sporting - Leisure Opportunities

HOTSEAT
The latest
club opened
in California at
the start of April
“In the long run we’ll look at further international expansion, but you have to go into
new markets at the right time and most importantly with the right operator”
draw a lot of people to our clubs.
We help franchisees recruit and train instructors, and
Crunch has designed some fantastic proprietary classes
which we’ve been able to put into the franchise clubs too. It’s
been amazingly popular – we started off with a small group
fitness room and soon 80 people were trying to get into that
class. The challenge was getting the scheduling right.
Do you think the budget model is sustainable
I think low-cost is completely sustainable. A lot of people
seem to be caught up in the notion that the health and fitness
industry runs in one way, but it clearly doesn’t. Look at
all the fringe companies popping up – the yoga studios, the
CrossFit clubs… There are a hundred ways to do fitness.
Trying to launch a franchise in this particular economy,
really it had to be low-cost. In any case, the low price
model can be extremely lucrative. Different operators have
approached it differently and have had varying degrees of
success because it is a tricky model, but it’s actually a very
intelligent way to approach the business.
You have to have a certain amount of discipline, and of
course there are limitations – you wouldn’t put a low price
club in a location where you’re paying US$50 a square foot
for the space, for example, although given the economy now
you can in any case get great real estate deals. However, I
would say that the margins in these clubs are the same or
better than any other. You just have to be smart about it.
Crunch Franchise currently has 14 operational
sites in the US and Australia with deals agreed for
a further 100 units. What investment is required
Each of our 1,580-1,670sq m (17,000-18,000sq ft) clubs
requires an investment of over US$1m. Just to get fi nance
for that in the US nowadays, you have to be pretty fi nancially
solid. So I think for our space we’ve done exceptionally well.
I’d always like to see us do better, but we’ll get there.
What about international growth
In the long run we’ll look at further international expansion,
but you have to go into new markets at the right time, and
most importantly with the right operator. It’s not about selling
as fast as you can. At a young stage for a franchise,
if you get the wrong operators and they do a terrible job,
you’re going to hurt yourself a lot more than the benefi t you
get from selling the additional units.
We’re working on other international markets – I’m not
going to talk about which ones at this point – but at the
moment we’re really concentrating on growth in the US. We’re
getting a lot more interest in the model now, and as the business
matures that interest is getting more sophisticated.
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