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Fit for a purpose in these COVID challenging times

Written by Martin Morris on Friday, 03 September 2021. Posted in Interviews

Jon Cottam, CEO of Lift Brands EMEA, has always had a passion for the fitness industry. He tells Elite Franchise how this has translated into business success.

Fit for a purpose in these COVID challenging times

Fit for a purpose in these COVID challenging times

Jon Cottam, CEO of Lift Brands EMEA, has always had a passion for the fitness industry. He tells Elite Franchise how this has translated into business success.

A graduate of the University of Bristol with a BSc Hons (1st class) in Sports Conditioning and Coaching, Jon Cottam's long standing passion for the fitness industry was first allowed to properly flourish in his GM role at the now defunct LA Fitness - where he was tasked with turning around the fortunes of several underperforming clubs.

"In many ways these were some of the most educational years in my career, learning about what does and doesn't make a fitness business, and frankly the teams that make them tick.” 

His first exposure to an entrepreneurial and investment environment meanwhile occurred when he took on a role at URBANFITNESSLondon- a boutique gym start-up, which had the vision of growing an estate of London centric boutique gyms offering the best equipment, staff/experience and everyday pricing. "It is fair to say that this lit a torch for me," says Jon.

From there he was approached to take on the MD role at 9Round UK by Lift Brands, who at that point were running their operations in the UK from the US. 

As he puts it: "Having spent time speaking to the global leadership team about their ambitions, as well as looking at the market, there was clearly a strong opportunity for the company's brands to grow; it was a no brainer to join." 

From a franchising standpoint the key takeaway in the UK, however, was when Lift Brands reacquired the Snap Fitness UK & Ireland market from its master, pulling the operations and ROI business fully back in-house.

Snap Fitness UK & Ireland, is Lift Brands 24/7 gym concept. Founded in 2003 it now comprises a global network of 1,000+ clubs in 20+ countries with more than a million members.

"We’re focused on offering the most inclusive and supportive fitness experience to members of every level of experience. We offer 24/7 access to premium equipment and facilities, " says Jon, adding: "As a franchise model, we place huge emphasis on selecting the right partners, whilst providing a very compelling financial and operating model and support structure to help our owners/investors be as successful as possible. 

Across the fitness industry, COVID-19 unsurprisingly, has had a major impact - the European Health & Fitness report issued by Deloitte (in partnership with Europe Active) in December 2020 reporting a loss of 10 million members across Europe, an average 15.4%.

Yet Snap Fitness UK & Ireland has managed to buck this trend, seeing membership numbers grow by 14.27% across the same number of sites against those recorded in February 2020 by the end June 2021.

Indeed, it has witnessed record breaking membership numbers since re-opening on 12 April 2021 following the third national lockdown.  

By Snap Fitness’ reckoning the challenges of the pandemic have only heightened awareness of the importance of exercise as part of an all-round healthy lifestyle – confirmed by their latest research and evidenced by their own numbers.  

In fact, membership levels have been driven by lower numbers of leavers, which the brand partly attributes to ensuring they supported members during lockdown with free access to apps and Zoom workouts.  However, they have also seen a large proportion of members who left during the lockdowns re-joining, coupled with exceptionally strong new member acquisition.  

As Jon puts it: “We believe how people think about exercise has changed and the industry has the potential to see continued positive growth – if we ensure that we adopt a more inclusive approach.”

Snap Fitness recently announced, for example, that they're increasing their focus on helping members move their moods as well as their bodies, shaking up the traditional perceptions that fitness has to be difficult.  They are on a mission “to help people create positive lifestyle habits that make them feel fantastic” and recognise that all fitness is valid fitness – whether in the gym or out of, whatever your level of fitness.  

These and other initiatives also reflect valuable lessons learnt during lockdown when it came to helping out franchisees.

"It was imperative we stood shoulder to shoulder with our franchisees in navigating what were challenging times, and to that end we moved quickly to help our franchisees in negotiating rent relief, lender repayment holidays if needed, as well providing a full waiver of all fees to us as the franchisor throughout," says Jon.

