Jacinta McDonell Jimenez

Do you have any sense that some franchisees are running their business at the same time as working?

Yes some of our franchisees will open their club while they maintain their full-time job and then a lot of them will open their second club and then leave their existing employment. From their point of view it’s a lot more secure than putting all your eggs in one basket.

Do you get a sense that it’s a bit of a trend in franchising?

I think it might be, but we are also pretty upfront with our franchisees when they are coming through our process. We’re very upfront with them and if we feel that they’re not the person who should be managing the business, we’ll tell them. But I think there is definitely an appeal for people to be able to invest in a business but not feel they have to leave their current career until they see how it goes.

What have been some of the challenges in growing this business? The growth has been very quick, has that put pressures on you guys as franchisors?

I think our challenge has definitely been the velocity which we’ve had to grow and recruit staff. Recruiting the right people is always a challenge but that’s definitely been a challenge – the speed of which we’ve needed the right people in the right seats. So I think we’re very lucky now we’ve got a really strong team of staff, but I think we’ve always managed to foresee what’s coming in a couple of months and put someone on and not stretch ourselves too much.

You’ve got 73 clubs open now and 142 territories sold. Is there going to be a challenge in providing them with the support they need?

I think the fact that Anytime Fitness has got 1,500 clubs in the States means that we’ve got access to the tools to deal with fairly large growth, so we really tap into the tools from the US. They’ve got six staff servicing most of their franchisees, so we’re more heavily staffed than they are in terms of franchisee support. A lot of our communications with our franchisees is on our management dashboard and through our internal process. We were lucky that it was built for a very high velocity brand in the States.

You mentioned selling out in 10 months. What happens then?

Well then we really focus on getting the clubs opened. We’re only at 73 clubs open now, so once we’ve sold 300 territories we’re still going to have quite a backlog of franchisees to work with in terms of finding real estate and actually getting these clubs opened. We’ve also just secured some ownership in the Anytime business in the UK as well, so that will be our next baby and my brother spends a bit of time over there now.

What’s the lag between selling a franchise territory and getting a club open?

Well we’re getting better now, we’re just around seven months. When we first started it was more around the nine or nine and a half months. Five to six months is definitely our aim but seven months is where it’s sitting now.

What’s the tough bit, is it site selection?

Yes, site selection is really where we get stuck just because of our parking requirements and the size of our tenancies sometimes makes it a little bit tricky, especially when you’re getting into tight metropolitan areas. Sometimes council requirements can be challenging as well.

And who’s sort of responsible for site selection, is it franchisee or franchisor or a combination?

A combination. We have a property department, so we have brokers that will assist in negotiating and finding sites for franchisees and then we rely on the franchisee to be on the ground trying to find something in their local area as well. But that’s definitely our challenge, especially in tightly held areas in the big cities.

As a health club veteran, what’s your sense of where the market is at? It looks to be very competitive from the outside.

I think if you ask a lot of people within the industry in Australia I think they probably think it is competitive. But relative to the US and other markets we don’t actually believe that it is. We’ve only got a 10% or 11% participation in Australia here in terms of gym membership but in the States it sits at more like 17% to 18%, so what we think will actually happen is that the market will expand as more people find a club that fits with them. So it is competitive and it’s going to become more competitive definitely in the coming years, but I think that’s actually a good thing for the overall population in terms of the obesity epidemic that we’re facing.

Will the bigger brand chains come to dominate?

I think it will become harder for a small independents and I think that’s already started to happen over the last couple of years. We noticed it when we were running our two clubs that when you’re sort of coming up against Fitness First, it’s harder to compete. I think the smaller independents will find it tough as our brand grows, Fitness First is now nearing the 100 clubs and there are some other club chains that are getting up there in terms of numbers.

And how have the Fitness First guys reacted to your rapid growth?

We sit in a bit of a different market to them, we’ve got many of our clubs that are in the same suburbs of Fitness First now and I don’t really think we affect each other much. We might pick up some of their members when we initially open but their clientele is somewhat different to ours so we quite happily sit side by side with Fitness First.

It sounds like you’ve got a lot of growth ahead. Is that the big challenge for the next 18 months, delivering on these territories you’ve sold?

Yes, we’ve definitely geared up our staffing levels to make sure we can cope with it. We’ve got a very strong general manager and a very strong team of staff so we are definitely focusing on getting these next lot of clubs opened.