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Franchise Horror Stories
When one purchases a franchise it is because they want to be business owners and taught by professional business owners (franchisor) who have proven business models that they follow step-by-step.
Franchisors interview potential franchisee's period. They know whether that person has experience or not and/or can follow their business model. The purpose again is to "learn how-to".
Alot goes on behind closed doors after you're into a franchise. Often too late to get out because of the capital invested. That is when you find out whether there is a proven business model in place in all areas, especially for marketing, and whether the projected gross revenue is based on actuals or some other calculations. You also find out if you raise too many questions you are treated like nothing by the franchisor for raising those questions and that you are always to blame for your business not working.
So to those who again blame the franchisee for their business failure - not every case is based on the franchisee's failure. Once you become disappointed in your franchisor it is very hard to continue the relationship in a productive manner on either side. If franchisee's were well versed on starting and operating their own businesses they wouldn't need a franchisor, especially one that is not well known like McDonalds, Burger King, Kentucky Fried Chicken, etc.
- forums:
A Snap Fitness Owner's Story
For potential franchisees: Consider carefully your available resources in terms of time and money.
Don't believe the sales pitch that you can run a successful snap while also working full time somewhere else. This would only work if you are able to pay a full time, sales oriented manager.
Also, you most likely will NOT breakeven within the first 6 months. It could take 12-18 months or more. Make sure you have the financial resources to subsidize your business for the long haul.
These were my two biggest mistakes. I didn't have the time, energy or finances to keep my business going.
I don't know if I failed or not because I was never able to give it my full, undivided attention. I was torn between my commitments to my family, full time employer and my snap, never fully engaged in any of the three. We took out a home equity line of credit to subsidize our business each month. After 18 months I saw the writing on the wall and decided to sell. The new owners are making a go of it as far as I can tell so I'm glad about that for our members.
I don't have a huge problem with corporate. I signed the FDD so don't really have any right to complain about any of the terms. They are in business to make money so let them to the extent that the law, the market and their conscience will allow. My biggest complaint is the way the business was pitched to me. The time and money required were vastly understated in my opinion.
Bottom line is that for some, this is a good business opportunity, for others (like me) it is not right
In my opinion:
-You cannot run a successful Snap franchise while working full time at another job
-Your breakeven will be substantially higher than 250 members
-Do not plan on turning a profit in your first 12-18 months.
-Make sure you have enough in personal savings or liquid capital to subsidize your business until you turn a profit (if you ever do)
-Franchising is extremely risky at best. You must be 100% committed in terms of all of your time, energy, and financial resources
-Take EVERYTHING the corporate sales team tells you with a grain of salt. If it sounds too good to be true IT IS!!
Here is my story
It was a couple years ago and I've tried to forget most of my experience but as best I can remember, based on an average membership of $40 (might be a little high), our break even was probably around 320 memberships (475-500 members).
We also never got personal training off the ground. #1 I couldn't find a good trainer in our area and #2 our members just weren't interested it seems. Of course if I could have found a good trainer, maybe my members WOULD have been more interested. However, it seems like the area I live in (Midwest) just doesn't see the demand for personal trainers. After all, they are joining snap for the low fees and convenience, why should they pay more and have someone hound them with training sales pitches while they are working out?
I tried the best I could to provide a clean club and friendly competent staff since I couldn't be there myself due to my regular job. When I opened I had a gung ho, energetic manager hired, who was also a personal trainer (newly certified). He was paid $10 per hour, plus incentives for signing up new members. He worked about 20-25 hours per week (all of our staffed hours except for about 5 which I covered myself, one night per week and some weekends). After a few months I bumped his pay to $11 per hour then $11.50. He was not able to get the PT going and quickly became disenchanted with the marketing, sales, and cleaning duties he was required to do. He quit after about 6 months and then it became an endless string of part time staff, usually 2 or 3 at a time who each worked 5-10 hours per week. No one stayed more than a few months so I was always recruiting, interviewing and training new staff.
I would stop in at the store in the morning on my way to work 2-3 times each week to check on the club. After a heavy thunderstorm, the satellite and TVs would go out so I was on the phone with DishNetwork. I had to meet the Pepsi guy to restock the vending machine, or the water guy for the water delivery, or the equipment repair guy. It was never ending. I could monitor the club via the cameras from my work computer (I cheated my boss out of many hours by working on Snap stuff). When my employees didn't show up I was leaving work early, using up my vacation to staff the club. I was maintaining our club website and monitoring our club email account and responding to inquiries about memberships. I was on the phone with members regarding club questions, issues, dues payments etc. On the phone with Corporate over Checkfree, door access, membership issues. all on company time. I spent my lunch hours and company time on the mostly useless to me marketing and sales webinars. All the programs sounded great, but I didn't have the time or the money to implement them.
