My biggest mistake: Diana Williams, founder of Fernwood Fitness

When Fernwood Fitness opened its first female-only studio in 1989, in regional Victoria, it was an instant hit — and the start of a revolution for Australia’s fitness industry.

As interest continued to skyrocket, founder Diana Williams, previously a stay-at-home mum, eventually decided to go for gold and franchise the operation.

The only problem? The new concept was so popular that the business opened 14 clubs in 12 months, without the capital or expertise to support such intense growth.

Williams reveals the impact of growing too fast, and the steps the business took in order to hit the right speed.

The mistake

It was 1995, six years in, when Fernwood went hell for leather on the franchise front — “not strategically, mind you”, Williams admits.

“There was one in South Australia, there was one in Queensland … they were all over the place.

“If somebody said, ‘I’ll have one of those’, I’d say ‘OK right, let’s do that’.”

Williams says the business was facing a chicken and egg style situation: it needed capital from franchisees to grow, but it wasn’t really ready — financially, or in terms of experience — to help get all those new clubs open and firing.

“To reach a critical mass, we ended up with a critical mess,” she says.

Without adequate support from head office, or a clear operations manual, franchisees wound up putting their own spin on things, particularly marketing.

The context

Fernwood Fitness is now a household name with a devoted band of members, and has been for years.

But in the mid-90s it was still early days, and Williams says she and her team had little experience in the world of franchising.

“I think a lot of entrepreneurial businesses start off the same way that mine did — where you follow your gut feeling and you do whatever you have to, to get the business open and growing.”

Aside from demand from people wanting a stake in the business, there was also a competitor lurking — a “very glitzy” New Zealand fitness chain trying to make its mark in Sydney, says Williams.

“They looked like the new shiny thing and that freaked me out, and was one of the reasons we did try to grow very quickly. I thought it was them or us — that they would open up and have the brand recognition.”

The impact

Whilst her business looked to be booming on the surface, Williams says the year of rapid openings led to “two or three years of pain”.

New franchisees were expecting a high standard of support that the business was not yet equipped to provide, she says.

The quick growth led to two major downsides.

“One is that I was always spending money before I had it,” Williams says.

An example was a decision to hire swimming champ Lisa Curry as a long-term ambassador when the business couldn’t really afford it.

“I mean it (all the spending) wasn’t devastating — obviously we’re still in business all this time later — but there were a lot of nights when I’d stay awake and look at the ceiling and wonder where the next dollar was going to come from.”

Behind the scenes, Williams was giving her credit card a lashing, and taking creative measures to keep things afloat.

“You do what you have to do,” she says.

“I did buy some gym memberships at one of our clubs quite regularly to put money in the bank so the wages would get paid. Then I had to find the money to pay the credit card.”

The second key downside was a lack of compliance among franchisees.

“They were creating their own marketing and not following our guidelines, and we didn’t have time to bring them in line because we were busy opening clubs.”

The fix

Williams says it had become very apparent that “the tail was wagging the dog”. Something needed to change.

“It was just a matter of building relationships with our franchisees, getting them together and talking to them — having regular meetings, visiting them and bringing them all back in line.”

A cheeky marketing campaign was another big part of getting franchisees back on board, she says.

“We put out a billboard that said ‘No Toms, no Harrys and no Dicks’,” she laughs.

“That really got all of our franchisees sort of saying ‘OK, this is some really clever marketing — let’s follow the guidelines’. That was probably the turning point, when everybody started coming back.”

The business also deliberately slowed down.

“We were only opening maybe four or five a year and they were much more strategic,” Williams explains.

Eventually, the NZ chain that had partly inspired Fernwood’s franchising rush folded, with Fernwood snapping up many of their Sydney sites.

The lesson

Williams says the mistake of growing too fast didn’t have a huge long-term impact on her franchisees — many who are still with the business today. But it did cause her a lot of stress.

With the benefit of hindsight, she’d definitely do a few things differently, including having a solid business plan in place and perhaps borrowing money to grow, rather than depending just on cashflow.

“If I was advising somebody to open a business, I would advise them not to do it that way — to get some capital behind them first and make sure that every franchisee follows the systems from the start,” she says.

“If you’re going to build a brand, it’s got to be following the brand guidelines, it can’t be going off doing all different things in different states.

“Now we have everything is systemised and our franchises follow the processes and they’re happy, and they know what they’re doing.”

These days, Williams says fast growth is not a problem because the business has the capital and “womanpower” behind it.

Another lesson, which she managed to pull off way back when, is how important it is to just keep going.

“I think you just have to understand that it’s not easy, it takes an awful lot of work and a lot of sleepless nights.

“But it’s worth it in the end.”