| Please read each the entire Q & A. You may have had the same question but never asked. These are actual questions from franchise prospects. On to the Questions:
Question: Isn't this like a Curves for men?
Dennis: That's like saying a 1972 Pinto is like a Laborghini. We are PERSONAL TRAINING based on our program and we make our clients accountable. This isn't show up when you want (Studio Fitness Centers) or please don't show up because we don't want you to abuse our equipment (Big Box Gyms). Besides, all the concepts that jumped on that Men's/ Curves bandwagon, e.g. Cut's For Men, Nitro For Men and The Blitz are MIA because they built their business model on the Curve's model of $19.00 monthly charges and paying astronomical retail rent competing with all the Starbucks and Quizno's. We pay 30-70% less for rent and charge fees commensurate with the personal training services we provide.
Question: I keep reading that your franchise owners are "Living Logos". Can you explain?
Dennis: Mark Waxman Senior VP of CBIZ coined that phrase. What he was referencing is that after he met our gym owners he realized that they had a confidence about them that would lead other men to follow and listen to them regarding their health & fitness. What it DOESN'T mean is that we all look like the Arnold Schwarzenegger. All of the men involved with Athletic Nation come from different backgrounds and experiences and are all over the map in terms of body types but you just know they are all committed to fitness.
Question: I have heard you quoted as saying Athletic Nation is the un-franchise. What does that mean exactly?
Dennis: I have ticked off quite a few people in the franchise industry with that quote but I stand behind it. I have been in the franchise industry for 25 years and know the good, the bad and the ugly in franchising. When I decided to launch Athletic Nation as a franchise I knew what it would represent as a company:
1) NO Ivory Tower where the corporate office runs the company as a dictatorship. We would be inclusive of our franchisees versus excluding them. We are now in the process of launching committees of our franchisees to help develop our concept further, including marketing, training, technology, etc. We will make group decisions to further our concept. Why wouldn't we want to leverage the skill sets of our gym owners?
2) Nickel and dimming the franchisees. We will NEVER mark up products or equipment or anything for that matter to our gym owners. I built our concept on developing unit performance and our only revenue will be our monthly royalty...NO hidden costs or fees.
3) Measuring our success based on how many franchises we sold last month. This is what is absolutely wrong with the franchise industry, i.e. the industry promotes the most successful franchises as the one's who grew the fastest! Drives me crazy. We measure our success at gym client acquisition and retention level. We have no quota as to how many franchises we need to sell each month because we know that we have to be patient to bring new owners aboard who are a good fit for our business.
Question: It seems most franchise concepts royalty is much lower than yours, around 5-7%. Why is yours 10%?
Dennis: Our royalty is based on a number of factors not withstanding the fact that I have to ensure the viability of the franchisor to succeed and grow the brand long term. I have been in franchising for over 25 years and one of the biggest mistakes of a new franchisor is not creating enough cash flow to sustain let alone grow the franchise brand.
Our gyms will never be a high gross revenue business at the unit level and probably not exceed $15,000.00 to $17,000.00 per month (45-60 clients) at maturity. So five percent royalty of $500,000.00 revenue or ten percent of $180,000.00 revenue is all relative to the bottom line. We are a service industry business (represents 90% service sales, 10% product sales) with extremely low fixed operating costs, i.e. averaging approximately $3,000.00 per month. I built the model this way, no unnecessary operating costs:
Rent/ Lease/ NNN
Utilities/ Telephone/Internet
Gym Liability Insurance
Water Service
Towel Service
The variable costs in our business are royalty, marketing & advertising, trainer labor, etc. I think as you explore the model and build a pro-forma you will see that the ten percent is very reasonable in our model and allows us to build a profitable and sustainable national brand. Question: How the Heck can I keep my job while opening a gym?
Dennis: Everyone we speak to we DO NOT try to fit a square peg into a round hole. We have a concept that has adaptability and we try and apply it to an individual's personal situation, if they are a good fit. We just need to look at the detail of a prospects life and find a round peg for a round hole, e.g. some of our franchisees:
Cary, NC (Raleigh)- Physician owned with a 23 year old PGA Pro as General Manager incentivised to grow the business. We had seven finalists for the GM job and could have hired six of them- guys want to work for us.
El Dorado Hills, CA (Sacramento) - Production manager for Canterbury -Schweppes. Works 7am-2pm. Has a family and baby on the way. Will go to gym as often as possible 3-8 pm each night but will have a part time assistant manager in place. Assistant manager will attend training with franchisee in San Jose. Franchisee will handle all inquiries from new clients.
Bridgewater, MA (Boston) - Civil Engineer who has flexibility to schedule his jobs. Most completed by 2-3 pm each day. Brother will be back up trainer as he builds business.
Redding, CA- Paramedic Supervisor- Works two 24 hour shifts per week and has 4.5 days off. Will have trusted part time trainer work his days that he pulls his regular job shifts. Will schedule and control all new client leads on days/ times he is at gym. |
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