Eight years after launching his first franchise with his sister Jacinta McDonell, Anytime Fitness Australia co-founder Justin McDonell is focused on his next major franchising network.
McDonell is bringing one of the fastest growing North American franchises, Massage Envy, to Australia through his company, the Collective Wellness Group.
The international expansion of Massage Envy is part of a 15-year deal between the US brand and Collective Wellness Group, announced in May, that could see as many as 100 Massage Envy outlets open across Australia.
In the US alone, there are more than 1000 Massage Envy locations frequented by over 1.5 million members, says Justin McDonell.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
On average, McDonnell says the brand’s US franchises have around 1000 members and each turn over US$1.3 million ($AUD1.7 million) a year.
Similar to Anytime Fitness, Massage Envy operates on a membership model but instead of giving members access to a gym, it offers customers affordable access to massage and facials.
McDonell recently opened company-owned Massage Envy outlets in Lane Cove and Paddington in Sydney, rebranding the outlets from Massage Collective to Massage Envy, and is planning to bring Massage Envy franchises to Melbourne and Brisbane by early next year.
“They’re tracking really well,” McDonell told SmartCompany.
The Sydney locations’ standard membership starts from $79 a month for a 60-minute facial or massage, although new members can currently access an introductory price of $59 per month.
If the facial or massage is not used in a given month, it’s rolled over to the next month, and members can buy additional services at discounted rates. Free treatments and special offers are also provided for referrals.
McDonell says he decided to bring the concept to his home country after becoming a Massage Envy member himself while travelling in the US.
“I thought this is going to work in Australia,” he says.
The entrepreneur has hungry to launch into the next big opportunity, having grown Anytime Fitness Australia – which the McDonells became master franchisors of in Australia in 2008 and still own – into a franchise group that operates 400 fitness clubs and turns over nearly $400 million annually.
“Franchising is a real good opportunity for people who want to run their own business and want the network and support of the brand,” McDonell says.
“Consumers like brands – it’s just really finding the niche for what you’re passionate about.”
Here are McDonell’s top tips for getting a franchise network off the ground.
1. Start with your niche
The secret to developing a franchise network comes down to finding a gap in the market and resolving it with a highly scalable, multipliable solution that creates new value for customers, McDonell says.
“It’s finding a brand where there is a niche market,” he says.
McDonell says Anytime Fitness found success by taking its affordable gym establishments into outer suburbs and regional towns.
“Many big players won’t do that,” he says.
Similarly, with Massage Envy, he says they’re appealing to consumers in a niche market.
“We think there’s a real sweet spot for making massage more accessible to more people so it’s not just a luxury product,” he says.
2. Get the first franchises right
Before breaking out and setting up multiple franchises, the first franchise in a network needs to be set up well with the right infrastructure, manuals and processes in place to make it as easy as possible to redo, McDonell says.
“If you’ve got a really good restaurant or café, how systemised is it so the manual book can be given to someone else to roll it out?” he says.
“How scalable is it to grow across the network?”
McDonell also recommends using tech and data to help inform decisions about where to set up new sites.
“The first ten are the slowest to open,” he says.
“We do a lot of work in the early days.”
McDonell says the biggest challenges with Massage Envy has been localising the US-originated franchise system, finding the best sites and then building them out.
When bringing in a franchise from overseas, he says it can take longer than planned to localise systems.
“The fit-out from a tech point of view has been a little slower,” he says.
Because of the cost of importing fixtures and fittings, the McDonell have spent time finding high-quality local suppliers and designers, while also ensuring they meet building regulations.
“In the US, you don’t have to have a sink in every room but you do here,” he says.
McDonells and his team will spend the rest of the year, and into early 2017, ensuring the first Massage Envy locations are properly setup and growing on par with the business’s US-counterparts.
After setting up the first eight to 12 franchises, McDonell says the rollout of new franchises should start to scale quite rapidly so having the right marketing team and franchise model in place is critical.
“It’s making sure the systems are working,” he says.
“Then, it’s just really focusing on generating franchise leads and sales.”
3. Choose the right franchisees
When choosing franchisees to grow the Massage Envy network, McDonell will be searching for experienced businesspeople.
“This is the ideal: they have either managed a team of people or have come from owning a business,” McDonell says.
This means franchisees must be capable of driving sales revenue, managing teams and providing great customer service.
“It’s really having that ability to manage a business under [profits and losses] and making sure they have enough capital,” he says.
“Ideally, they’ll have ties in the community they’re looking to set it up.
“Franchisees know their local market and can add personality to the franchise.”