At night I would try to keep up with the accounting, pay the bills and do the payroll. Luckily my good friend is a CPA and helped me out a lot. There were quarterly payroll taxes, quarterly income taxes etc. One of my staff had a child support order against him so that was more work for me.
Meanwhile my wife and kids suffered because I was always gone or busy.
You can either do all this yourself, or pay someone to do it for you. I couldn't afford to pay someone so I was doing it all myself.
Make sure you can afford either the time or the money necessary.
Eventually I couldn't (refused to) keep up. My wife suggested we seek a buyer and I agreed, two months later my club was sold. We lost about 65K in the deal but I was glad to only lose that much. The weight of the world was off my shoulders and I felt FANTASTIC!
I'm sure this sounds like whining and it probably is. I'm just mad at myself for falling for the sales pitch, overestimating my capabilities and putting my family finances at risk.
Snap Fitness ranchisees or potential franchisees beware
If you choose to sign with Snap Fitness.....Beware
If you become dissatisfied with them and don't want to renew your agreement, they have a clause in the agreement that prevents you from doing business on your own for two years. Peter Taughton is no better then a mob boss forcing franchisees to stay with him. And the sad part is that they really don't do anything to help you succeed, except have their name, which I have found no one is familiar with the name anyway unless they have actually driven by a Snap in their area. Biggest mistake I have ever made in my life.
My experiences with Snap
I looked into buying a Snap Fitness franchise.In fact I made an offer on one in Eagan, Mn. I found out later my offer was not presented to the owner, but instead my offer was used to get a friend of the
Snap franchisor's off to snide to make an offer. It turned out the offer was lower than mine--but the
old Eagan owner never saw mine so he got stuck taking the lower offer from the friend of the salesman.
How unethical!
Plus I have gotten numbers directly from club owners at Snap who have put their clubs up for sale. I have compared them to numbers provided me by Snap salespeople. They are different--which proves
to me Snap salespeople are "cooking the books" inflating profits and deceiving potential new franchisees.
That should not be surprising to hear considering the founder of Snap was convicted in court in 1999 in St. Paul, Mn. of fraud!
Did you tell the seller this?
Who was it that was representing the seller? Was it listed with an independent broker? Was your offer cash or contingent on funding approval? There is much you are omitting. You sound liked sour grapes.
this is called a non compete clause
And it is present in every franchise agreement. In some states it holds up and others it will not. Didn't you read your agreement before you signed it?
Snap Fitness ranchisees or potential franchisees beware
If you choose to sign with Snap Fitness.....Beware
If you become dissatisfied with them and don't want to renew your agreement, they have a clause in the agreement that prevents you from doing business on your own for two years. Peter Taughton is no better then a mob boss forcing franchisees to stay with him. And the sad part is that they really don't do anything to help you succeed, except have their name, which I have found no one is familiar with the name anyway unless they have actually driven by a Snap in their area. Biggest mistake I have ever made in my life.
anytime fitness loser loser loser
franchise fees 5k more than snap. startup cost 60k more than snap. breakeven 100 plus members more than snap.
Anytime Fitness and Snap Fitness are both LOSERS!
Concur. Both are LOSERS!
all franchises suck big time
Franchising is on the way out! In 10 years there will be no franchises.
SNAP FITNESS - Loser, Loser, Loser
SNAP FITNESS? The quotes just below are Snap Fitness "marketing strategies for potential franchisees" and are directly from the lips of Snap Fitness CEO Peter Taunton. They are embellishments and this is a absolute LOSER!
"Running these gyms is a breeze, all you need is an internet browser." "Recession proof." "Can break even with as few as 220 to 250 members." "Allows one manager to man the location between 15 and 20 hours per week."
Would you like to know more about this franchiser and it's CEO? Read below:
WANT TO BUY FROM CORPORATE, READ ABOUT THE CEO BELOW:
PETER TAUNTON, CEO SNAP FITNESS = Case # 24040055, Court File # K598001371, Disposition Date 3/18/1999, Minnesota Attorney General's Office St. Paul, Kaniyohi District Court, Theft-by Swindle-Artifice/Trick/Device or Other, Statute # 609.52.2.4., CONVICTED
Candy Bouguet International
Candy bouquet International US franchise numbers fall to 178... By a Guest 2011-08-19 07:42 Candy bouquet International US franchise numbers fall to 178... Candy bouquet International drops another US franchise and those numbers fall to 178... And those numbers just keep on falling down!!! Candy Bouquet International US franchise numbers fall to 178 according to Candy Bouquet International homepage. For every loss of a franchise less cash flow for CBI and more importantly less money to line Margaret Mcentire's pockets. Margaret Mcentire are you regretting how you have treated your past and present franchisees? PS: To Margaret Mcentire No matter how much you SPAM our posts we will continue reposting and posting the truth about your SCAM CBI business venture. PS: PS: Margaret Mcentire Warned you I would continue reposting and posting the truth about your SCAM CBI business venture.
