Snap Fitness takes neighborly approach to workout sites

NEW MEXICO BUSINESS WEEKLY

Lynn Nannemann was looking for a franchise business that wasn’t too complicated and that would allow him to help people.

He and his partners looked at fast food and other franchises, and none of them fit.
Then, in 2008, Nannemann, a supervisor at Intel Corp.’s Rio Rancho plant, found what he was looking for: Snap Fitness, a company that franchises small, no-frills gyms.

Now Nannemann has three gyms in Albuquerque, and the rapidly-growing, Minneapolis-based
Snap Fitness is looking to open 17 more locations in the Albuquerque area in the next three years.

“This is a business that helps people,” Nannemann says at his 2,500-square-foot gym at 12251 Academy NE. “It’s what we were looking for.”

Snap Fitness’ no-frills gyms and low-cost memberships appear to be what a lot of consumers are looking for. The company started in 2004 and now has more than 1,800 locations open or sold worldwide. It boasts 500,000 members, many of whom have migrated over from the more expensive, full-service health clubs.

The company is opening 10 to 20 new stores a month, and is slated to open 22 in August. Before the recession, it was averaging 25 to 40 new stores a month.

Snap’s concept is simple. Its stores average 2,500 to 3,500 square feet. They have state-of-the-art exercise equipment, but no swimming pools, saunas, racquetball courts, running tracks or showers; they never close, and they offer basic, no-contract memberships that cost $34.95 a month.

“Ninety percent of our members live within two miles of our stores,” says Snap founder and CEO Peter Taunton. “That tells you that our members love the convenience.”

Snap Fitness brought the 47-year-old Taunton out of an early retirement. He had owned and operated full-service health clubs in the Minneapolis area for more than 20 years when he retired to spend more time with his wife and young children. It didn’t take long, though, for him to come out of retirement.

“Being at home and semi-retired, I started thinking about all of the things that weren’t being used in the clubs I ran – the swimming pools, the climbing walls, the spas,” Taunton says. “It seemed that most people wanted to get in and out, and most of the things they used were the strength and cardio equipment.

“So I took the best components of my big-box facilities and put them into my smaller facilities. Growth has been explosive.”

One reason for that sudden growth could be that buying and opening a Snap Fitness franchise is relatively easy and inexpensive. The franchise fee is $15,000, and equipment and build-out averages $160,000 to $190,000. Most Snap Fitness gyms are located in strip malls and serve as a sort of neighborhood gym, Taunton says.

“Walk into a Snap Fitness club and it feels like you are taking a step forward in the quality of their workouts. We’re delivering the best equipment in the market, with a nice, bright color scheme and a nice, relaxed atmosphere, and at an affordable price.

“We’ve made the product very consumer friendly. There are no contracts. We have to earn your trust and your business every month.”

Although Snap Fitness centers are open 24 hours a day, they aren’t staffed all those hours. Nannemann’s three stores have two employees each, a trainer and a part-time sales manager. Customers get into the locked facilities by swiping security cards. The gyms have security necklaces and emergency buttons that will alert police to any emergency.

Nannemann, who has spent 25 years at Intel, opened his first gym in March 2008. The second opened in June, 2008, and the third in March of this year. The three clubs have a combined membership of 965, which Nannemann hopes to build to 1,500 by the year’s end.

His advertising and marketing plan is very simple; it consists of door hangers and mailings to residents within a two-mile radius of each store.

“It’s really kind of word of mouth. We rely on people to tell their friends about is. We want them to think that this is their neighborhood gym,” Nannemann says, adding that his facilities offer members help with their workout routines and goals. Members can track their gym visits at Snap’s Web site. Their card swipes are automatically tracked by computer.

“We offer a trainer consultation every three months, which we pay for,” Nannemann says. “For us, if the members are not successful in meeting their goals, they are not going to stay members. We have to earn their business every month.”

Taunton says he sees continued growth for the company.

“I see no reason why we can’t have 4,000 to 6,000 stores worldwide,” he says.