Little Gym is not a mini Gold's Gym, as people sometimes think.
It's something much grander: a children's program that builds healthy minds and bodies and a hot retail concept lauded by the International Council of Shopping Centers (ICSC), says Bob Bingham, CEO of the Belleview, Washington-based company that was founded in 1976 and started franchising in 1992.
Three weeks after Bingham took over the top spot, he set up a meeting with the existing franchisees. "I was excited and had a tight schedule (planned)," he says. His agenda, however, went out the window once he discovered they, too, had an agenda, and it usurped anything he had to say. The franchisees were not happy and they told him in no uncertain terms that corporate was doing a bad job.
They prefaced their comments with "Now, Bob, don't take this personally," and then they'd pound their fists on the table for emphasis as they poured out their pent-up frustrations with the leadership.
Their list was all business: the manuals didn't contain a business system and neither did the training program. Plus, the hour and a half they did spend on business practices had no value. To add insult to injury, the franchisees claimed the people hired to consult with them didn't know the business, so their advice was worst than none.
The problem, Bingham says, was that the founder's larger-than-life personality made his centers successful. "He was a kid-magnet," Bingham says, "but you can't franchise charisma."
After spending several hours being yelled at by franchisees, Bingham did something amazing – he hired some of them.
"They came up with their own answers (on how to run the business), so we managed to learn our own business from them," he says.
And then they were hit by a train.
In 1996, the company tried to go public, and after spending $800,000 on attorney and other fees, it failed. "It was a train wreck," he says, "and the worst part was we didn't have a Plan B." The investors were out of money; they had been paying bills with credit cards thinking they would pay them off when the IPO came through. The creditors, franchisees and employees all looked at him and asked, "What are we going to do now?" Bingham says. "And I didn't have the answer."
He did, actually: He downsized the company from 28 employees to five. Knowing that serving the franchisees was "sacred," he hired six of the top franchisees to consult with their peers. And although he paid them next to nothing to work more than the agreed upon eight to 10 hours, no one turned him down. The franchisees gave the same advice corporate staff did, but hearing it from a peer had more credibility, he says.
Since then the company has had nine consecutive quarters of double-digit growth, Bingham reports. Little Gym now has 273 units in the U.S. and 43 gyms in 20 countries, including Kuwait.
The chain is a "leader in the category," he says, and the tradition of learning from the people doing the job day-in and day-out continues. Of the top nine executives six also have a Little Gym franchise. "It makes a world of difference with our relationships with franchisees," he says. "It's not us versus them."