How I turned my fitness company into a franchise

Nigel Miller and John Fuller had a good thing going with their Plus Fitness chain of gyms. But in 2008, the company noticed things deteriorating in the fitness space and decided to move their club towards a 24-hour model – and franchise the entire thing.

It was a good move, with the company now turning over about $8 million a year. But it wasn’t easy – Miller spoke with SmartCompany about the difficulties involved in transforming a chain into a franchise.

So how’s the year been for you?

It’s been a fantastic year, it hasn’t stopped. We’re pretty much opening a club every couple of weeks now, and in January and February we’ll be incredibly busy.

The fitness scene has been under pressure for a while now…

It has, but for us there’s an element of knowledge here because we were already in the fitness industry. We recognise the trends, and we see what’s happening. But at the same time, yes, there have been challenges. Otherwise we wouldn’t have done well…if we didn’t change our model, really, we’d have been dead in the water.

So what happened when you decided to turn the company into a franchise? What was the business like at the time?

At the time, we thought we had a good understanding of franchises, so we said, look, there’s a slowdown in the health club market, we saw that small groups of health clubs were falling over, they were in trouble, and we were hearing horrible stories. But that was our exact model. We’ve always been big believers that you need to reinvent yourself every few years, and this was that opportunity.

It was the way the industry was going. We just felt the decline of the health club model, and we knew we had to move pretty fast.

Was it hard moving to the 24-hour model? There’s a lot of that around at the moment.

You know, I actually think it’s something consumers have wanted for a long time, but it was a stubborn industry that prevented them from having it. I think the flexibility membership programs, the low price point, that’s what people wanted. It’s always been a very tunnel vision industry, and we were persisting with knocking heads on the wall and struggling with price points.

But over time we figured out that our customers who want things like extensive swimming pools and classes and so on, they’re the most expensive to service because of license fees, wages, and so on, but they’re a minority. You can’t please everyone.

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