PMD direct
Ask the Attorney General of Ill. The AG of Illinois sent PMD a letter that they were selling illegal franchises in the state. PMD, Jeff and Joe panicked. Cooper and Elliot knew the licensing ploy was an illegal franchise and PMD created the Franchise move to hide from their past lies. They wiped out the PMD's past history which was a fraud and they said trust us. They told the dealers they could now sell their businesses so just sign up. No PMD dealer has ever sold their dealership except Armetta. That didn't last to long. Selling a business but PMD gets $50K if you could.
Forget the Royal Heritage brand story they concocted. That story allowed the DA to walk away and sue Jeff and Joe as the license agreements provide for use of the brand which was RH (breach of contract). Armetta convinced Jeff that Royal Heritage could be a brand and he could a passionally buid it. No one wanted the American Dream label that Jeff and Sheila defended as a brand. Does that famous brand Royal Heritage still come in Crown Mark boxes?
You can't make this up!
PMD
I don’t know or care about economic concepts, its almost July 4th and what an appropriate time to write this. A celebration of independence and freedom for me and a lot of others! I was a PMD dealer and manager as well as an occasional social events organizer for Jeff. I never met the Andrew’s guy from South Carolina but I did hear Jeff say that he had absolutely no chance of financially making it through the legal wringer that Jeff’s lawyers would put him through and that Jeff would make sure they wrecked him like they had others. Looks like the guy got a hold of enough facts and enough truth to make Jeff eat those words. We all hoped somebody would some day. I heard the trial was full of lies from Rob, Jerry, Joe, and especially Jeff. What a surprise. I remember when Joe started talking about getting PMD into Furniture Today’s top 100 and all his ideas for strategic positioning before a single dealer ever reported any retail numbers to PMD. Hey Joe remember that AWESOME all white pajama party at the Pure nightclub in Vegas put on by United Sleep when you introduced me to that girl who ran United? What was her name? Jen, Jennifer, no it was Lisa, that’s right Lisa Kaufman and you said you had known her since the two of you worked in the investment group at Bank of America together. It seems I also remember that girl who handled the “Protect-A-Bed” product line. Joe made sure her relationship with PMD was well protected all right. Bert never had a chance to compete with Joe’s expert strategic business planning or your expert social event organizing, Jeff loved both of those skills.
Oh the good old days. I remember the model home sales events, hot tubs, one day specials, and the trips to Mexico and to the Caribbean. I doubt if any of that was a part of the SC guys trial but the dealers association group is a different story. They have and know people who saw the skeletons put in the closet at PMD. 3 dealers in the same market, managers told to lie in recruiting, managers told to toe the company line like they were in the military, managers made to beg for their job, managers told to lie on the stand to bury ex-dealers in lawsuits filed by PMD. Yeah those were the days. I remember one manager having to get on his knees and beg Jeff not to fire him and thank him for making him who he was. Those Vegas and High Point trips for furniture markets, what times we had. The dealers association should ask Jerry Williams how he has been doing as Jeff’s social manager since guys like me and Joe are gone. I hope the call me as a witness. Jerry was a real good understudy and based on what I’ve heard about his testimony and knowledge of the company there must be something besides a COO job he gets paid for. Remember those Vegas trips Jerry? I hope all the ex-managers in the next PMD case remember all those 2005 management meetings where Jeff blasted us for our sales being down. Maybe some of the managers wives who were brought to tears by Joe and Jeff can come testify. That fight in the pool, girls on the beach, those incredible massage therapists, and all those late night bars. No one closed them down or cranked them up better than Joe and Jeff.
Is this for real?
Former 24 Hour Club Franchisees: Feel free to copy, paste and send to your state legislators and management of health department and environmental department.
Dear State Legislator, Environmental or Health Department Supervisor,
It has come to the attention of thousands of legitimate nationwide health club owners and health club members that franchised 24 hours clubs are offering amenities and availability that are not consistent with state, county and city laws and regulations.
