Fit to Export, Part 2

Besides Asia, BTF sees great potential in other regions such as Central and South America, and Western Europe. It learned about these markets through its partner China Sports Industry Co. Ltd. (CSI), from its own contacts and by carrying out due diligence. China was singled out to be of particular interest because of its huge population, admittance to the World Trade Organization and its hosting of the 2008 Olympics, and BTF managed to establish a relationship with CSI, which is the largest publicly traded company related to sports and fitness in mainland China.

Gold’s Gym

Gold’s Gym is in more than 74 locations in 32 countries, and has approximately 600 franchises. It has placed master franchisees in Saudi Arabia, Egypt, Turkey, Japan and Asia. The company’s goal is to develop 1,200 gyms worldwide by the year 2005. In India, Gold’s opened its first gym in Bombay through its master franchisee F2 Fun & Fitness Pvt. Ltd., which has master franchise development rights for expansion into India, Nepal, Bangladesh, Sri Lanka and Maldives. Gold’s has also recently opened in Ecuador, and says there are plans to expand in Eastern Europe.

The master franchise program was started about one-and-a-half yearsago. It’s an initiative Ben Amante, senior vice president for Gold’s Gym franchising, brought to Gold’s from his own background in franchising. “It leverages finding high-level business people from within or outside the fitness industry who could develop a Gold’s gym, but also sub-franchise,” says Amante.

The master franchisee system improves management across distance. The master program “creates command and control with less people checking, as opposed to having a couple of people who travel to check all locations,” says Amante. “We can grow more gyms this way. It provides a better ratio of management-to-locations. “Gold’s uses a standard franchise agreement, with a defined time period and fees associated with having that franchise. “The franchisee gets branding, recognition and also the support from the master franchisee in that part of the world,” says Amante.

Gold’s franchisees are a mixture of generic concept from Gold’s U.S., and local concept. “We think that fitness is universal,” says Amante.”However, we do leave the door open to learn from other cultures.” For example, Gold’s is studying yoga programs in India through its master franchisee for better understanding and possible deployment elsewhere.

Amante says that the prospects in Western Europe are strong, and Gold’s sees strong potential in other regions, also. “Plans are in place for Asia, and for Mexico and Central America,” he says. “Looking ahead, perhaps South America, [the] Middle East and South Africa.”

World Gym

World Gym has 309 clubs under franchise agreements. The company has trademarks for fitness centers, clothing, apparel sales and equipment in the European Union and 25 other countries around the world. “We have negotiated in the last 12 months master franchise agreements in four separate territories of the world,” says Mike Uretz, CEO of World Gym International. Moneet Pawha is the master franchisee in India, who has a right of first refusal on Sri Lanka, Singapore and Malaysia. In Peru, the master franchisee is Gonzalo Vega, who opened the first facility in Lima, with three more to follow within two years. He has right of first refusal for Bolivia.

World Gym is negotiating and about to conclude an area development agreement with Mike and Kevin Lee of Seoul, who will open a minimum of 10 clubs within seven years. Uretz says World Gym also has serious interest for area development agreements or master franchisees in Taiwan, China, Mexico and Brazil.

World Gym entered international markets, Uretz says, because “the worldwide interest in fitness mirrors the United States.” The key challenge is ensuring the brand name is well-represented, and equipment and facilities are of the highest standards. He says this is because of import “vagaries.”

World Gym says there are strong growth prospects around the world. “The most promising international growth markets would have to be Japan and other countries in Eastern Europe and Asia,” says Uretz. “We look forward to opening, at a minimum, 40 percent of our new clubs in international markets over the next 10 years.”

Possibilities for others

These clubs lead the way in franchises around the world. Others may follow as they learn from example, and see how successful international franchises can be.

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