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The 5 Red Flags To Look for in a Fitness Franchise

The 5 Red Flags To Look for in a Fitness Franchise

Athletech News shares some common issues that come up with franchisors—and offers tips on how to avoid them

Knowing what not to look for in a fitness franchise partner is just as important as knowing what to look for.

It can be overwhelming to find the best-in-class fitness franchise that will help you on your way to becoming a successful franchisee in this space. In my experience, potential franchisees should investigate five significant areas for potential red flags before selecting their franchise partner: communication, onboarding, marketing, franchisee management and the growth plan. 

Let’s take a closer look at all five.

Lack of Two-Way Communication Between Franchisees & Franchisors

Effective communication between franchisees and franchisors is critical to a productive and successful partnership of stakeholders. Franchisees’ quarterly, bi-annual, or annual meetings are among the most common tactics to share upcoming business initiatives and results with franchisees. Signs of collaborative franchisee meetings with their franchisor should include multiple opportunities for you to have a two-way dialogue and offer feedback. 

During your due diligence phase, ask current franchisees if these meetings are nothing more than a ‘parade of PowerPoint’ presentations, where the head of each department merely downloads the information they deem relevant to franchisees and nothing more. This type of meeting does little to build a collaborative working culture between franchisees and their franchisor.

A broader business update followed by smaller roundtable sessions is much better suited to ensure meaningful collaboration with the system’s franchisees takes place.

When comparing your potential fitness franchise partners, ensure you have a robust discussion about how and when the franchisor looks to seek feedback and engage directly with their franchisees.

No Formal New Franchisee Training Programs

The best fitness franchisors know that showing new franchisees what right looks like as it relates to the operations of the business model is essential to their brand’s success. A learning approach like this often comes in an immersive on-the-job training experience ranging from several weeks to several months, depending on the brand and the complexity of its operations. The training will either occur in a franchise location that consistently ranks among the chain’s top performers or at a franchisor-owned and operated site.

Regardless of who conducts the training, corporate or franchise employees, getting the absolute most of this experience is vital to your success.

When considering the purchase of a franchise, understanding their process for training new franchisees and if there is an opportunity to bring key staff with you is essential. New franchisee training will set the foundation for understanding how the business model operates and familiarize you with the systems and tools required to run a top-performing location for your members.

A Lack of Focus on Attracting Gen Z

By 2026, Gen Z will be the largest consumer demographic in the US. Ensuring your chosen fitness franchisor has a marketing plan that captures them in their decision-making process about which fitness center to join will be essential to your success as a franchisee. 

A survey by CivicScience reveals that nearly 50% of Gen Z adults exercise several times weekly, which is above average compared to the general population, so ensuring that your franchisor understands this demographic and what they are looking for in a fitness center is critical. The same study also revealed that Gen Z likes a variety of fitness activities, so make sure you choose a franchise partner that can offer a variety of fitness classes and activities to keep your Gen Z members engaged, as it will be vital in ensuring you can capitalize on this growing and soon to be number one, consumer demographic.

No Management of Underperforming Franchisees 

One of the main reasons entrepreneurs invest in buying a franchise fitness business is the well-designed operating system that has proven successful in the minds of members and operators alike.

Investing in a franchise with a well-qualified team of professionals whose sole focus is the programs, systems, and tools required to operate the business is the driving force behind why many entrepreneurs end up in the franchise world.

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As a franchise operations professional, I’ve always found it curious why franchisees would invest their money and time into buying a franchise with a proven operating system and then fail to follow the franchisor’s brand standards. If the system has proven successful and evolved into a franchise, not trusting the methods that helped it become successful seems counterintuitive. Yet, I saw it repeatedly across several franchised systems.

One of the most important things you can do as a franchisee is to dedicate as much time as is required to knowing your brand’s standards inside and out. What are the steps to deliver a member experience that will keep them returning repeatedly, helping you build a solid reputation in your community? 

Failing to execute the brand standards will jeopardize your members’ experience, community reputation, and ability to run a profitable business. It will also undermine the brand’s reputation and the investment and capital of every franchisee within the system.

The best franchisors take this commitment to brand standards very seriously. Asking potential franchisors for specific examples of how they have handled underperforming locations and franchisees in the past is an excellent way to get historical examples of how this has been managed.

No Strategic Plan for Growth

In my experience in the franchise world, one of the single greatest detractors of strong franchised unit economics has been when franchisors have no strategic guidance or insights into how their system will grow, as this often leads to situations where new locations open too close to existing franchises, which can lead to significant cannibalization of memberships. 

The leading franchisors in the fitness space understand that the best way to manage the system’s overall health is to ensure each franchisee’s success. When individual franchises have strong unit economics, meaning healthy profitability and strong membership growth year over year, the entire system will thrive. 

Understanding how growth happens within your franchised system is vital to your overall success. How are new locations selected? What tools or processes do they use to assess the viability of that location and its potential cannibalization of memberships on existing units?

Great franchisors have a scientific approach to making these decisions and should openly share that process with franchisees whom the new location may impact.

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