ANALYSIS & COMMENT
#5 To franchise, or not Franchising sounds sexy and is a hot topic in the boutique market right now, but it’s far harder to do and make money than you might think. It also isn’t suitable for every product; selling fitness is more difficult and nuanced than selling sandwiches. You must be able to customise and adapt the model locally, and understand your product’s potential geographical and cultural (ir)relevance. You must also consider the key overriding trend of personalisation, which brings a natural intricacy to the offering. You must find the right franchisees and once again consider the staffing tensions that exist in this climate. Orangetheory, as an established example, looks for proven operators who have a track record in scaling businesses to take on whole regions rather than single sites.
You must be very careful how you scale, not spreading yourself so thin that the head office cannot support multiple (and often diverse) markets with single or only a few sites in each. A cluster strategy is often embraced to offset this risk. Proceed with caution. And you must work out how to condense your product to a set of lowest common denominator deliverables (The Playbook) – something franchisees can confidently commit to and that will still ensure a boutique experience. F45 and others went over their skis on sales projections driving valuation, but did elements of the lowest common denominator stuff well, streaming centralised pre- programmed digital content onto in-studio screens. If too much is left to the coach or studio manager, and they struggle to create enough profit to pay themselves and reinvest, you will find yourself in tenuous negotiations where there is push-back on the contract.
Franchising sounds sexy, but it’s far harder to do and make money than you might think. It also isn’t suitable for every product.
Xponential Fitness can use its size to drive efficiencies across its 10 brands
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LONDON BOUTIQUE STUDIO REPORT 2023
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