Australia’s health club and gym sector was enjoying a decade-long boom until the GFC got in the way. But one company shrugging off this gloom is Anytime Fitness, which was launched in 2008 by brother and sister team Justin McDonell and Jacinta McDonell Jimenez. The chain already has 73 clubs open, 164 territories sold and could be sold out within 10 months.
Today Jacinta McDonell Jimenez talks about the changing face of the gyms sector, the challenges of rapid growth and the rise of the part-time franchisee.
Am I right in thinking you have a family connection to the fitness sector?
We grew up in the industry. Our parents had clubs when we were quite young and then we opened up our first club basically when we came straight out of school. So we’ve been in it from 1992, quite a long time actually.
How has the industry changed over that period? Being a member of a gym is now a lot more common than it was back then.
The industry when we started was quite immature in that everything was prepaid memberships, there wasn’t the sort of direct debit reoccurring income that we’ve got now. There wasn’t any of the treadmills and stuff, it was more classes. Obviously it became a lot more expensive to open clubs because the cost of all the equipment is quite significant.
Were you casting about for a different business model or was it just something you came across?
Yes we came across it. There was an international magazine that we’d subscribed to for years that featured fitness franchises in the United States. There were 100 or so franchises in there, but we just saw that model and it sparked our interest. We went straight to the States about two weeks later and met with the guys at Anytime Fitness.
At the time we were running two of our own female-only high service, fitness centres and we just saw this as a massive opportunity. We knew how much more diverse the clubs are in the US in terms of the offerings, so we just saw a massive opportunity in our market here for that product.
Were the founders of Anytime Fitness looking to expand?
No, they hadn’t really gotten that far. They had been approached by two other groups of people from Australia around the same time but they definitely weren’t ready for global expansion, so it took us 12 months to get the rights. So I guess they sort of cut their teeth on us. We’ve got a great relationship with them so we were very lucky that they sort of jumped onboard and got ready and now they’re expanding very quickly globally.
In that 12 month period what did you have to do to convince them to give you the rights?
We travelled over there quite a lot, we did all of our due diligence, we did a lot of road trips around the States making sure that all of their clubs were what they said they were. Then one of the other co-founders came out and met with the three parties that were looking at bringing the chain to Australia and I think we were just a much better cultural fit for them.
So you came back to Australia having secured the franchise. Did you guys build the first few centres?
Within the first 10 clubs we really did the first three, which we’ve sold and now we’ve only really got one that we own and the rest are franchises. We wanted to get the ball rolling and test all the systems. Obviously we’re very high on the security and we wanted to make sure that we had our correct suppliers and everything in line before we started franchising.
I know there have been a few 24-hour gyms in Australia in the past, but what is the attraction?
I think the attraction really is affordability, but convenience is definitely our biggest unique selling point. Not everyone trains at two o’clock in the morning obviously, but it’s the fact that people can go whenever they want, they can go on a Sunday morning, they can train on a Friday night late, on public holidays. We also have worldwide reciprocal rights, so our members can train in any of our clubs 24/7.
And from a franchisees point of view, the attraction must be lower labour costs, given the businesses are unstaffed for a large portion of each day.
A lot of our franchisees that come onboard have had pizza franchises or other types of franchises, so they’re used to having quite a large wage component and then you’ve obviously got the hassle of managing the staff as well. So that’s very appealing from a franchisee’s point of view and in terms of the costs it’s massively different to running a traditional fitness centre. We typically staff our clubs 40 to 50 hours a week and those hours are really based around the busier times at the club. So Monday, Tuesday, Wednesday nights you’ll always find that we’ve got staff on.
How does the franchisee feel when they leave their prized gym unattended? Are they worried about equipment going walking out the door or someone jamming their hand in a machine?
Yes, a lot of the investment from our franchisees is around security. We have cameras all the way through the club, we make sure that there are no blind spots, we have panic buttons, we have duress lanyards that member can wear so everything’s in place for the members to feel safe but also for the franchisees to feel safe. Obviously they’ve just invested $200,000 or $250,000 into getting this club open, they want to know that nothing is going to go walkabout. We really don’t have any issues like that though, because the members are all aware that they are on cameras as soon as they walk through the door and they are actually pretty good at looking after the club.
Have you had to do much education of franchisees or customers?
I think that the customers that we attract are sometimes different to what people think we’re going to attract. People think we’re going to get the super fit market but a lot of the time we get people that have never been to a gym because of the fact that it’s intimidating. But ours is a smaller club, we don’t have lots of classes where there are girls jumping around in bikinis and all that kind of stuff. A lot of our larger members that haven’t been to clubs before come in late at night when the club’s quiet.
In terms of selling the concept to the fitness sector, I think it’s only really now that we’re starting to capture their attention. Initially I would say the first 50 or 60 franchisees weren’t fitness related.
But they were experienced franchisees?
Some were yes. Our first one was, he was an ex Eagle Boys Pizza franchisee, he’s now got six clubs that he owns.
Recruitment is a big challenge for all franchisors, what’s been your experience?
We haven’t had a challenge at all with franchise recruitment, which is a bit strange I know. Our general manager at the moment still can’t really believe how easy it has been comparative to other business models. I mean, the price bracket that we sit in is unique, it’s not expensive to open one of our clubs but we’re not in that $70,000 to $80,000 capital investment where you are looking at sort of buying yourself a job as we sort of say. So I think we’re at a unique price point and the requirement from the franchisee in terms of time is another unique point. In fact, because we’re now getting into franchisees purchasing second, third and fourth and fifth sites, we’re probably looking to have sold out in Australia probably within the next 10 months. So we’re in quite a unique position.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
