What to Look for in a Fitness Franchise (Part 2)

What do you think is the one question that I get emailed and Facebook messaged the most?

“When shopping or looking for a fitness franchise opportunity, what exactly should I be looking for, and what should I be asking?”

I thought I’d take a moment and share with you the three or four key things that yPicture-1971-vT3JwE.pngou should be asking franchisors — like myself — when you shop around to start your own fitness business.

If you’ve ever read E Myth, then you know that Michael Gerber, the author of E Myth, talks about the technician, the manager, and the entrepreneur. You’re obviously an entrepreneur since you’re visiting my blog, and you have a passion for starting a small business.

As Michael Gerber talks about in E Myth, you have a five-times greater success rate if you were to open with a franchise rather than start your own business.

The reason for that is really simple: most people who start their own business don’t have systems, operations, processes, marketing prowess, a sales formula to convert prospects to paying clients, and there’s no retention or referral generation system.

You learn as you go. Someone might have a passion for baking pies or delivering amazing workouts, but he or she may not have the systems in place to run that business.

That’s why franchises are typically a lot more successful – you get all these systems, processes, operations, marketing funnels, sales funnels, retention tools and strategies, and even referral generation systems done for you. Typically, they’re handed to you in an educational manual or in a series of DVDs.

Let’s say that we’ve got that covered. Now you’re looking for the right fitness franchise business that you’ll get into business with, which is essentially a partnership.

Full disclosure: I’m the president of Fit Body Boot Camp, and we are a fitness franchise. Of course my job is to get more people who are going to be a good fit with our culture on board with Fit Body Boot Camp. I’m going to tell you about four specific things to look out for, whether you’re shopping Fit Body Boot Camp or any other fitness franchise out there.

 

Get What You Pay For With Your Buy-In Fee

Number one: ask, “What do I get for the buy-in fee?”

All franchises have a buy-in fee. Some have a small buy-in fee, while others have a big buy-in fee. The buy-in fee might be, I don’t know, anywhere from $40,000 to as much as $100,000.

Then there are build-out costs. You want to ask, “What do I get? Do I get equipment? Do I get signage? Do I get help with build-out?”

One thing we do at Fit Body Boot Camp is I’ve committed to keeping the cost of Fit Body Boot Camp franchises, the buy-in, low.

With that buy-in, our owners get a protected territory, 14 DVDs, our operations manual, and access our systems and processes. They also receive credentials to our members-only and owners-only sites, where there are done-for-you workouts, marketing systems, sales systems, everything you need to run the business without needing to think up creative marketing strategies.

These are all done-for-you tactics.

Your buy-in even gets you a done-for-you website that we optimize for you with keywords so that you can be found locally.

See, we can quantify what you get with our buy-in. You need to ask any franchisor, “What do I get with the buy-in fee?”

Now, the fact of the matter is that there’s also profit built in to the buy-in fee. There’s nothing wrong with that.

We’re both in the business of making profit. However, what exactly do you get for your $50,000?

 

What’s The Deal With Royalties?

The number two question to ask when considering franchising is, “What about the monthly franchise fee, also known as royalties? What exactly am I getting for the royalties, and what are the royalties?”

Typically, it’s standard practice in the franchise business to charge between six and eight percent of royalties. So if you are doing, let’s say, $20,000 a month in gross revenue in your fitness franchise. If you’re paying six percent, which is on the low end of what most franchisors charge as a royalty, that means you’re paying $1200 a month in royalties.

When someone builds up his or her franchise business and it goes from $20,000 a month to $30,000 a month, that same six percent means he or she pays $1500 a month.

At Fit Body Boot Camp, we only charge you a modest flat fee.

Here’s why: by doing so, this makes it more convenient for our owners. They know it’s a predictable dollar amount that they’re paying. I’d love to make $1500 per location, but we want to earn that first.

We earn that by setting up giant Groupon and deal-of-the-day deals for all of our owners worldwide. When we do that, we set those deals up, we manage those deals, we take all the phone calls related to these deals, we negotiate the best deal possible with the deal-obuy-cubes-300x208-iKl4Ci.jpgf-the-day sites, and, of course, we sell anywhere from 3000-5000 in only three to four days, which might be a record for any fitness business on these deal-of-the-day sites.

We’ve worked really hard to build relationships with our national reps. Our franchise owners don’t have to go knock on Groupon’s doors. We do it for them.

When Groupon gives us half that money, we split that money with you 50/50. We earn the rest of our money, and we give you a lead from Groupon, plus we give you half the money.

I’m not saying that’s wrong or right for other franchises. I’m saying that’s how we do business. I’d rather you pay me a flat fee – a small, reliable, consistent flat fee – that you know that you can comfortably afford, and let me give you a lead and make a little bit of money while I’m at it.

The other way we do this is with our ongoing traffic. We use lots of technology and always focus on search engine optimization. We’re always trying to get your local Fit Body Boot Camp website to rank for the top keywords that people are searching for relating to fitness and fat loss.

