Growing Fitness Franchise | Snap Fitness: An exercise in growth

The Oakland Press

Tough times force people to get creative and Snap Fitness proves the point.

Snap Fitness, a franchise business that started in Minneapolis in 2003, is moving into the Detroit area in a big way.

By the end of the year, it hopes to have as many as a dozen locations open around Oakland County, counting the new sites in Oakland Township and Berkley that are expected to open before the end of the year.

“Michigan is becoming one of our fastest growth areas,” said Patrick Strait, marketing communications manager for Snap Fitness. “We have had a lot of people say ‘Hey, I see the potential for this.’ It’s the franchisees that are driving the growth,” said Strait, noting that over the past year or so Snap Fitness has opened sites in Ferndale, Birmingham, Commerce Township, Troy, Farmington Hills, Oxford, Highland Township, Novi and South Lyon.

“We never strive to be the cheapest show in the town but we do strive to offer the best value,” says Strait. “We also created a model that’s easy to use,” said Strait, noting that more and more gym enthusiasts have traded in their memberships at large clubs to join Snap Fitness.

“Our founder, Peter Taunton, used to manage ‘big box’ fitness clubs,” said Strait. “He concluded people wanted to be healthy, but they didn’t need rock-climbing walls or swimming pools. What people needed was fitness. What we offer is the same fitness equipment as the big box clubs but at a fraction of the prices,” he said. Seventy-five percent of the visitors used the cardio-vascular equipment, he said.

Taunton concluded many of the costly amenities offered by the large clubs facilities such as racquetball courts and childcare sat idle most of the day. He designed a model for a club that incorporated the most readily used health club equipment into a smaller, more efficient, passcard-secure facility. By doing this, he was able to deliver affordable membership pricing and quality exercise equipment to neighborhoods across America. Snap Fitness was the second-highest ranked concept in the health category in Inc. Magazine’s annual survey of fast growing companies. Overall, it was one of the top 20 fastest growing privately held companies in the U.S., according to Inc., Taunton said. “We look forward to continuing success and to breaking into the Top 10 next year, as both investors and consumers continue to recognize the value we provide,” he said.

Launched in only 2003, Snap Fitness opened its first site in 2004 and now has more than 2,000 locations and more than 400,000 members around the world. The basic concept is to open small fitness centers with state-of- the -art equipment that are open 24 hours a day, seven days a week, Taunton said.

Stephen Collias, the owner of the Birmingham Snap Fitness location, said he had opted for a Snap Fitness franchise more than a year ago and he has been pleased with the results.

“I had owned a mortgage company,” he said. “But when that started getting soft, I decided to start a new venture. I’ve been very interested in athletics all my life and I live in Birmingham, it was tough getting started and getting it open. But it’s been great,” said Collias, whose Snap Fitness gym on Willits in the Center of Birmingham has been open since August 2008. “We’ve grown steadily every month,” he said.

“We’re staffed from 8 a.m. to 8 p.m. (weekdays) and from 10 a.m. to 1 p.m. weekends. We have six personal trainers, who will set up personal appointments,” he said. “Otherwise members are free to come and go as they want,” he said.

“We’ve heard nothing but good things. It’s easier to keep 3,000 square feet clean than a big box store. It’s an energetic environment,” said Collias, adding he already has 700 members. “With the 24 hour access, it alleviates the stress. It’s convenient to own and in some ways it’s like having your own personal gym boutique with the very best equipment.

Collias also said the surge of new Snap Fitness sites in Oakland County hasn’t disturbed him. “That’s actually better for the brand,” he said.

“As more people see health and fitness as a necessity versus a luxury, they’re seeking convenient and affordable ways to look and feel better. While people are trading in their big SUV gas guzzlers, they are currently doing the same thing with their fitness memberships,” said Taunton.

Fitness Industry Trends | Consumers Go Crazy for No-Frills Fitness Franchise Concept

CNNiReports

As millions of consumers continue to swap over-priced SUV’s for wallet-friendly compact cars, the same trend is taking shape in the fitness industry. No-frills concepts like Snap Fitness are rapidly dominating the $16 billion fitness category, as workout enthusiasts trade in their memberships at big-box facilities for the convenience and affordability offered by 24/7 compact fitness clubs.

The world’s fastest growing franchise featuring compact, state-of-the-art fitness centers, Snap Fitness has defied recession conservatism and continued to expand its “no frills” concept worldwide, having already opened approximately 300 clubs in 2009. Today, Snap Fitness has nearly 1,000 locations open and operating throughout the United States, Canada, Mexico and India, with more planned in Australia and New Zealand.

The burgeoning brand consistently opens 300-400 new clubs each year and plans to have a total of 2,500-3,000 centers worldwide in the next few years.