Please check your current state laws and regulations. We have already researched this extensively and know a high percentage of states are not properly enforcing their laws and regulations in regards to 24 hour clubs.
SEVERAL STATES REQUIRE AN AED AND/OR CERTIFIED CPR STAFF ON DUTY AT A HEALTH CLUB AT ALL TIMES.
NEARLY ALL STATES REQUIRE A TRAINED OPERATOR FOR TANNING AT HEALTH CLUBS AT ALL TIMES TANNING IS AVAILABLE AND BEING USED.
NUMEROUS STATES REQUIRE STAFFING AT ALL TIMES A HEALTH CLUB IS OPEN OR AVAILABLE.
The risk for a person to have an emergency medical condition during exercise is ten times higher for those with heart disease risk factors.
Here are a few scenarios that could easily occur in a 24 hour club. Who would be liable with the current laws and regulations on the books?
1. A 24 hour club member has a heart attack in the middle of the night with no one else around. There is an AED on the wall but no one to use it. If the law states there is always to be an employee on the premises at all times for a health club, who is liable?
2. A 24 hour club member has a heart attack in the middle of the night with no one else around. There is an AED on the wall but no one to use it. If the law states there is always to be an AED/CPR certified employee on staff at all times, who is liable?
3. A 24 hour club member has a heart attack in the middle of the night and the only other person in the club is tanning. There is an AED on the wall but no one to use it. If the law states there is always to be an employee on staff at all times while tanning is being operated, who is liable?
This not only puts the 24 hour clubs at risk for liability, but also the state, couty and city entities requiring and enforcing these laws and regulations.
I personally witnessed a club member death at a health club that was totally unnecessary. The person was provided with excellent emergency treatment but the club did not have an AED on site. The AED was used later on the way to the hospital and they were revived but too much time had passed without oxygen to their brain.
I encourage you to go to the website www.bluemaumau.com and to the "Anytime Fitness or Snap Fitness" forum to read the feedback from the community in regards to these issues. It would be prudent to address these before situations occur to solicit lawsuits.
THE 24 HOURS CLUBS HAVE ADOPTED AN UNFAIR ADVANTAGE OVER STAFFED CLUBS DUE TO THEIR CIRCUMVENTING LAWS AND REGULATIONS THAT SHOULD BE INFORCED FOR THE HEALTH AND SAFETY OF THE CONSUMERS.
I would only ask that you research this issue in regards to your state laws and regulations. Thank you for the courtesy.
Yours in health,
A Concerned Fitness Educator
PS. I am not a health club owner, investor, franchisee or employee. I am a concerned citizen who understands the risk of exercise, liability and cost of litigation.
Flipping a Snap fitness to a privately owned gym
We are trying to save our home town Snap Fitness. We do NOT want to be part of that franchise. We have gotten the owner to agree to sell us all the equipment in the gym.
The problem here lies in the contract. We believe it states that the owner is obligated to sell the equipment BACK to Snap before selling it otherwise.
There are no liens against the equipment and the owner paid cash up front. He owes nothing on it.
Can Snap come back and try to get this equipment from us? We have an attorney is more worried about the liens (which the owner states there are none) than worried about the corporation trying to grab our stuff.
Help? How do we flip this into our own gym without being sued for it because the owner defaults on his contract?
Please email me at: iilaad65@yahoo.com if you have any advice. Thank you!!
YOU SIGNED A DEAL WITH THE DEVIL
I feel for you. You are stuck in a perpetual contract. You are screwed. Believe me your not the only one that is very unhappy with the ethics of Snap Fitness and peter taunton. Today he is probably sitting in the front row in church tomorrow he will be looking for another victim. Peter taunton and his brother Paul have had dealings with Tom Peters taking millions from people.
RE: Flipping a Snap Fitness......You can't be serious? READ!
You are dealing with the company co-founded by Peter Taunton, Mr. Ethics himself who clearly has a swindling conviction in the fitness industry. You are crazy to assume this is a square deal...You did say Snap Fitness, correct? Franchisee contract....this is an absolute no brainer! This franchisee got bent over and is now trying the same move on you.
Snap Fitness CEO, PETER TAUNTON = Case # 24040055, Court File # K598001371, Disposition Date 3/18/1999, Minnesota Attorney General's Office St. Paul, Kaniyohi District Court, Theft-by Swindle-Artifice/Trick/Device or Other, Statute # 609.52.2.4., CONVICTED
Does this help you at all?
the person said they wanted to convert a snap. They want to
Make it a mom and pop. Read the post. Its like you type before you think. Perhaps you do a lot of things before you think. Maybe why you are such a dissappointment to yourself and family.
