Ben details the meteoric rise of Crunch Fitness, and how the gym brand has formed such healthy relationships with its franchisees
Could you give me a run-down of the Crunch Fitness brand and your day-to-day role as CEO of Crunch Franchise?
BM: We’re at about 350 clubs as an organization. Our target this year is to open about 100 new stores. The business has been growing 30 to 40 per cent year over year for about 10 years now. So it’s really on a great trajectory.
For my day, it’s all about multi-unit management. I’ll check out every club’s statistics every day; every line item, in order to see what’s going on at a club level. Obviously, as any CEO would, you’ve got to be fully coordinated with your team, whether it’s the operations leader or finance or real estate or construction.
A lot of moving parts, it sounds like.
BM: Sure, it’s balancing the needs of the business against the needs of the franchisee. You have to be mindful of both; it’s a very symbiotic relationship, and you can’t have one side playing favoritism over the other.
Franchisees appreciate that. You’re striving for fairness – that’s the goal here.
You’ve also previously worked at Planet Fitness: is there an aspect of this industry that’s held your attention for so long?
BM: I got into fitness because I’d been out of high school for a few years and I was making a couple of bad choices as a kid. Going out and having a little more fun on the weekends than I should, you know? Eventually, I just looked at myself in the mirror and I was like, “oh my God, you look terrible!” I knew I had to do something.
So I started exercising and that led to trying to get a job in a gym. I started cleaning machines; that’s how I started in the industry, in exchange for a membership. And then I moved onto the next position, working on the front desk, and so on and so forth up through some pretty big organizations.
With all of your experience, are there any notable shifts that stand out for you?
BM: First, fitness is always changing. If you’re a company in our industry that can’t get out of your own way, or you’re set in your methods? That’s what kills you.
The changes that have happened have been both in the industry and pushed upon the industry, but they’ve all been favorable. You have the boutiques, which took everybody by surprise five or six years ago. Before you know it, there are 20,000 boutique studios across the country.
There are still thousands out there, but it’s thinning out and being regulated a bit more now. People have adjusted their business models to work through that. If you haven’t adjusted your business model? You’re not doing so well.
The mid-price clubs in our industry continue to suffer quite a bit. Anybody who’s in that $40 to $60 range. It makes it much more challenging for those guys because you can’t change your business model from mid-price to low-price. You just can’t do it. Your margins change and it’s a whole different ball game.
And what about the upper-end of things?
BM: High-end fitness has done very well. Equinox, Lifetime Fitness – they do very well because the economy is great, so there’s a lot of expendable income for some people. For those who don’t have a lot of expendable income, they’re going to migrate to a high-value, low-price.
Outside of the industry, you’ve got insurance companies that are really pushing people to be active. You didn’t see that seven to 10 years ago. People are getting pushed by their employers to change their lifestyles, too.
“Our target this year is to open about 100 new stores”
Wearables have been a big help for everybody involved. The general consensus was that people might just buy a Fitbit or an iWatch and they wouldn’t go to the gym. Far from it. They use it for feedback; they’re checking their heart rate, calories burned. My mom’s 76, and I could never get her to exercise. Now I’ve got her a Fitbit and she’s exercising because she likes the feedback.
When it comes to Crunch Fitness, you have lots of locations but a smaller number of franchisees. What’s the motivation behind that?
BM: We’re in seven countries now. You’ve got to be strategic when you enter new countries. We have about just under 90 franchisees now but 1,200 franchises sold. On average, it’s about 10 units per group.
A lot of times, franchisors aren’t overly selective with who they put in the network. You learn pretty quickly, though, from a young franchisor on your way to becoming mature, that the quality of your franchisees and their dedication to their brand really matters.
So you’re forming much deeper relationships with experienced people, rather than scattering as many franchisees as possible.
BM: Yeah, and on that note, it’s what we talked about in the beginning. People know that we’re all about what’s best for them and what’s best for us. It’s a very aligned relationship. We don’t hide anything from them and they don’t from us; sometimes we have disagreements with our franchisees, as anybody does, but we always work for the best possible solution for both parties.
With so many locations in the pipeline, how do you ensure consistency?
BM: That grows over time. As you grow, you have to more and more effectively manage your brand standards. It’s not just for the protection of the franchisor; it’s for the protection of the investment that the franchisee has made.
Let’s say you and I have a franchise and we’re just over the border from a county with one another. People drive back and forth and they go to my club and I’m just not running it very well. I didn’t paint it well, I don’t have the right graphics, I’m wearing a different shirt behind the desk. But then they go to yours, and you’re doing it right.
That neighboring franchise is going to affect you. If we don’t manage it as the franchisor, we’re actually letting the franchisees down and potentially affecting their investment by not enforcing brand standards.
Looking ahead, what trends throughout the 2020s do you predict will shake up the fitness industry?
BM: You’re going to see more diversification in the ways that people get fit. Streaming services are big; the outdoor races and Spartan races are big as well. Fitness and more health-conscious influences are being thrown at everybody every day. As long as people get out there and exercise, it’s going to be good for our industry.
