123 FIT: Franchisees Debate Viability of Franchise, 30 Minute Fitness Biz

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The 123 FIT organization and franchise concept has taken some heat from commenters on this blog – in part because it is owned and operated by the much maligned (in franchise circles) executives of Quiznos.  But 123 FIT is not an isolated target for criticism;  the very viability of the women’s 30-Minute circuit training club as a sustainable business model has been called into question.  Industry critics and failed franchisees alike complain of high recruitment costs, low retention rates, oversaturation of the market and profit centers that are too limited and too small.

Commenter Pete (anon) claims to be a successful 123 FIT franchise owner.  He contends that the 123 Fit company have been given a bad rap, that the 123 Fit concept is sound and, contrary to what many would have you believe, women’s circuit training is “hot.”  We invited him to share his view, which he has graciously done.  (I’ve edited slightly to delete the side chatter, added line breaks and formatting for readability)

Pete (anon) writes:

Ok. Here are some specifics… these numbers are mine – rounded off… what I will share is tested and true. So let’s get to the business.

Overhead should run $11K – $12K per month. Here is a breakdown.

  • Rent $4K.
  • Labor (to cover 77 hours – total coverage) $4K.
  • Marketing $1000 – $1500.
  • Royalities $600.
  • Credit card fees and member service fees $600.
  • Utilities/insurance $500.
  • Eqpt/Debt Service  $600 – $1000

Someone had posted they spent $300,000 in 9 months – so they probably paid cash for equipment. If not, add $600 – $1000 for equipment. Either way, this is a good baseline of monthly spending. My experience is that this is accurate month after month after month.

Revenue.  For the revenue. I will use 250 members with an average of $33 dollars per member. The avg per member will vary by club. Rough formula for why I am experiencing that. 125 members at full price of $44 and 125 members at $22. The ones at $22 are add ons or members we signed up on special deals whe we first started.

So here is the math –

  • $8250 in monthly dues.
  • 12 new members per month.
  • 10 pay enrollment fee of $100 plus first months dues. That is $1440.
  • $2000 – $3000 in personal training.
  • 2-3 of the new members prepay $1100 – $1700.
  • So you get to $13K – $15K per month this has been my experience.

I know the math is rough. This is where we are but adding the 10 – 12 new members per month. Even if we lose 6 members per month and add 12 we have a net gain of 6 members per month. In 12 months we go from 250 members to 322 members and you can redo the math from there. More monthly dues and more members to sell Personal Training to. So there is the revenue.

Here is where we have found success.

Price. We strictly adhere to the corporate sales tour. It is incredibly effective in showing the value of what we offer. Price is not the issue when the tour is done. So we get full enrollment and $39 plus $5 towel for all new members. The towel program is not optional. We just include it and quote $44. When the towel program was rolled out I can recall several clubs on the call resisted charging for towel service. Most if not all of the big gyms do – the YMCA near us charges $1 per towel. So unlimited for $5 is a good deal.

Advertising. We focus on “weight loss” rather than exercise in our advertising. We do this at the suggestion of corporate. Last spring they launched the weight loss marketing. Once again many clubs resisted it. We embraced it. The respones we get from weight loss ads VS exercise ads is in the multiples.

Employees. Our employees are such a big part of whether we sell things or not. We hire people that are passionate about helping people. They are paid on production. They know they are valued and they belive in our exercise/weight loss programs. Not only does this help us get new members but it helps us sell personal training. People get results, have a positive experience in our club so they spend money with us.

Capital. Fortunately we had the the capital to get through the normal start up and operating period. It took us longer than 9 months to reach where we are. So when I read that someone only gave it 9 months it is important to understand that it sometimes takes a bit to build a business and to get to a tipping point. So I don’t mean berate those that did not have the capital to get to the tipping point – I just assumed people knew it can take some time.

So with all that said I now want to offer a sincere apology to Barb and any Sean and any others I offended. Just as you are passionate about your experiences, I am too. And members and potential members do read these blogs. When a potential member came in recently and told me that 123 Fit was being trashed on some sites and that caused them to decide not to join I became engaged in this and other sites. I just want to get the word out that many 123 Fits are experiencing what I am. That the future for 123 Fit may very well be better than the experience Barb had with them.

I can understand the bitterness and hurt from folks that were first in with 123 Fit or many other concepts. Certainly there is a learning curve for any business. Even with experienced and long standing businesses mistakes are made – New Coke? But I am sorry people get hurt in the process.

But several of us are making it. I am just here to protect my business – not hurt or berate others. So you have my sincere apology.

….please know that success or failure with 123 Fit does not make you OR 123 Fit bad people. You mentioned I may be Brooksy Smith. Well I am not. I have no love lost for him just an arms length relationship. Trust but verify. But I have come to learn that he is not evil. He did not start 123 Fit so that he could oversee failure. I believe he is doing his best. And based on recent changes and the profitability of many clubs – they may have actually figured it out…




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