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 fi tness 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 fi t- ness 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 fi tness. Trying to launch a franchise in this particular econ-
omy, 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
ISSUE 2 2012 © cybertrek 2012
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 sell- ing 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 busi- ness matures that interest is getting more sophisticated.
Read Leisure Management online
leisuremanagement.co.uk/digital 25
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