Reply to: the person said......why don't you take Peter a drink?
YES, Snap Fitness may have an angle of getting the money from the equipment if the owner defaults on his franchise agreement! Consult with an attorney, the a_sshole Guest above is from Snap Fitness and would love to see you suckered into biting this dangling bait. It might even be Peter Taunton himself, he is feeling the feedback from this and other sites and has hired henchmen to post favorable crap about his franchise. The big boys don't play fair.....why should they?
Real as it gets..............
Real as it gets..............
This is absolutely ridiculous
This has to be some pi$$ed off health club owner getting his lunch eaten. It never cesases to amazxe me how pathetic some people can be. Talk about sour grapes. Gez.
RE: This is absolutely ridiculous
The steaming pile post above "This is absolutely ridiculous" is obviously from corporate or a current franchisee. Please remind the readers of the 4% Snap Fitness closures last year which amounts to over $8 million of lost investment, the swindling conviction of your CEO as noted below, the embellishments of that same CEO in this forum (Peter Taunton, CEO Snap Fitness) as well as other websites and the seemingly disregard for the well being of struggling franchisees. May-August are the most popular months for closures so watch for an empty building coming soon to to a town near you compliments of Snap Fitness. BUYER BEWARE!
What does the comment to this letter have to do with
Snap Fitness? His comments were about the intent of the letter. He didn't say anything about Snap. We get it.
RE: What does the comment..............
Scroll down, scroll up. The topic has not deviated from Snap Fitness. We get it, you're a shill
Snap Fitness - Rocky Horror Picture Show gone wild......
Snap Fitness CEO, PETER TAUNTON = Case # 24040055, Court File # K598001371, Disposition Date 3/18/1999, Minnesota Attorney General's Office St. Paul, Kaniyohi District Court, Theft-by Swindle-Artifice/Trick/Device or Other, Statute # 609.52.2.4., CONVICTED
This was back in 1995
and Involved membership agreements in a chain of health clubs PT owned. We looked into this years ago. This has been posted here before. It is old news. It has no relation to Snap Fitness or the business model. It's easy to find the details on the case. I was a misdemeanor.
Conv_cted in 1999, just a few years before Snap Fitness.....
"I was a misdemeanor." Thank you for the clarification, Peter!
PETER TAUNTON, CEO Snap Fitness = Case # 24040055, Court File # K598001371, Disposition Date 3/18/1999, Minnesota Attorney General's Office St. Paul, Kaniyohi District Court, Theft-by Sw_ndle-Artifice/Trick/Device or Other, Statute # 609.52.2.4., CONV_CTED.
Place it Local
Placeitlocal , we are here for serving a better service to the people with lot of our Product.
What's going on with Coldstone and Zarco
That thread has gone cold. Any news on that situation. What about the tv show? Did it air?
Coldstone/Zarco?
"That thread has gone cold. Any news on that situation."
Looks like maybe the Hired Gun did his job - barked at CNBC, got some changes made, so now he's done?
what did zarco do to help the franchisees who recruited him?
Is he just a turncoat?
The Show
Behind the counter is back on the air. I saw their site but can't fine any videos for the cold stone story. Does anyone have a link to the show?
I would appreciate a link
to that story. I can't find it anywhere.
Highlights of Bluemaumau forum "Anytime Fitness or Snap Fitness"
For those who want to stay up to date with the progression of the 24/7 fitness club franchisers, this should help!
Post "Can't have it both ways......POTENTIAL FRANCHISEES READ HERE"
The self proclaimed 24/7 fitness franchise expert continues to defend, attack, embarrass, offend and simply make an _ss out of himself and must actually believe anyone cares what he writes anymore. He posts his slanted opinion and provides no evidence to substantiate. Name calling and duplicating posts will not fly in this forum.
THE FACT IS if Snap Fitness franchisees would have had the information in the posts below previous to signing the contract, how many would have bailed before signing up for this financial massacre? Scroll down of these pertinent posts:
REPLY TO BELOW: i have no connection with snap
Focus on Facts
Who wants to be the next pinata?
Anytime Fitness or Snap Fitness - How about neither?
Post "Have some more diligence.........no extra charge!"
