Is a Franchise the Right Fit for You?

by Kristen Horler on Oct 04, 2018

Operations

Partnering with a company that has systems and marketing in place is one way to grow your business.

A number of tried-and-proven options to attract new members and clients can help you grow your business without reinventing the wheel. You can join a franchise system, license the rights to an established brand or invest in instructor training to build a specialty business. Each option has an opportunity cost (what you might lose if you don’t choose the particular option), as well as benefits that you might gain. Among these choices, franchise systems offer many advantages.

“Franchising is becoming the preferred pathway to entrepreneurship in the fitness industry,” says Pamela Kufahl, MA, director of content and engagement at Club Industry. With a better understanding of how a franchise works, you’ll be able to determine if this business model meets your needs.

Franchise Basics

According to the International Franchise Association, a franchise is “A contractual relationship between a licensor (franchisor) and a licensee (franchisee) that allows the business owner to use the licensor’s brand and method of doing business to distribute products or services to consumers.”

How it works. To be able to offer and sell franchises in the United States, franchisors must follow Federal Trade Commission regulations. Some states (franchise registration states) require additional information. A franchisee pays the franchisor a one-time initial franchise fee and a monthly royalty fee for the rights to use the franchisor’s brand and methods.

Benefits. A franchise provides brand awareness, marketing and systems support, plus a community of other business owners who are active and invested in the success of the franchise system. The support system provided by the franchisor and fellow franchisees enables you to be in business for yourself, not by yourself.

Mark Daly of Anytime Fitness promotes the benefits and resources available to franchisees. “Without stifling creativity, franchising provides trainers and their clients with a higher level of consistency,” Daly says, as opposed to individuals building a fitness business on their own. “Franchisors have the resources and technology to efficiently support trainers to incorporate new exercises, programs and products into their existing repertoire of offerings.”

Franchisors often develop relationships with partners and vendors, providing better pricing on software, services and products than you could get by purchasing directly from a vendor as an independent business owner.

Although the initial investment and ongoing payments to a franchisor may deter you at first, the fees you pay to your franchisor generally come with ongoing business support, marketing materials, research and development, preferred vendor pricing and a centralized website.

Franchising has the benefit of an exclusive territory, which reduces competition. “If the business turns out to be not a great fit for you, there is often a pipeline of new franchisees entering the system who can buy your established business. So ultimately, franchising is often the better investment option,” says Lane Fisher, partner at FisherZucker and a member of the International Franchise Association’s Board of Directors.

“In my opinion, a fitness instructor wishing to own a fitness business and ultimately expand will find their best opportunities in franchising, based on the scalability and predictability of the franchise model,” says Fisher. “While it may appear on its face to be a more expensive option, franchisors offer superior training, which extends far beyond the training provided by licensors or training enterprises, because it includes instruction on the ‘operation’ of the business.

“By having a well-defined model, which is replicated from location to location, business owners more quickly establish relationships with customers and build upon goodwill, such that they ramp up and become profitable faster.”

Considerations. Your success—or failure—will be based on the daily performance and management of your business. There is no substitute for hard work, and paying into a franchise system does not guarantee success.

A franchisee abides by the procedures and restrictions set by the franchise, which may include what services are offered and how those services are priced. Usually the franchisee must operate the business for a specified length of time, and the products that can be used may be limited.

Look for a franchisor that consistently enforces systems and standards throughout the franchise system. Enforcement may not seem important to you; however, it is meant to protect the brand for the benefit of all franchisees.

If a company has certain components as part of the offering (a license to operate a business using a common brand name and a common operating support system, in return for the payment of initial and/or ongoing fees), then it may be a franchise, whether or not the company chooses to call itself one. If in doubt, speak with a franchise attorney to ensure that you’re aligning yourself with the right business.

If becoming a franchisee sounds like it might be a good fit for you, go to the resources at the end of this article and start exploring.

Examples of franchises. Anytime Fitness, Shapes® for Women and CycleBar®. Search for more franchise opportunities online: entrepreneur.com/franchises.

Additional Options

Two other popular options may be a fit for your business development.

Licensing. A license agreement is a written agreement between a company (licensor) and an individual or business entity (licensee), providing the licensee with permission to use the licensor’s brand name and (often) intellectual property within a set of parameters. A licensing fee is required, at an amount that is likely lower than a franchising fee.

You may pay for training, for example, to use the choreography and music that are part of the brand, or to operate a fitness studio using the licensor’s name. A license allows you to operate and market your business without restrictions as long as you maintain the standards of the licensor’s name and product. Generally, a licensee does not receive business or marketing support, although such support may be available for an additional fee. You run the risk that other licensees may develop their own marketing materials that may not represent the brand well, or that many competitors are marketing the same licensed product.

Darren Jacobson, senior vice president of instructor programming at Zumba® Fitness, says, “Licensing has become a viable and attractive option in the fitness industry. The key to being part of a license is that the brand does a significant amount of marketing and promotion to create the brand awareness and recognition which in turn benefits you, the licensee. If the brand you are looking at does not have a high profile or mass appeal in the eyes of the consumer (regardless of the cost of the license), this may not be a viable business opportunity.”

Examples of license opportunities: Zumba, Revo2lution Running™ and Spinning®.

Instructor training. This is the most widely accessible option in the fitness industry, with instructor training for any format you can think of—indoor cycling, barre, Pilates, boot camp and many more. After completing the training, you have an expanded skill set that you can use to diversify your client base and boost your marketing efforts. Training can provide you with a competitive advantage that impacts your ability to increase fees or work in new locations.

Many instructor training opportunities are now offering franchise or license agreements to provide ongoing business support or product sales to fitness professionals who have completed their proprietary training. Other instructor training opportunities are focused on continuing education. When considering a continuing education course or certification, research the cost and requirement to maintain your certification and what, if anything (such as updates to training materials), is provided upon renewal.

Instructor training often appears to be the lowest-cost option, but fees for a certifying organization’s renewal or recertification requirements, as well as continuing education credit requirements, can add up over time. Generally, certification and continuing education providers do not provide any business or marketing support to help you grow your business.

Examples of product-based training: TRX®, Merrithew Health & Fitness™, BOSU® and Lebert® Fitness.

Turning the Wheel

You can partner with a franchisor or a licensor, and you can go out on your own. You don’t have to reinvent the wheel with any of these options, but one of them may help you travel more quickly to your goal. Do the research, and invest in advice from an attorney. The best choice is the one that you are most comfortable with.

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About the Author

Kristen Horler

Kristen Horler IDEA Author/Presenter

Kristen Horler, MS is founder of Baby Boot Camp, offering fitness franchises that target new moms. Kristen completed her Master of Science degree in Sports & Fitness Nutrition at Northeastern University in December 2015. Prior to becoming a fitness professional, she earned her B.A. degree in Physical Anthropology from the University of California at Santa Barbara and an A.O.S. degree from the California Culinary Academy in San Francisco. Kristen was named 2012 IDEA Program Director of the Year Finalist. Today, Kristen makes her home in Sarasota, Florida with her husband and two children where she continues to develop the Baby Boot Camp franchise program. Learn more at www.babybootcamp.com.