Fit to Export, Part 1

International franchising is a trillion dollar industry that few health, spa and fitness chains have explored. The rationale for franchising a national fitness chain comes from the same kind of issues that drive exports and franchising in other business sectors: A product/service mix that is proven in a competitive domestic market has a good chance of success in other parts of the world, if delivered correctly.

Bally Total Fitness, Gold’s Gym and World Gym have set up robust master franchising systems. Their successes illustrate the possibilities of “going international,” and some of the key steps to get there.

Bally Total Fitness

Bally Total Fitness (BTF) has more than 430 facilities located in 29 states and Canada under the Bally Total Fitness, Crunch Fitness, Sports Clubs of Canada, Gorilla Sports, Pinnacle Fitness and Bally Sports Club brands. BTF debuted its first international Bally-branded facility in Nassau, Bahamas. The Bahamas will have a second facility within a year. BTF also has international operations in South Korea and China. Two clubs now operate in South Korea, and there are plans for three more in 2003, and another 15 to 20 in the next five years. In China, there is one joint venture club and one franchised club. Three franchises have been signed to open clubs within six months — another in Beijing, one in Dalian and one in Shenyeng.

The fitness chain also has a master franchise agreement to open 10 to 15 clubs in Taiwan, Thailand, Singapore, Malaysia and the Philippines. “Franchising represents an excellent opportunity for Bally to expand its distribution and presence without relying on our own capital,” says John Wilson, assistant vice president ofoperations at BTF.

BTF is confident its brand name, multi-site management skills, purchasing power, marketing expertise and 40-plus years of experience are “both portable and transferable,” says Wilson. Now is the right time, he says: “Where fitness was once only for the ‘rich and famous,’ now it’s becoming more affordable to a greater number of people.”

BTF uses its website as a low-cost method to develop franchisee leads, then it tailors its domestic club model in terms of what it could provide to international candidates. “We think we have developed a turnkey system as a result,” says Wilson. BTF has left room to customize its model to each particular country; however, Wilson says franchisees want the brand — they want their clubs to look and feel like clubs in the U.S. As a result, franchisees use American BTF instructors to ensure the brand is delivered.

The next step for BTF is to develop legal documentation that allows it to sell franchises in different countries. This includes registration of trademarks in each country as an initial measure to combat piracy. This is followed by partner identification.

“We did painstaking due diligence with each partner prior to signing contracts,” says Wilson. “It takes a significant amount of time to make sure both parties feel comfortable with the partnership.

After all, our goal is to establish successful, long-term relationships.”

There are difficulties in managing franchisees. Wilson says this can include problems associated with language, and the challenge of providing training, checking compliance and coordinating club openings when a franchisee may be 6,000 miles away.

Comments are closed.