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Building up success with fitness franchises

By Joseph Pisani

Health care franchises are a major industry trend that has been unfolding in the last couple of years. This niche market focuses on wellness, nutrition, and home health care services.

According to one of Canada’s franchise directories, concepts operating in the health and fitness sector have seen incredible growth with a 35 per cent increase in listings over the last five years. Typically, Canadians are more conscious of their well-being from physical activity to healthy eating. Statistics Canada notes more than 16.2 million Canadians aged 12 and over have said they had participated in at least 150 minutes of moderate to vigorous physical activity per week.

The March 2019 IBIS World Industry Report (observation and research on more than 400 Canadian industries) shows most of the growth happening in two areas. The first is small-scale gyms that focus on a core fitness regimen. The other is operators that have diversified to offer spa services, personal training, and nutritional consultation, to broaden their potential client base.

The report also projected growth to continue until 2024 where overall revenue is expected to rise roughly four per cent annually. For a prospective owner looking to start a franchise, the fitness trend presents a unique opportunity. With growth expected to continue, this sector may help to provide a boost in demand for services (and overall revenue).

Despite the projected demand, there are still some crucial business elements to consider. To help with the success of this type of franchise, here are the key things to consider:

Financing and fees

The starting point for any conversation around financing is the individual’s personal credit. All banks will look at a person’s credit worthiness before looking at an application for a loan.
The starting point for any conversation around financing is the individual’s personal credit. All banks will look at a person’s credit worthiness before looking at an application for a loan.

The starting point for any conversation around financing is the individual’s personal credit. All banks will look at a person’s credit worthiness before looking at an application for a loan. It is important to make sure the company’s credit worthiness is very strong (and not over extended), and this can be discussed with a banker.

When it comes to investing in a company within a specific industry, there are several different costs, including the initial investment and franchise fee. The payment is a one-time, upfront fee that allows the owner to use the company’s name, business system, or products and is due upon signing the franchise agreement.  In most cases, the price is non-refundable, but the agreement will outline these terms. The franchise fee itself varies within networks and could be used to help support the franchisor’s costs of site and/or product development, training, marketing, and access to suppliers.

It is also important to learn about recurring fees—royalties and advertising fees are often paid as a percentage of sales to the franchisor on a weekly or monthly basis. This can have a fairly significant impact on the overall cost of doing business with a particular franchise. Having a conversation with a franchisor to better understand the overall financial picture will help with determining projected financials and income.

Team members

It is important to look at the overall demographics in the area and the economic situation as well to better understand the prospective customer base and market.
It is important to look at the overall demographics in the area and the economic situation as well to better understand the prospective customer base and market.

With a health care focused franchise—especially one that emphasizes getting customers motivated to workout—finding and retaining the right team members (trainers) is going to be vital. For a franchisee looking to operate a small-scale gym that focuses on a core fitness regime, a central part of the model is customer engagement. The more involved customers are, the more likely they will keep coming back and purchasing monthly memberships. These types of fitness franchises encourage and create a sense of community, so it is likely the franchise will benefit from word-of-mouth marketing if there is a high level of engagement. The reverse of this is also true, which is why emphasizing recruitment and retention is important.

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