Franchises are difficult. Or at least some are. When you’re a potential franchisee, there are lots of things you’ll need to look into before choosing what’s the best company to look into.
As I was sitting and doing some work to better be able to support potential franchisees I work with, I was digging into Anytime Fitness.
Now, what needs to be said is that there’s not one type of franchise that is perfect for everyone… The choice you make will impact your life for years to come.
However, to give you the answer, the 10% Anytime Fitness franchise failure rate isn’t the reason why you shouldn’t open one. Instead, the reason you shouldn’t open one is because it’s an incredibly hard business to turn profitable.
Now, hear me out.
How thoroughly did you consider your choice the last time you ate a sandwich? It probably wasn’t an extensive research methodology you used.
What I struggle with in regards to fitness centers as a franchise is that they’re pretty hard to turn profitable, particularly if you don’t have prior experience running one.
Do you know what it takes to bring potential customers through the door and get them to convert to paying members?
In the area I’m in, an Anytime Fitness customer gets tied in for either 12 or 24 months. Last time I moved, I spent a considerable amount of time looking into the various fitness centers around where I live, and price was a considerable factor. After visiting various centers, I often found myself going to the food option they had right next door without even considering what it would cost me. In part, it was because I knew I wasn’t locking myself into a lengthy contract.
When it comes to business, I much prefer businesses that don’t compete on price and target a wealthier segment of the population, while being successful with fewer customers. That’s the exact opposite of what a fitness franchise is, unless you go extremely high end. However, again, that would only work in a very specific demographic.
Fitness centers have another factor against them, which I really don’t like, which is their high rent overhead. In order to run a fitness, you need a lot of square footage, and that usually means you’re paying a lot in rent.
To have a fitness center, you typically have to lock into a number of years with a lot of overhead that is very hard to reduce.
When you’re talking about a product that’s hard to differentiate in a market that’s price-sensitive with a model that relies on a high volume of customers, that’s a perfect storm for a failed business plan. I would much rather open a franchise that offers IV therapy with a considerably smaller footprint required. Heck, I’d even choose a Mexican restaurant before.
However, while Anytime Fitness’ failure rate may be around 10%, those are not the only reasons I’m less than thrilled with the idea.
If you want an understanding of what the numbers look like when you’re choosing to run an Anytime Fitness, your best bet is to find a location that’s for sale and request their P&L. Chances are you won’t be thrilled.
A big portion of the franchisee’s success comes down to their ability to market themselves as well as close the deal when someone comes through the door. On Reddit, you can read about a prior 9-Round owner (whose parent company is the same as Anytime Fitness).
He said the marketing plan of the mother company did not work and driving member sales wasn’t easy. In addition, the support provided didn’t yield the desired outcomes.
The person on Reddit explains that he agreed to abide by the current operations at all times, hidden in hundreds of pages of legal disclosure. I’ve personally been in such a situation myself before, and it can be very hard to spot the tiny details that will make or break your operations.
He highlights not being able to see the operations manual you agree to follow, which should be the first sign you’re in trouble if you sign.
He also highlights the fact that the operations manual was very strict in terms of listing how frequently equipment needs to be upgraded. That’s not just an expensive endeavor, but it also one that could take you from green to red.
When I personally looked at Anytime Fitness’ FDD, something stood out. There are a lot of random costs you’re committing to that frankly don’t make sense. Even if you’re a good operator and you manage to get a considerable number of people to sign up, the high degree of overhead you’re committing to makes it unlikely that I would ever recommend a franchisee open one.
Whenever you’re looking to open a franchise, it only makes sense that you get access to all the documents you’ll be required to follow. If you don’t know the costs of what you’re agreeing to, there are just too many unknowns.