After spending more than 20 years in the fitness industry owning and operating various big-box clubs, Snap Fitness Founder and CEO Peter Taunton realized that many of the costly amenities offered in his facilities such as swimming pools, racquetball courts and childcare sat idle most of the day. Knowing most people are on the go, constantly seeking balance between work and family, he designed a model that incorporated the most readily used health club equipment into a smaller, more efficient, passcard-secure facility.

Snap Fitness gyms are small – only 2,500 square feet – and frills free. There are typically five treadmills, two stationary bikes, five eliptical machines and weight equipment. The gyms typically attract married folks, aged 35 to 55, with kids. Most don’t have the time to linger over a cappuccino or leer at the young man or woman on the next bike. Many live within two miles of the gym.

“Our more than 400,000 satisfied members, combined with our triple-digit revenue growth, proves we've honed in to what consumers want and expect from their fitness program,” said Taunton.

Shop wise for a gym membership

Given the tough economy, you are probably still looking for ways to trim unnecessary expenses and save money wherever possible. The real challenge is finding ways to cut costs without cutting quality of life.

Take your health, for example. A recent survey by Money magazine shows that about half of all consumers are unwilling to part with their gym membership despite the uncertain economy. But even if fitness is a staple in your life, there are ways to save or get more value without compromising the quality of the workout experience.

Here are some tips to consider, according to Snap Fitness

Ask about freeze and cancellation policies

“Some gyms advertise a great enrollment offer but don’t tell you about the long-term contract that goes with it,” said Peter Taunton, Snap Fitness Founder. “Ask the salesperson if you can pay month-to-month, if you are able to freeze your membership and how much notice you need to give in order to cancel your membership. Otherwise, you might find yourself paying a lot more money over a long period of time.” Snap Fitness offers the option of paying as you go, allows you to freeze up to three months per calendar year and requires 30 days’ cancellation notice.

Inquire how the club will help you reach your fitness goals

“Anyone can open a gym, buy some equipment and sell you a membership, but that doesn’t mean you’re getting your money’s worth or able to achieve noticeable improvement in your health,” said Taunton. “At our club, we offer new members a free $100 Fitness Assessment with a personal trainer to test your strength, endurance and flexibility, and give you a sense of the types of workouts you should do to improve. We also include a free session to show how to use the equipment and put you on a workout plan. It’s just another way we give our members more for their money.”

Ask about convenient, value-added services that may come free with the membership

Snap Fitness recommends looking for add-ons that “coach” you towards better results. Snap Fitness, for example, offers members a host of online tools for little to no cost, including meal planning, workout tracking and health and wellness coaching.

“We know times are tough but that doesn’t mean you should have to sacrifice your health,” continued Taunton. “Avoid paying for amenities you don’t need. Make a list of what’s really important for you in a health club and let that list be your guide. Look for the club that can give you everything you need and nothing you don’t.”

Snap Fitness opens its first Oklahoma club

The Oklahoma City Journal Record

Snap Fitness has opened its first health club in Oklahoma and has hit the ground running with its member-friendly policies and equipment.

The club fills 3,600 square feet of the old Luby's restaurant at 3800 N. MacArthur in Warr Acres. Local franchise owners Isaac and Candy Williams said they were drawn to this venture because of Oklahoma City Mayor Mick Cornett's campaign to put the city on a diet. But they wanted to operate a fitness center that made working out easier for everyday people.

"It's a small, neighborhood type of gym as opposed to a large, extravagant gym that you can almost get lost in," Isaac Williams said. "We get to know our members on a first-name basis, and they get to know us."

Snap Fitness, based in the Minneapolis suburb Chanhassen, has quickly grown its company since the first club was sold in 2004. Through 2008, the company has opened 1,672 health clubs in five countries and plans to top 2,000 by next year. Revenue for 2008 was $34 million, up from $150,000 in 2004.

Oklahoma's Snap Fitness offers Cybex equipment. Cardio equipment includes treadmills and Arc trainers, and both weight machines and free weights are available, Williams said. A separate area is available for personal trainers to work with groups of up to five people.

But Snap wanted to go beyond the traditional 24-hour fitness center, he said. Each member, upon joining, receives orientation on equipment use, as well as a free consultation with a personal trainer. The member is given a "fit score" and can talk to the trainer about goals and workouts. Three months later, they are re- evaluated and given a second fit score.

"It may not be just about losing weight," Williams said. "It may be about strengthening and toning your muscles so that as you get older, you won't have atrophy."

Members also can create their own Snap Web pages to track their workouts, make a nutrition plan and gain access to an animated online personal trainer.

Williams said diets and fitness plans work best when people track what they're eating and how they're exercising.

"It's such a nice tool," he said. "You can see and track your progress, which most people don't do. People tend to get discouraged until they realize they are making a difference.

