Large Commercial Gyms Have Dominated the Franchising Game for Years, but Innovation in Both Technology and Exercise Has Allowed Their Boutique Siblings to Bridge the Gap
Starting in 1980, the iconic Gold’s Gym in Venice Beach California became one of the first gyms to start a franchise. Owner Pete Grymkowski and his partners took Gold’s from one location to 538 gyms around the world by the time ownership changed hands in 1999.
This was the beginning of the franchising “gold rush” in the fitness industry. Franchising was once best known for fast-food chains, but gyms have now expanded their reach across the US and the globe. Anytime Fitness recently became the first franchise to have a presence on seven continents when it opened a location in Antarctica.
In the 1980s and 1990s, franchising was primarily used for growing traditional or “big-box” gyms and health clubs. These businesses sold annual memberships well beyond their capacity and benefited from poor attendance rates for much of the year.
More recently, a new type of gym experience has emerged – the boutique fitness studio. They are usually located in a small space (800-3500 square feet), focus on group exercise, and specialize in one or two fitness areas. They present a strong brand and provide a costly but overall more premium experience. They typically sell shorter running memberships or “class-packs,” giving customers the choice to pick and choose between studios.
Franchising this type of business has become the latest trend in fitness. In the US, Pure Barre, 9Round, and Orangetheory have emerged as frontrunners in the boutique fitness franchise space. Since the 2000s, their presence has snowballed and spread across the country and, in some cases, the world. These boutique fitness franchises are driving such a change in the industry that traditional gyms are now adapting their business models to compete.
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So How Did This Happen?
First off, these businesses are well funded. Private equity firms like L. Catterton and North Capital Partners have invested in many boutique fitness franchises and Xponential has become a “curator” of eight large boutique fitness brands. The availability of finance has enabled investors to seek out unique fitness concepts and fund the mid and late stages of franchising.
In addition, fitness franchises are innovating in both technology and exercise methods to deliver a critical factor in their success – results for gym-goers.
For example, Orangetheory, founded by Ellen Lantham in 2010, is class-based and varies its workouts between cardio and weightlifting. Heart rate monitors track everyone’s anaerobic threshold (the point where you reach 85% of your maximum heart rate, which increases your metabolism for the next 24 to 48 hours). They call this the “orange zone” and the goal is to spend 12 minutes or more in this zone. Screens on the wall show what color zone each person is in, motivating them the get into the coveted orange zone.
The Australian fitness franchise F45 used a combination of technology and unique exercise programming to establish themselves as one of the fastest-growing fitness franchises. Founder Rob Deutsch opened his first F45 in 2011 intending to provide a fitness experience that made people want to turn up. Workout programs are delivered on several flatscreens from a global headquarters. No two workouts are ever the same. The pinnacle of their offering is the F45 Challenge where participants follow a strict meal plan provided by F45 to go along with a robust workout plan.
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Finally, boutique fitness franchises deliver results for studio owners. While the up-front licensing fee can be large ($200K+), results are essentially guaranteed. Gone are the days when gym memberships were advertised in newspapers and at bus stands. As well as branded equipment and exercise routines, franchisees now receive detailed social media and digital marketing playbooks for getting people in the door. Much like any other business, with technology, a franchise can now deploy marketing strategies across its network and measure and benchmark results for each franchisee.
In summary, boutique fitness exploded because it delivered results for gym-goers by providing an effective workout experience. Boutique fitness franchising is taking off because with technology and shared best practices, franchises can deliver success to studio owners who could be otherwise struggling to sustain a business in a hyper-competitive market.
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