Rebates? I think we all understand that these are KICKBACKS for overpriced services and products. Anyone at Snap Fitness experience this, besides every franchisee I know? Read the first link below because it is oh so pertinent. The second link are comments. ENJOY!
http://www.bluemaumau.org/inadequate_disclosure_rebate_practices_increase_risk_franchisee_class_actions
http://www.bluemaumau.org/node/10023/talk
Post "Corporate Shill warning of "major lawsuit" directed at blogger"
Just when you thought you had seen it all, the Snap Fitness corporate shill shows up on a complaint site warning a blogger Nathan of "major lawsuits". Anyone else here have a problem with this?
http://snap-fitness.pissedconsumer.com/snap-fitness-casper-very-rude-20110222223084.html
Anytime Fitness or Snap Fitness - Forums getting sketchy?
Posts have been and continue to be removed from forums but the constant spam of Tom Garmon's plight to recruit potential independent club investors and advertise his consulting services are left untouched? This should concern all who post here. The paragraph below is posted numerous times in this forum.
"Tom Garmon is an independant business broker who has been involved in the fitness industry since 1991. He does not work for a franchise system in any form or fashion. He has had the opportunity to review financial statements for well over 250 health clubs and fitness franchises. Fitness is a highly compeditive industry and before signing any franchise agreement one should perform due diligence by speaking in person with franchisees and contact an attorney. Cheers! 800-457-0350 ext 300"
Observations of an Independent Fitness Industry Business Broker
Many of the clubs that I saw which were not profitable or had lower profitability had a few things in common.
(1) Rents in excess of $5000.00 per month. I looked at struggling clubs in both models and about 80% of failing clubs had rents exceeding this. I didn't track the successful clubs with rents in excess of $5,000. I actually tracked low performing clubs as it related to rent levels; since this is generally equal to or greater than payroll and can literally make or break profitability.
(2) Equipment lease payments totaling $2000 per month or more. This eats into cash flow and thereby reducing profitability. Why leverage 80-100k on a lease totaling $24k a year. Paying cash for your equipment will pay for itself in approximately 3 years when compared to a lease over 5 years. That's a good portion of the ROI. People should not lease equipment. Period. If you can't afford to pay cash in the startup phase don't buy.
(3) Absentee ownership (owners living out of town and not involved in any day to day) People who were sold the ease of absentee ownership and purchased on that premise were largely unhappy, due to the challenges of managing the managers and performing aggressive local marketing and sales functions. You aren't going to get a "go getter" as a part-time manager for $800 per month. Sure there is the exception to the rule, but generally speaking this is a big factor. Remember success in the health club business is not so much the palace as it is the people. While some members are the self service type this doesn't apply to the sales function. Exceptional management is the key to successful sales, marketing, and member retention. (One demographic where payrolls decrease or even eliminated (in rare cases) are in high income areas where the gym is effectively a defacto personal training studio. Trainers are paid by clients, but will maintian the facility and assist with sales as part of the arrangements.)
Franchisee dissatisfaction is much higher among this group which has these three above factors present. I am willing to venture that the people here who are unhappy can check off at least two of the three above items.
Among franchisees who didn't have the above 3 negatives, satisfaction was much more on the positive side. Profitable Anytime and Snaps generally generate (on average) net margins between 20% and 35% of revenue. As revenue increases there is some margin pressure from incremental increases in payroll and discretionary expenses such as marketing and promotions. A breakeven club can add 100 members with 85% to 90% of the revenue added as net income ($35,000 annually or more), but lose 100 members and the opposite holds true as well. Income level fluctuations can be volatile if an abrupt change in management or ownership occurs, whether positive or negative.
Attrition levels in these types of facilities is best tracked on a 4 month moving average, targeting 3%-4% attrition each month. A 300 member club should expect to lose 9-12 people on average every month. A club with properly trained staff should see 60% of their appointments come in and enroll 80% of those guests. Upon rebooking the no shows 50% of those should come in the next 2-3 appointment rebooks. This is why a sales person is ever so important. Essentially one needs to target 30 guest a month to maintain a 300 member club.
I estimate that the median 24 hour club (based on my data) has 300-350 memberships, generates between 37.00 and 45.00 per membership, with revenues between $13,000.00 and $17,000.00 per month. Higher income areas see added revenue with personal training services. Management should be high energy with a sales background and have strong direction for prospecting, telemarketing, sales, and member relations. Owners will likely be doing some micromanaging with the managent level, directing local marketing efforst, including flyers, local strategic partnerships, buddy referral promotions (in house). Typical payrolls fall between a very low side of $1200.00 per month to and upper average $2500.00
FRANCHISED 24/7 FITNESS CLUBS - INVESTING AND ATTORNEYS
Anyone stop and think why it is so difficult for regulars in this forum to figure out who is posting the harsh realities of the 24/7 fitness club business model? Could it be there are so many franchisees who have failed, sold at a loss, are failing or have been disillusioned that the pool of possible people is just too large to know? When all else fails, it can always be blamed on a lawyer.
