Nigel Miller co-founded the Plus Fitness gym franchise with John Fuller in 2008 after noticing a shift in the market – independently owned gyms were declining and 24-hour models were on the rise.
Now, Plus Fitness is closing in on 100 franchise locations and revenue of $7.9 million. Miller spoke to SmartCompany about how the gym market is transforming from expensive, fixed locations into a haven of franchising.
I met my co-founder John in 2002. I was working as a consultant in the fitness industry, that’s how we met. But it wasn’t until 2008 that we formed a partnership and established the franchisor company.
We were both independent gym owners. John had four gyms and I had one gym, but I sold my shares and used that money to invest in Plus Fitness.
Jetts was starting to make a surge in the market. It had a bit of a presence in Queensland, that was around 2009-10, and so the market was moving. This was the 24/7 aspect coming into the market, and full credit to them.
We recognised we needed to change our model. Customers were demanding more convenience and lower pricing, and if we didn’t change our model we recognised we wouldn’t survive as fixed clubs.
Our concern was growing the brand. We wanted to try the 24/7 model because we knew that was the direction the industry was heading.
The investment size is much higher in a fixed club. The operating expenses are considerably higher and it was challenging to attract franchisees.
Using a lower-cost investment model enabled us to express the growth of our franchise offering. This model presents a lower risk. Not only with the investment level, but you have a smaller footprint, your operating costs are lower. It becomes an absenteeism business if you want it to be, you can easily manage it remotely.
We believe the growth is sustainable. Based on the choices that we’re making alongside our franchisees, we think we can continue to grow.
We’re only placing franchisees in territories and properties we know are saturation-resilient.
It’s up to the franchisor to make those decisions. We’re not going to decide to put someone in an area with five other gyms and a population of 15,000 people.
We’re fast heading to be in excess of 50% of 24/7 gyms. But there is still a core market that requires what 24/7 gyms don’t give, which is classes, and child minding and so on.
There are now fewer independently owned gyms. Based on the fact that the majority of 24-hour gyms are part of franchised groups, they are becoming few and far between. Franchising has taken over the industry.
For us, international expansion is next. That takes a lot of time and effort, and there’s a lot of learning to be done there. We’re preparing for that now. It’s going to be a big shift in our business.