On all Fit Body Boot Camp websites, we have various web specials. The way we look at it is that we’ll invest the time, money, energy and effort into driving traffic to your websites so that when somebody buys that web special from you, again, we’ll split that money 50/50, and we’ll give you a lead and half the money from the promotion.

Once you convert that person into an ongoing client, you keep 100% of the money. Again, wouldn’t you pay us half the money earned from a web special that we create IF we were to give you a lead and half the money earned?

You would.

As far as I know, by the way, we are the only franchise out there that’s actually writing a check back to our franchisees every month for these deal-of-the-day site promotions and web specials.

 

Is This Franchise Approved In Every State?

The third thing you really want to ask when shopping around for a fitness franchise or a fitness business opportunity is whether you are licensed and legal to sell franchises in your state.

Here’s what I mean: as a franchisor, we are managed by the Federal Trade Commission. What that means is throughout all 50 states, we have to apply every year. There’s certain states – I believe it’s either 14 or 20 states – that we have to apply for each and every year, get audited, show our financials to make sure we’re strong, and then get approved us to sell franchises to that state that year.

A franchise might get okayed or approved to sell a location this year, but maybe in 2018 their financials aren’t strong enough. Maybe they made some poor decisions in their marketing and growth, and the franchise or its financials are suffering for it.

A state might then say, “Hey, you guys can’t sell in my state.”Screen-shot-2012-04-02-at-2.35.47-PM-300x224-nSECTC.png

Now, that’s important because that’s a red flag to you. We work very hard to manage our money right, to make sure we stretch every dollar we can AND have money in the coffers. We do that because we want to make sure that our franchisees are protected, they’re confident, and that every state that we apply for approves us year after year.

If these franchises don’t get approval in random years, it tells you that their financials are weak and that they’re probably making some bad business decisions, which could ultimately affect you if you’re on a three- or five-year franchise agreement with them.

Nothing is worse than getting into a partnership with an organization that is financially broke or headed towards financial brokenness, if that’s even a word.

Your job is to ask those questions and say, “Hey, are you approved this year? Have you been approved? Have you been audited by the state to sell franchises in my state?”

If the answer is, “Well, yes, we were last year, but no, not this year,” that’s a red flag for you. You should definitely consider doing further research.

Think about this: this is the franchise you’re forking over your hard-earned money to. You’re joining them because you believe they are capable of outfitting you with the resources to own a largely successful business.

If a franchise can’t get its financials in order, that might signal them sending you less or lower quality resources. That affects your bottom line.

What if they just don’t care about being approved in every state? That could mean that they’re only focused on selling to a specific region of the country, OR it could reveal a lack of structure and priority-setting (since not getting approved in states is like leaving potential money on the table).

Be wary when it comes to this stuff.You’re making a huge commitment; you deserve to know what you’re getting yourself into.

 

Talk To ANY Owner, Not Just The Ones They Tell You To Talk With

If there’s a fourth and final thing I want to leave you with when shopping around for a fitness franchise, it’s this: don’t just call the numbers that the franchisor gives you.

Typically, a franchisee potential – someone like you – might ask me, “Hey, Bedros, can I have the numbers of a handful of franchisees?”

I feel like I’m kind of spilling the beans here, but I want to. I want to be fully transparent. My job is to help clean up the franchise industry if I can, and give it a whole new reputation.

What most franchisors will do is they’ll give you the numbers of four or five of their best, most ideal franchise locations. They’ll say, “Here, call these four people.” Those are their raving fans, the total action-takers who are making it happen.

What we do every time someone has that question is say, “Hey, go to FitBodyBootCamp.com. You’re going to see our directory of hundreds of our locations worldwide. Call a handful of locations in your state and in your area, and then call some random ones across the country. Talk to them. Let them know why you’re talking to them, and let them know that I asked you to call them and to get feedback from them. Ask, ‘Would you sign up with Fit Body Boot Camp again? Would you start this franchise over again? How would you do things differently? What’s your perspective on a new franchisee coming on board?’”photo-1-300x194-TCYxD4.jpg

When a franchisor just gives you two or three or four numbers to call, again, it might be a red flag. My whole thing is that we have full transparency.

I believe in the model that we run. I believe we own the number one franchise model in the fitness and non-fitness space, so I gladly say, “Hey, we have an open door policy. Go to FitBodyBootCamp.com, call any one of our locations off the directory and get feedback.” Whatever feedback you get is the true metric unit that you’re going to use to gauge whether you want to come on board or not.

Those are the four big things that I want you to really consider when shopping around for a fitness franchise. It’s going to save you a lot of headaches, and it’s going to make sure that you get on board with an organization that shares the same core values that you hold.

Ultimately, you want to pick a franchise you’ll grow with and be successful with.

If you have any questions, make sure to stay plugged into this blog, as well as my other blog at renegadefitnessmarketing.com/blog/. Be sure to take a peek at my two highly watched YouTube channels: https://www.youtube.com/user/KeuilianInc/videos and https://www.youtube.com/user/MarketingFitness101/videos. I love sharing even more tips there for any “average Joe” to pick up for free.

 

Committed to your success,

Bedros