Franchises vs Independent Studio's - The Lowdown.

In hindsight, it was just the tip of the iceberg really, but I didn’t realise that until later on 😊

I opened my facility 15 years ago, when I was only 24 years old. So, in effect my DREAM was achieved early..

Little did I know, it is one thing to open a facility, it was another to build it and keep it running well for 15 years!

So, when I was looking at starting my facility all those years ago, I had a choice.

Start my own independent Studio, owned, operated and developed by ME, or take on a franchise with someone else’s branding, ideas and systems.

For me, it was a no-brainer, but that’s because I like a challenge and backed my ability..

However, I also understand the benefits owning a franchise can bring..

There are pro’s and cons to each option, and below I’ll cover off on them

Starting a studio by yourself can seem to be overwhelming, especially if you don’t know where to start!. It’s a steep learning curve but can end up being much more lucrative in the long run.

Leaning on a franchise for assistance may hinder your independence, but it also makes it a little less stressful due to them providing you with the framework and support you need early on.

So, in my opinion, it comes back to your goals, capabilities, and also your personality!

Some quick facts:

Research on franchising in the US by Timothy Bates, a Wayne State University Economist, showed that after 4 years, only 62% of franchised businesses had survived, while 68% of independent small businesses were still open for business. And independent businesses are far more profitable. Profitability was actually negative, on average, for franchised firms over the four-year period.

Firstly, let’s be clear on what a franchise is:

A franchise fitness studio is basically a business situation or arrangement through which an individual (franchisee) is allowed to operate a fitness studio under the brand name of some other company.

The prospective franchisee buys the franchise from a company, the franchisor. This franchisor then, generally, supplies equipment, signage, marketing materials, business support, software, and operation manuals.

There are number benefits of opening up a franchise when compared to an independent Studio facility. Franchises allow for growth under an already established brand name making it easier to see profits in shorter amount of time. According to some franchise operation agreements, it is also good for the franchisor, as the franchisor doesn’t have to put in its own resources in hiring staff, buying property, and running operation in another branch while simultaneously working hard on its independent brand name noticed.

If you are an aspiring studio owner and are struggling with deciding whether or not to open your own independent fitness studio or to seek out a franchise operation, of course you need to weigh in the pros and cons of both paths.

Here are some things to consider..

Buying a franchise studio comes with substantial costs. A licensing fee is required to obtain the franchise and may be several hundred thousand dollars. Additional fees include payment on the revenues earned and a fee for cooperative advertising. An independent studio does not have the initial outlay for the license and isn't obligated to pay the monthly or quarterly fees... a HUGE initial saving!

Most franchises require a documented net worth to ensure the franchisee has the capacity to get the studio built, equipped, staffed and running through its first year. A failed franchise negatively affects the franchisor. If you don't meet that net worth benchmark and don't have the required liquidity you won't be approved for the franchise. An independent studio owner doesn't have to document their finances to anyone unless they are going for a bank loan. On the other hand, they have a greater assurance of success with the franchise because the franchising company has required minimum financial standards.

One of the advantages of a franchise is that clients know exactly what to expect. They know that all franchise locations offer the same amenities and have the same classes, equipment and philosophy toward working out and will charge the same membership fees. The bad news for the franchise studio owner is that their business operations, vendor relationships and marketing must comply with the franchisor's direction. An independent studio can offer the classes, equipment and amenities the owner finds most successful. If the smoothie bar doesn't go over with his clients he doesn't have to continue to offer it.

Traditionally, an independent studio owner is on their own when it comes to marketing, facilities, training and management.. unless they engage a reputable and successful Business Coach with all the solutions a franchise offers (for a fraction of the price) Cough, Cough ;) This concept has now changed the game for Independents.

A franchisee is assisted by the franchisor in many aspects of the business, including where to locate the business, what equipment to buy, marketing and training. The franchisor sets up the vendors and negotiates discounts. Some studio owners find this supervision annoying while others would rather concentrate on helping their clients improve their fitness and appreciate the assistance.

Franchisors provide marketing advice and assistance. Cooperative advertising benefits all the locations in an area, as well as the franchisor. The marketing is developed and tested by the franchisor. An independent studio is responsible for its own marketing but that allows it to choose its own strategies, some of which may be better for the individual business. The downside is that the studio owner may not be an expert in marketing and may not have the ability to implement an effective marketing program. A fantastic solution for the independent Studio or gym is FITBIZDOCS

It would be difficult for someone with no fitness experience to open and operate a studio successfully. Franchises, however can be owned by absentee owners, as long as the franchisor feels there is competent management in place.

The main benefit of running a studio under an established company is the association which you get with an established and reputed company. As stated above, you will likely receive business plans, procedures, policies, and rules ready made from the franchisor. Therefore, a large part of your installation and initial setup work is already done for you when opting for a franchise fitness studio.

In most cases, the franchisor will choose the location, provide equipment and set up the studio for you. Additionally, you will already have a likely membership base as some of your future customers will choose a studio solely on the basis of its brand name.

Above: The newest solutions offered for Start Up, and existing Independent Studio Owner's, giving you all the stuff Franchises are offering, for a FRACTION of the price!

Another advantage of owning a franchise is that the franchisor will be responsible for various manual or tutorials related to the studio. All the material is already made and you simply need to supply it to the staff. Additionally, you may have a franchise fee that covers the franchise owner’s responsibility for advertisements and marketing.

The cons of a franchise fitness studio are almost the same as any other franchise ownership. With a franchise, you have to work under certain limitations. Franchisors are generally very strict about showcasing their own products and services and you will have to follow their set of guidelines when operating your chain studio. Thus, this control diminishes your own business creativity.

Another downside of a franchise includes the high cost that you have to pay to the franchisor to use the brand name. With everything out there, there are good and bad apples. The same is true within the franchise community. There are some franchisors that are not very reliable and are difficult to connect with once your place has been established.

Additionally, you will have to pay a certain percentage of the income to the franchisor irrespective of the studio’s profit or loss scenario. Usually, you have to pay a large upfront license fee (anywhere from $100K-$500K), as well as the 5-10% of revenue that you give to the franchisor each month. Also, you may need to show some financial proofs or meet financial benchmarks set by the franchisor in some cases.

Another con is that you will not have control over the brand name. It is always good to be associated with established brand, but you run the risk of tying your fortunes with that of the franchisors. As such, any publicity blunder performed by the franchisor, or other uncontrolled franchisees, could hurt your business. The marketing and publicity of your business is closely tied with that of the franchisor and so is your profit or loss according to the overall business performance of the fitness brand.

As with all business decisions, do your homework and due diligence. Don’t just jump to it because seems attractive or you get emotionally attached to a certain idea. Although, due diligence takes time, be true to your future self and make sound judgment.

The good news is that I've evened up the playing field, and in fact moved the goalposts to favour the Independent Studio Owner.

Check out my solutions on this site to see how you can get all the benefits of a franchise for a FRACTION of the cost!