.
The workout: Founder Michael Parrella started martial arts training when he was 13 years old, and opened his first martial arts studio at age 24. Now 48, he perfected his franchise’s kickboxing class by testing which sequence of events encouraged people to sign up for a membership earlier: with the tough part at the beginning or the end of class. “I found out if I put the really hard stuff at the beginning of class, people forgot about it by the middle, and then we did some fun stuff at the end so they had a good time.”
The stats: The franchise is selling 35 to 46 units a month, Parrella claims, with 160 open now and 400 at various stages of development. It costs about $225,000 all in to open a unit, lower than some others because the equipment is less expensive—boxing bags are relatively cheap and last for a couple of years.
The competitors: “The big-box gyms are so lazy because they’re so big. Personal training studios you get amazing results, but it’s $500 to $700 a month.” His price is $125 to $150 a month, which he calls the sweet spot. “Nobody out-markets us,” he claims.
The handicap: Signing high-quality franchisees is the challenge, of course, with a growth rate this fast, as will be the franchisees’ task in hiring people for culture rather than skills. “We hire staff that’s cordial and friendly,” he says, so members feel good and want to come back. “I think people’s lives suck. They’re getting disrespected by their husband, by their boss. You come into our centers and you’re treated like a queen or a king,” he says.
The workout: And now for something completely different—a big-box gym, not a boutique concept like the others covered here. A Blink gym has everything you’d find in a broad-scale gym. “What differentiates us is the overall experience you have, vs. other value players in the marketplace,” claims Todd Magazine, president. “Our whole concept is putting mood above muscle.”
The stats: Blink gyms are big, 15,000 square feet, and cheap to join like Planet Fitness, the far-and-away franchise leader in the niche. Membership costs $15 for one location and $20 to use multiple locations. The price tag for franchisees is bigger than the boutiques, too, ranging from $700,000 up to $1.6 million to open.
The competitors: In the fitness business lately, the value brands like Blink Fitness and Planet Fitness are doing well, and the luxury brands like Equinox (which owns Blink) are thriving, too. “Over the last three to five years, luxury has done very well and value has done very well, and the middle has gotten squeezed,” Magazine says. He counts on the Blink experience to keep members coming back.
The handicap: Planet Fitness went public this summer, so is armed with fresh capital and way ahead of Blink in the numbers game. But that actually works out just fine for Blink, Magazine says, because Planet is sold out in many territories, with franchisees itching to expand ripe pickings. One shouldn’t bet against Equinox, Blink’s owner, “the premier luxury provider in the world in lifestyle and fitness,” as he calls it, but not an experienced player in franchising.
The workout: “It is pure, intoxicating entertainment,” says President Heather Harris about CycleBar’s spinning classes, which take place in a setting designed to give an “IMAX theater concert-like experience.” Called CycleStars, instructors are given freedom to be who they are, rather than following a set script.
The stats: CycleBar just opened its first franchise location, in Carmel, Indiana, and Harris says they have 178 units sold to 98 franchisees. Cost is $300,000 to $600,000 for buildout, including the state-of-the-art AV and HVAC system, which cycles in fresh air every 10 minutes. “We want people to get in there and get sweaty and gooey,” but not get hot, Harris says. Customers pay about $20 per class.
The competitors: SoulCycle is the star in this space, with cult-like followings on the East Coast and a bid to go public, although since its summer announcement the IPO has been stalled. Skeptics ask questions like this: “How many Americans are willing to pay $35 to ride a bike in a dimly lit room for 45 minutes while being yelled at?” CycleBar’s price is much lower, but more to the point CycleBar is being franchised while SoulCycle and another popular brand, Flywheel, are not.
The handicap: Harris is a pro at building global brands—she most recently did so at Donna Karan Intimates—but growing a solid franchise system is a different animal. The initial stores are targeting “flyover cities,” where often the only competition is the local YMCA. But will these boutique fitness clubs attract enough riders?