| CBI Interview|
RM: I took the initiative to meet with Colin Waggett, the CEO of Fitness First, in the summer of 2010, to discuss the European market and the different club-business models. Colin discussed his plans to focus more intently on the Asian market, and I took that as an opportunity to pursue the purchase of 57 Fitness First locations in Belgium, the Netherlands, and Luxembourg. The negotiations, as well as the com-
pletion of the transaction, took three months and went very smoothly. At that time, we didn’t talk about the balance of Fitness First’s European clubs—that would have been too many locations, in too many countries, to take on at the same time.
number of clubs we’ve ever taken over at once. The past transactions helped us fine-tune a systematic acquisitions process. Also, Fitness First is a very well structured and organized company.
CBI: What’s the biggest challenge you face when integrating new acquisitions? What will it take to rebrand these clubs?
RM: Corporate communication, and integrating the accounting, IT, and membership administration—those are always the biggest challenges; chang- ing the culture of the newly acquired clubs—that’s what takes the longest. It takes two to three years for people to
“Over the next three to five years, we’d like to grow to 500 clubs and be the market leader in every country we’re active in.”
After the rebranding process of the
facilities we’d acquired was well under way, I met with Colin again to discuss the possibility of purchasing the other European clubs. Again, the smooth acquisition of this group of 45 clubs in France, Italy, and Spain took three months. Our existing bank loan was sufficient to cover both deals.
CBI: What’s happened to the employees of these former Fitness First facilities?
RM: Fortunately, because the club models were similar, we were able to retain 95% of them. When positions overlapped, we reassigned most of these people to different roles in order to retain them.
CBI: Clearly, you were very involved in the process. Why do you think it went so well?
RM: This was the 21st takeover we’ve conducted over the last six years, although, in fact, it was the largest
34 Club Business Internat ional | SEPTEMBER 2011 |
really feel as though they’re a part of the new company. In fact, we lost a few Fitness First associates because the people at them just couldn’t wrap their heads around the notion that they had to work for HealthCity, their former competitor. As for rebranding, we’ve put together
a project group that’s solely dedicated to this process, and we’ll use the same approach for the clubs in France, Italy, and Spain.
CBI: In general, what are the unique difficulties inherent in overseeing a multi-country chain? What does it require in terms of management expertise, operating systems, tax-reporting require- ments, etc.?
RM: Culture, language, distance, and laws are the biggest difficulties. To be successful, we’ve created very clean lines for operational reporting struc- ture and communication. We rely on a lean, but empowered, leadership team to keep us agile. Over the years
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and during our acquisitions, we’ve experimented with many different meeting, training, and communication approaches, and we feel that we have a good system in place to keep our leaders and club teams informed, engaged, and well-trained. With each acquisition, we adapt a little bit more and become more efficient. We work hard to understand new situations and environments, to integrate best practices, and to adapt our systems by utilizing clear communication lines.
CBI: How do you expect your new clubs to affect HealthCity’s financial performance?
RM: We’re now in a great position. With the acquisitions complete, we now have the largest number of facilities in Europe—a total of 265. We also have lower overhead, a larger marketing budget, and more intellec- tual leadership and horsepower. We’ve already enjoyed great success by integrating the two brands’ best sales, operations, and management practices. We’re happy with our performance so far.
CBI: Whom do you regard as HealthCity’s major competitor in the European market right now? Is it Fitness First, even though you’ve acquired these clubs?
RM: There’s no one company that we’d single out as our largest individual competitor; in every country, there are different ones.
CBI: What one thing have you learned in the role of CEO that’s really surprised you? What was the most challenging business dilemma you’ve ever faced, and how did you deal with it?
RM: In 2006, we went from 25 to 74 clubs, and from operating in one country to doing business in three. Having to deal with all of the differ- ences in culture, language, and laws in one year was extreme. To give our- selves time to adapt, we slowed our growth for the next two years. And we
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