"Our process also helps to knock down the intimidation factor by helping people develop a plan and showing them how to use the machines," he said. "That's what holds people back - they don't want to look like they don't know what they're doing."

Membership packages vary but average $1 a day, Williams said. People pay month to month and can cancel any time or freeze their membership for up to three months if they're not planning to use it. An access card gives members 24-hour entry to the facility, and also any Snap Fitness centers around the world.

At Oklahoma's Snap Fitness, a personal trainer serves on the staff full time, and members can pay for training beyond the initial consultation, Williams said.

Survival of the Fittest | Forbes Magazine Feature

Lean times may help Peter Taunton bulk up his bare-bones Snap Fitness club chain.

At 11 p.m. on a recent Wednesday a dozen men in their 30s and 40s bobbed on stationary bikes and pumped iron in a Snap Fitness club on a busy freeway in Pine Brook, N.J. Members, already in their workout togs, pulled up, parked within feet of the club and headed for the cardio equipment or the weights. After spending 50 minutes, on average, working out, they left--without showering. "There are no lines, it's cheap," says Richard Prochov, one of the members. "I'm in and out."

Snap Fitness may be a rarity: a gym chain that can thrive during a recession. Bally's Total Fitness recently filed for Chapter 11 bankruptcy protection for the second time in 17 months. But 24-hour Snap Fitness clubs are cheap and convenient. Membership fees for the 910 clubs--60 opened in December--with 400,000 members in 46 states are only $35 per month and are easily canceled or put on hold without penalty.

Snap Fitness gyms are small--only 2,500 square feet--and frills free. There are typically five treadmills, two stationary bikes, five elliptical machines and weight equipment. Missing from its outlets: classes, spa rooms, on-site child care and a juice bar. Few clubs have showers. Most clubs are staffed only 25 to 40 hours a week. "We offer a fitness product that screams value," says Snap Fitness Chief Executive Peter Taunton.

It's a franchise operation. Most of the 820 owners paid $175,000 to open a Snap Fitness club, and many are in rented space. The capital outlay includes $120,000 for equipment, tvs, a card key system, a surveillance camera and a one-time $15,000 license fee. After that franchisees pay Snap a royalty fee of $400 a month plus 50 cents for each membership. Snap, the parent, also collects a one-time $5 fee for each security card issued; it gets another $5 for "billing setup." (Curves, the women's chain, charges a $30,000 license fee and a monthly royalty fee of up to $800.)

Franchisees can break even on 275 members in as little as three months. Once a lease is signed, a club can be outfitted and opened in ten days. "We pull up with our 18-wheeler that's basically a store ready to be unpacked," says Taunton, 46.

Some franchisees run the gyms as a side business; 60% of them are absentee owners with other full-time jobs. Franchisees have online access to revenue reports and visit counts. They can view live footage of their clubs remotely. "Running these gyms is a breeze," Taunton tells prospective franchisees in a weekly conference call. "All you need is an Internet browser."

These clubs typically attract married folks, aged 35 to 55, with kids. Most don't have time to linger over a cappuccino or leer at the young man or woman on the next bike. Many live within 2 miles of the gym. Often, admits Taunton, women and prospective franchisees want to know if the gyms are safe. Taunton insists they are. Members enter gyms with access cards. Two gym walls have panic buttons. Security necklaces are available at the gym entrance, which members can use to alert police. To date, Taunton says, the only trouble has come from a teenager who broke into a Minneapolis Snap to steal tvs. Franchisees must pay Snap $255 a month for insurance.

The club concept, hatched in 2003, seems to be working for Taunton. Snap in 2008 had operating income (Ebitda) of $10 million, almost double what it did the year before, on $30 million in revenue, up 67%. The company sold 483 franchises in the first 11 months of the year. Taunton owns 60% of the company.

There are already clubs in Canada, Mexico and India. More are planned in Australia and New Zealand. To help fund the $5 million-plus cost of expanding overseas, last May Taunton sold an undisclosed minority stake in Snap to Summit Partners, a private equity group in Boston. Taunton hopes to have 6,000 Snap gyms around the world in five years.

Taunton isn't a pioneer in the bare-bones 24-hour-gym world. A privately held company called 24 Hour Fitness, with $1.3 billion in sales in 2007 (a forbes estimate) has been around for 25 years, but the San Ramon, Calif. company's gyms are 25 times the size of Snap's. Across town from Snap's offices in Minneapolis, rivals Chuck L. Runyon and Jeff A. Klinger have been running Anytime Fitness since 2001. Runyon gripes that Taunton "has done a good job copying us." Taunton is adding a few features his rivals don't offer. Snap now allows members to track their gym visits, get health assessments and build fitness and meal plans online.

