Based in Newington, New Hampshire, fitness franchise Planet Fitness has gone from a small, local based chain to national leader in fitness franchises. With an astounding 4.5 million members across 47 states the popularity of Planet Fitness has grown tremendously.
And it doesn't look like this growth will be slowing any time soon; it is currently the fastest-growing full size health club franchise in the country.
In 2012 Planet Fitness became the national gym sponsor of the widely popular NBC program "The Biggest Loser" and the franchise celebrated the opening of their 700th location in November of 2013 in Stockton, California.
So how did Planet Fitness get so big? Well, the story starts in 1992, when brothers Michael and Marc Grondahl took over a struggling Gold's gym franchise in Dover, NH. Unfortunately, due to poor location and lack of parking, they were eventually forced to close that original location. But that didn't stop Michael or Marc.
They went back to the drawing board and started again in 1993 with a new location named Coastal Fitness. To help with managing operations, they brought on a third partner, present CEO Chris Rondeau. They would eventually buy the name "Planet Fitness" from a Florida gym in 1994.
Given the highly competitive nature of the gym business, the partners made a bold move to target an entirely new demographic... people who wanted a place to casually exercise without all the serious body-building types and judgemental attitudes.
To accommodate this new audience, they streamlined operations and eliminated the serious weight equipment and focused more on cardio machines such as treadmills and stationary bikes. Over time, this hassle-free environment became known as the "Judgment Free Zone," designed to make those new to working-out totally comfortable.
After quite a bit of price experimentation from $99/year to $35/month, they ended up offering gym memberships at dramatically reduced prices of $10/month in order to compete against bigger, better-known brands. This low cost membership and unique environment proved to be a truly revolutionary business model in the fitness world.
In addition to the low-cost $10 per month membership, Planet Fitness offers a variety of other benefits including membership appreciation gestures such as free pizza on the first Monday of every month, and free bagels on the second Tuesday of every month, being open 24 hours, no contracts, no commitments, no salesmen, free training, 30-minute workout rooms.
After a decade of successful operations, the company then embarked on a national franchising plan in 2003. The fitness industry as a whole has seen rapid growth in the last ten years or so, with global gym membership reaching close to 50 million, and Planet Fitness is right on the cusp of that trend. Today, they are actively seeking new franchises throughout the United States and Canada, ranking in at #25 on the list of fastest growing franchises. If you are looking to invest in a fitness franchise Planet Fitness is one of the best options out there. The franchise fee is $10,000 with an ongoing royalty fee of 5% over the course of the ten-year franchise term, which is renewable.
All in all, it looks like Planet Fitness' success will only continue to grow. "As we celebrate our 10th year of franchising and the opening of our 700th club, we're excited to continue to open new locations and provide even more people with access to affordable, high-quality health clubs," Chris Rondeau, the franchise's chief executive officer, recently explained. "Our unique, non-intimidating environment truly creates an atmosphere where everyone can feel comfortable."
The Keys to Planet Fitness Success?
Specialized Knowledge/Proven System
For starters, the original Planet Fitness owners were operators themselves and operated several gyms first-hand. This personal experience provided Planet Fitness ownership and team members with the "specialized knowledge" to build-out a scalable, franchise-able system. Such operations experience provided Planet Fitness corporate members with the insights and experience to understand the dynamics of leases, construction, gym operations, staffing, member issues, memberships and product offerings, marketing and sales, legal and other business areas critical to franchise system success.
The Right Team
With a seasoned, experienced team Planet Fitness was able to crossover into franchising much easier than other franchises with less hands-on experience. As well, Planet Fitness really did have a "system" that could be rolled out successfully -- and they knew it because their team had already opened and operated multiple gyms previously for over 10 years.
Smart Marketing
A keen sense for marketing exposed a large, untapped market of casual fitness individuals that were often intimidated and therefore uninterested in gyms. By introducing a low-cost membership and the "Judgement Free Zone", Planet Fitness was able to directly target and attract a huge following of new, atypical gym members.
Planet Fitness fully committed to this "non-gym" audience and successfully launched national advertising campaigns that specifically scoffed at typical "gym rats." Such edgy campaigns were wildly successful and clearly touted that Planet Fitness was truly the home of "no judgement."
Combining these marketing efforts with the national recognition that came with Planet Fitness' involvement with "The Biggest Loser" created a recipe for franchise awareness and market success.
Business Model
By pricing recurring monthly memberships all under $20, Planet Fitness made their gyms accessible to most everyone. As well, most members don't work out frequently, but are willing to maintain their membership anyway because it's so affordable. Planet Fitness also went against the grain and focused only on the bare essentials clients wanted in equipment and services. This allowed for streamlined operations and equipment purchases.
National Trends
Of course, it always helps to have some national trends driving interest in a product or offering. And the trend of an aging population and increasing rates of obesity are now encouraging people to get fit far more than ever before.
Support
No franchise system will be successful without dedicated support. Planet Fitness offers a range of franchisee support such as:
- Training: Available at headquarters: 2 weeks. At franchisee's location: as needed.
- Ongoing Support: Newsletter, Meetings, Toll-free phone line, Grand opening, Internet, Security/safety procedures, Field operations/evaluations, Purchasing cooperatives, Lease Negotiation
- Marketing Support: Co-op advertising, Ad slicks, Regional advertising.
Commitment
Given the success of Planet Fitness, it's clear to see the brilliance of this unique business model after 20 years. But the truth is, it wasn't always so clear what the future of such a novel concept would be. It took tenacious confidence and commitment of the original ownership team to stick with this unique and unproven gym model. And in that commitment lies the real key to the success of Planet Fitness.
Marc Grondahl once said, "Just be true to yourself. If you have an idea, even if it is an unpopular idea, be tough and don't give up. Don't be afraid to do things differently."
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References:
http://www.planetfitness.com/health-club-franchise
http://en.wikipedia.org/wiki/Planet_Fitness
http://www.nhbr.com/June-3-2011/Q-A-with-Michael-Grondahl-Co-founder-of-Planet-Fitness/
Fascinating franchise growth story.
With the history of gym competitors you'd think that there wouldn't be room for new brand.