SAVING POTENTIAL FRANCHISEES FROM INVESTING IN THIS LOSER BUSINESS MODEL IS THE GOAL. If you are already in the franchise system, it would be prudent to have an exit strategy in place. Franchise contracts are rigid and legally binding so hiring an attorney AFTER THE FACT would just compound the problem and add more financial burden.
Until franchisers provide the percentage of clubs actually making money or experiencing a reasonable return on investment, the best way to protect yourself from potential financial catastrophe is to avoid it altogether.
Thank you Chicken Little
I see successful health club owners and unsuccessful ones. There are many factors that make up successful and unsuccessful businesses. To brand a complete industry in that manner is hogwash.
Tom Garmon recruiting business here (a true professional)
Just when you thought you had seen it all, a club consultant, business reseller and independent club rep begins trolling bluemaumau for clients. Anyone smell that odor.......it's the ripe smell of desperation. He needs you to call him. He wants you to call him. He surely has several slots available for new clients. Tom aka "the never ending punchline" can help you save ANY club or open a new one without a franchiser. If you are buying this, please post your name, number and request brochures of a nice piece of land I am selling in the everglades. LOL
What About
the attorneys here scrounging for clients and franwack customers? Are they unprofessional or are they held to a lower standard?
Thank you for the kind words.
What the heck is a club rep? Please elaborate so we can get this discussion going.
Why Trial Lawyers Don't Usually Win Against Franchises
There are many horror stories out there in the franchise world. People are often oversold by hungry sales people. Often franchise systems will employ 3rd party sales groups to help with the sales function,while the franchise system focuses on operations and support and pay heavy fees and encourage "multi packs" or "master territories". Urgency may be used is the sales technique "fear of loss" or the "takeaway". Do not fall for these tactics. If you feel these tactics are being used, run. If you are reading this and it's too late for that advice, keep reading there's more.
While there are many different levels of support among franchisees, it is the intersection of a franchisee's expectations and actual support that leads to franchisee satisfaction. Naturally every franchisee wants to be financially successful. After all, we all want to make a good return on our investment. So when we buy a franchise and what we were sold isn't what we were delivered, we naturally look to the franchisor for answers.
I have talked with franchisees who feel they were oversold, even misrepresented. If you read this blog there is no doubt that you have seen ads for franchise attorneys and post by them. If you haven't purchased a franchise and are looking into one now; then this would be the time to contact them to review the franchise offering. You will see many aggressive post around this site, anonymously. Many of these are posted by trial lawyers, failed franchisees, and competitors attempting to smear one another and their brands, even their names. People claim you are destined for failure or sure to succeed. People here anonymously attack one another, it get's unprofessional even ugly.
If you are here because you have suffered financial ruin and think that contacting an attorney, not so fast, have you read your franchise agreement to find a clause that says something to the effect that you have "not relied on any information provided by any verbal representation" something to that effect"? You might be SOL. Federal law is so much in favor of the franchise system that the system itself as a whole is see more valuable than your individual rights. Attorneys will lead you to believe that you have a chance, encourage you to recruit for a class action. Don't fall for this. You are about to get on the 2nd Sucker Train. Ask the attorney to provide you with a specific case study as it related to your complaint and your FRANCHISE AGREEMENT. You are likely to be sold your next bottle of snake oil.
Utilize the attorney when he can actually help you and catch a bad agreement or system before you take the plunge. Once you've made the mistake there is very little an attorney can do for you except cost you more money. Recently a major case against Curves International was settled after plaintiffs paid thousands of dollars to their attorney over 2 years and many didn't get enough to recover their damages and instead were counter sued by the franchisor and incurred even more legal fees. The franchise horror stories usually end with the franchise lawyers.
Guest 1 knows what the scoop is.
People read the comments above. You need to get a franchise attorney before you sign. After getting fleeced the only one who makes money is the zor and the counselor.
The reason I respect many of the counselors on this site is they give free advice.
The truth is if people don't get hurt in franchising than the lawyers would not make any money. (Very much like doctors, if people don't get sick they would be out of business.)
Yes you are correct.
I know 2 people who sued their franchisor and now the only person they hate more is their FRANCHISE ATTORNEY! Franchise attorneys can do nothing after you sign an agreement. Franchise lawyers slub all aound here, trying to appeal to the "victom" since they are already proven to make ill informed decions. They recruit these suckers to recruit for class action suits, knowing full good and well that they are building a chain of fools.
http://www.youtube.com/watch?v=X-uNb_Nihuk
WHY SNAP FITNESS FRANCHISEES FAIL?