In addition, the company pivoted very quickly to a digital strategy to keep members engaged: "To achieve this we centrally delivered a range of digital programmes including live and recorded workouts, wellbeing, nutrition and mindfulness seminars to name just a few. This central delivery from our support office was key to enabling franchisees to furlough staff and thus preserve previous cash reserves to cover other related costs." 

For anyone considering purchasing a Snap Fitness franchise the walk through process is pretty straight forward; a set-up call - and brief discussion to answer any initial questions - followed by a personal meeting (or via video) to discuss the opportunity in more depth, where the focus will be more on the details of what the business's activities are and what the would be franchisee's aspirations happen to be.

Introductions are then be arranged with finance partners to help the would be franchisee better understand the options available. 

The would be franchisee will then have the opportunity of going to one of the clubs to meet the general manager or franchisee to better understand the day-to-day operations.

After this the would be franchisee will be provided with an Investor Pack containing all the detailed information on process and financials, along with documents to create a business plan for the franchisee's club. Once submitted the application will then be reviewed with a view to awarding a specific territory.

Once the various requirements have been met to both parties' satisfaction, a dedicated property team will record the franchisee's specific requirements and review opportunities within the franchise territory, making sure they're appropriate to both the market and the franchisee's business plan. 

Assuming all is well, then comes the step-by-step process from completing the lease through to the first day of trading, which will involve, among other things, tendering the build work, design, installation, marketing and pre-sales stages.

A Snap Fitness One Club package, for example, comes with a £30k licence fee - minimum capital required of £160k-£200k (40% of overall funding). Total investment is £450k -£600k incl. bank funding, subject to status.

For the Three Club option the licence fee is £75k - minimum capital required of £480k-£600k (40% of overall funding). Total investment comes in at an estimated £1.35m -£1.8m, incl. 60% bank funding subject to status.

For Lift Brands' 9Round offering, meanwhile, an Owner Manager One Gym Starter Pack comes with a 20k licence fee. Minimum capital required is £80k-£100k + 60% bank funding, subject to status. Total investment (project costs) are estimated at £180-225k.

For an Owner Investor Three Gym Starter Pack, on the other hand, a £45k licence fee applies - minimum capital required in this case being £240k-£300k + 60% bank funding, subject to status.  Total investment (project costs) is estimated at £540k -£675k.

From a marketing standpoint a two pronged programme is employed (National and Local). At national level (Snap Fitness HQ) there are quarterly campaigns focusing on building the Snap Fitness brand value proposition. Franchisees have access to an asset management system which hosts the campaign creative they'll need.

At the local level an 'always on' digital marketing investment will be required. In this case an in-house agency team can provide the franchisee with the needed support in areas such as exploring out-of-home marketing during key periods such as street, mail drops, billboards and so on. It will also help franchisees manage reviews and social media more effectively in order to get advocacy and build a community.

Those likely to be approved for franchising purposes are expected to be ambitious and service oriented, as 'forward thinkers who appreciate the commercial opportunity that results from helping people discover a lasting passion for an active lifestyle' as the company describes it.

Yet in many ways this also comes down to a question of setting the team/organisation up to succeed. "When they succeed – ‘its their success’. When things go wrong, ‘its the leader’s failure’! says Jon.

Indeed, leadership for Jon is understanding and caring about the team around you as much as you do any commercial outcome you're working towards.

As he puts it: "Empowerment and empathy go a long way to ensuring stakeholders are engaged appropriately in delivering success. To this end we actually look very closely at EQ as much as IQ/Skill when we recruit our staff. The simple reality is that understanding what makes people/groups tick and why, makes it much easier to help get them there," he adds. 

Clearly this doesn't mean things won’t go wrong at times. "Failure is ok – but fail fast, understand it, making change and move on," as Jon is quick to point out.

Looking ahead Jon sees Lift Brands EMEA being on track  (over the next five years) to significantly increase both the size of its UK/ROI estates whilst also continuing to grow its European footprint, both in existing markets and also by entering additional territories. 

In short, it's a strategy that provides a whole new meaning to the term 'fit for a purpose'. 

About the Author

Martin Morris

Martin Morris has more than 30 years of experience writing about topics for national and trade papers, ranging from banking and investment through to energy and computer security. Technology is transforming the financial landscape and it is my job, I believe, to both engage with and inform readers about the rapid changes that are underway there and elsewhere.

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