CHINA: Franchising Industry - Export.gov

US Commercial Service – The JLJ Group
China Franchising Industry
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1. Qualified personnel – Since the fitness industry is still in its infancy, there is a lack of people who
consider it a place for a long-term career. Up until 2002, there were very few or no certified personal
trainers. Currently some 80% of certified fitness trainers received their credentials from the Asian
Academy for Sports and Fitness Professionals, a Hong Kong institution that operates according to
international standards.
2. High investment requirements – Significant start-up capital is required for gyms due to high costs
of renting / buying a location as well as equipment. It may be difficult for franchisors to find wellqualified
franchisees that have the financial resources to invest. Many franchisors thus look to
partner with real estate companies to offer gyms in condominium / residential complex.
3. Demand still yet to take off – The pool of potential members is growing, but still limited as gym
memberships are still an expensive item. Nevertheless, all major international gyms are already in
China, and competition to sign up members is intense, especially in Tier 1 cities.
Case Study Return to Top
Weider-Tera – Tested the franchising model but has reclaimed many franchised gyms and has no
plans to open franchised stores in the coming years. Franchisees’ lack of management, poor knowledge
of fitness, and inferior equipment purchases led to the change in strategy. Now Weider-Tera expands
via JVs, where they provide part of the start-up capital and assistance in other areas – e.g. location
search, equipment import, and setting up daily operations. To maintain service quality, management
control is within Weider-Tera.
CSI–Bally Total Fitness – In 2002, BTF formed a JV with the China Sports Industry Group (CSI).
Combining CSI’s market knowledge with BTF’s experience in fitness and management, the company
entered Beijing. It opened two direct-run outlets in Beijing and had opened its 10 th China franchise by
August 2004. It is now the second-largest foreign gym chain in China after Weider-Tera.