Why do Snap Fitness franchises fail?
1. Inaccurate representation of potential financial success by corporate
2. Factual statistics about financial health of current franchisees "not available"
3. Weak business model
4. Inadequate support provided to franchisees by corporate
5. "No contract" memberships become a liability in time
6. Billing, software and technical equipment continually have issues
7. Requires turnover of staff to keep costs low. Revolving door employees.
8. Return on investment, if any, is scant and unjustified for the amount of risk
9. CORPORATE IS MAKING HUGE PROFITS WHILE FRANCHISEES ARE WIPING OUT
PETER TAUNTON = Case # 24040055, Court File # K598001371, Disposition Date 3/18/1999, Minnesota Attorney General's Office St. Paul, Kaniyohi District Court, Theft-by Swindle-Artifice/Trick/Device or Other, Statute # 609.52.2.4., CONVICTED, Probation Sentence - 2 Years
PETER TAUNTON AND SNAP FITNESS DIRECT QUOTES: (EMBELLISHMENTS)
"Running these gyms is a breeze," Taunton tells prospective franchisees in a weekly conference call. "All you need is an Internet browser."
"Snap Fitness claims that the fitness industry is "recession proof"
"Franchisees benefit from the absentee ownership model, Taunton says, which allows one manager to man the location between 15 and 20 hours per week."
"Snap Fitness could realistically add another 100 locations in Minnesota since it can place its 2,700- to 3,200-square-foot clubs in communities with as few as 3,000 people."
Taunton said he’s found the typical Snap Fitness club can break even with as few as 220 to 250 members.
PETER'S FAN CLUB: By Guest2010-01-25 21:52 (Read the entire post using the date to find in the "Anytime Fitness or Snap Fitness" forum) Peter Taunton's Snap Fitness; "Beware. I know Peter Taunton , and I believe wholeheartedly that he is as shallow and dishonest as one can be. In my opinion, he is a con artist through and through and I think he is capable of scr_wing anyone who gets in the way of him making his almighty dollar; the dollar seems to be his god."
Go to this forum to read more: http://www.bluemaumau.org/franchise_horror_stories
We looked into that court case you mentioned since we are Zees
It was in 1995 and involved 5 members of a health club wanting a refund. When they didn't get it they pushed the issue and won. Being a multi unit operator over the long term will most likely have a few court cases where members want refunds and if you don't give them it could escalate into something you may not be too happy with. Our policy in our club is to give refunds to prepaids if they request to cancel. At first reading this is was upset, but after looking further we determined that the psot here is more imflammatory than informative.
3. Weak business model
That's the main problem right there. If the stores were making $$$ it would hardly matter if the Zor was Jack the Ripper. The mass fitness business is becoming a commodity. Here, two franchised gyms (different "concepts" but the same thing) opened up across the street from each other. I think they are now at $10/mo., no sign-up fee, with heavy radio advertising. How ya gonna make $ on that?
The winner could only be the one who outdid the other on buildout since, if the fee is the same then the customers will go to the gym with snazzier facilities. So somebody has to spend the other into oblivion. Unless they both go down from excessive cost of capital, of course.
HELP- Want Anytime Fitness Franchise Fee REFUNDED
We searched and researched for 6 months + prior to signing. Anytime Corp flew to my city and did a sales presentation trying to get people to open in our area. Corp proudly voiced their 740 average # of members and 2-3% failure rate..The day before the "Sales Pitch Conference" we got a phone call that if we did not pay & sign we were going to loose the area we have been researching for the last 6 months, which we lost anyway... So we signed and paid. Now the situation for our market is ALL of the gyms are FAILING (happened in 2010, so not posted in Disclosure Document). Failing as in have closed their doors, sold, or are struggling (9 out of 10 in our market). Gyms that have 200-350 members after years on being open, when break even is near 500+. Before dumping our life saving into this disaster we asked for a refund of our fee and we would go our own way. We have been mislead and deceived. We are going to pursue a refund of our full franchise fee. Aware that the fee is non-refundable, but searching for ways to get around their ironclad system.
Any help or advise would be appreciated.
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what city
What city are you in
Don't believe any Lawyer who says they can help.
the only thing worse is a franchise lawyer. Just as the Curves owners represented by a firm out of Florida that starts with a Z. A friend of mine was in that suit and he didn't make enough to pay the lawyer's retainer! He ended up hating the lawyers more than the franchisors. Lawyers troll here looking to drum up business. BEWARE..
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