With the boom of gym and fitness franchises in the last few years the market may be meeting saturation, particularly with the rapid expansion of players like Anytime Fitness.
Adopting the innovative new trend of 24 hour gyms, newer fitness franchises have been stealing some market share from the traditional industry leaders, while also appealing to new segments of the market.
This leaves little room for new players to enter the industry.
Launched in 2008, Anytime fitness had already grown to 73 outlets and 164 territories sold within 3 years, before virtually doubling their size again in the next 12 months.
While rapid growth can be a risk if not managed correctly, franchisors (brother and sister duo), Justin McDonell and Jacinta McDonell Jimenez, have laid good foundations for growth (providing they can find suitable sites for the new territories sold).
With all Australian territories now sold, they should also have plenty of capital to further strengthen franchise operations.
Three of the good foundations for growth are:
1. Good systems in place from the start
Having bought out the licensing rights for Australia from the US parent franchise Justin and Jacinta were blessed with having good systems, including technology, in place from the start. This, coupled wit their extensive experience in the fitness sector, gave them a very strong starting base from which to grow the franchise.
2. Strong growth trajectory
Findings from the Franchise Performance Metrics research shows the rate of growth of a franchise in the first few years generally sets the trajectory for growth in future years. The stronger the franchise growth rate means the quicker the franchise is likely to reach breakeven (or critical mass) where royalties cover operating expenses. While there are dangers of rapid growth if not managed correctly, it appears from the outside looking in that Anytime Fitness are managing their growth well. This is helped in part by the approach of offering franchisees multiple territories, rather than focusing solely on new franchisee recruitment.
3. Focus on multiple unit franchisee ownership
Although Anytime Fitness is expanding rapidly, rather than relying purely on new franchisees for growth they offer multiple unit opportunities to existing franchisees. Despite having sold virtually every territory in Australia, they still have less than 100 franchisees currently in the system.
This has several benefits including:
- Performance of franchisee already proven
- Existing relationship with franchisee
- Franchisee already knows the system so initial training not required (although franchisors need to recognise multi-unit franchisees require different types of support to single unit franchisees, with a greater focus on management and HR issues)
- Less franchisees to manage
- Demonstrates the strength of the franchise model to positively influence franchisee recruitment in the future
- Provides franchisees with opportunities to grow and greater profit potential, increasing franchisee satisfaction levels
This is not to say a multiple-unit franchisee strategy isn’t without challenges, but for rapid growth and expansion it can be highly effective, and is a strategy being used more and more by franchisors.
Market size key for franchise growth
Even more important than franchisee recruitment though is ensuring there’s a large enough market to support your franchise concept and provide enough market penetration for franchise success.
If you’re planning on opening a new fitness franchise concept in the Australian market it is suggested that you investigate an alternative industry/franchise concept in a less competitive market, which may prove much more lucrative.
If your heart is still set on launching a fitness franchise concept in the Australian market you need to conduct thorough due diligence, ensure you have a strong point of difference and plenty of capital to enable rapid market penetration to take on the competition.
Share your views below now – do you agree or disagree this market is nearing saturation? And are there any other markets you feel are reaching saturation too?