Taunton dropped out of college when he was 20 to play professional racquetball along with his twin brother. A short time later Taunton was back home and out of work in Willmar, Minn. The owners of his hometown gym offered him $16,000 a year to manage the moneylosing club, then named Kandi Kourts. The first year he ran it, Taunton says, the club lost $40,000 on revenue of $340,000. The club's six owners agreed to give him a stake in the club every year it was profitable. "I rolled up my sleeves and worked that club from ding to dong," he recalls. Six years later, in 1982, Taunton bought out the other owners for $450,000. In 1990 he renamed the club America's Fitness, borrowed against it and opened several more big health clubs (one was in a space with 40,000 square feet) around Minneapolis.

He ran America's Fitness for 20 years, but he says he was ultimately overwhelmed by the responsibilities and overhead expenses, which totaled more than $1.5 million. He pocketed $3 million when he sold the five gyms in 2002. In plotting a follow-up, Taunton made a list of essentials for a more basic gym, the beginning of Snap Fitness.

Taunton believes Snap will attract more franchisees with so many people looking for work. He's also betting Snap will attract 300,000 new members this year as fitness buffs ditch costlier gyms. "Let's just say the dogs are eating the dog food," Taunton says. "The people keep coming."

Snap Fitness Brings Affordable, Compact, Member-Friendly Fitness Centers to Mexico

In just five short years, Snap Fitness, the world’s fastest growing franchisor of compact, state-of-the-art fitness centers, has expanded its business model through the United States, Canada, India and Australia. Now they’re preparing to add Mexico to the list.

To aid in this expansion, the company recently formed a partnership with Grupo ACIR, a business development group and leading radio broadcaster in Mexico, whose programming reaches more than 63 cities and upwards of 10 million people each day.

“With our ability to keep a pulse on what the consumers in Mexico are looking for, Grupo ACIR saw a huge opportunity to bring Snap Fitness and its industry-leading 24/7 fitness options to the Mexican population,” said Carlos Ibarra, Manager Snap Fitness Mexico. “Mexico’s consumers are putting an increasing emphasis on health and fitness, and we wanted to offer these burgeoning health enthusiasts state-of-the-art fitness equipment, affordability and convenience. In essence, Snap Fitness.”

The first Snap Fitness location in Mexico opened in Metepec June 2009, with a second center slated to open in August 2009 in Queretaro. The company has its eye on continued growth for the remainder of 2009 and beyond, and is currently seeking qualified candidates that are interested in owning their own Snap Fitness franchise in Mexico.

“Snap Fitness is well on its way to becoming a global leader and expansion into Mexico was a top priority for our franchise,” said Snap Fitness Founder and CEO Peter Taunton. “Snap Fitness has flourished by partnering with our North American neighbors, and we are honored to bring our affordable fitness and member-friendly policies to Mexican consumers.”

As Taunton mentioned, an emphasis on member-friendly policies and value-added services has promoted Snap Fitness over its competitors. Snap Fitness offers month-to-month memberships as opposed to long-term contracts, and allows memberships to be frozen for up to three months a year with no penalty. In addition, the company provides members with a host of products and services, such as an Online Health Assessment and customized supplement suggestions, designed to give members better results and more value for their money.

Launched in 2003, Snap Fitness has approximately 1,000 locations in operation worldwide and projects to have more than 2,000 locations under development by the end of 2009. Consistently opening 300 – 400 new clubs each year, Snap Fitness operates in the United States, Canada, Mexico and India, and has locations under development in Australia and New Zealand.

For more information, visit www.snapfitness.com

Snap Fitness Recognized as One of Twin Cities' Fastest Growing Companies By Minneapolis/St. Paul Business Journal

Snap Fitness, the fast growing franchise system featuring compact, state-of-the-art fitness centers has ‘muscled’ its way to the top of the Minneapolis/St.Paul Business Journal’s “Fast 50”.

Unveiled on October 22, Snap Fitness leads the list fastest-growing private companies in Minnesota with a growth rate of 638 percent since 2006 and 2008 revenue of nearly $32 million.

“We are truly honored to be recognized as the fastest growing company in our home state,” said Peter Taunton, Founder and CEO of Snap Fitness. “We look forward to building on our continued success and growing worldwide in 2010.”

Launched in 2003, Snap Fitness offers members a fast and convenient workout alternative to traditional “big box” health clubs, including access 24 hours a day, seven days a week and the industry’s best equipment, allowing members to get the same quality workout experience at a lower cost and with no contracts.

“Our more than 400,000 satisfied members, combined with our triple-digit revenue growth, proves we're honed in to what consumers want and expect from their fitness program,” Taunton added.

Today, Snap Fitness has nearly 2,000 locations open or under development worldwide and consistently opens 300-400 new clubs each year. Company plans call for a total of 2,500-3,000 centers within the next five years. In addition to being in nearly every state, Snap Fitness also operates clubs in Canada, India and Mexico, and recently launched its expansion into Australia and New Zealand.