Our experience at Snap Fitness 24/7 of building a network of 81 established clubs in the UK & Ireland (soon to be 100+), is that there is both a science and an art to property selection to create a profitable and sustainable business. You need to select the best location for your target market, secure a good financial deal, and evaluate all costs in detail.
The right site for your target market
Once you have agreed your territory, the starting point is the search for your site. Your franchisor should support you with finding one that is right for the product. Some key areas to look at when sites are proposed:
- Territory Analysis
Explore population demographics and trend analysis. This will include aspects such as age, household, employment and income status’ against the brand’s existing customer base in similar locations. This will give you an indication on the business performance you can expect. - Location Specifics
You need to ensure that locations are future proof, identifying locations that offer long term viability, and key performance characteristics such as visibility, transport, road flows, accessibility, and competition. - High street vs out of town
You’ll hear many pros and cons on locations. High street locations can be great for footfall, but are less likely to have significant parking provision. Retail parks offer excellent parking, but are less likely to see lunchtime trade from office workers. It’s important to think about your target customer group and whether you fit into their routine and is easy to access. - Competition
This does not rule out a good location, particularly where you can win on quality and convenience, but population size is important in avoiding saturated markets. - Area potential
Make sure you look at any big building projects going on or planned locally that may have an impact on your business. Consider whether these could be restrictive or provide a business opportunity.
Whilst it can be tempting to apply a rudimentary desktop approach it’s important to visit the sites and understand the local area.
Check the details of the financial deal
Most landlords offer an attractive introductory rent or rent free period which is huge bonus to help you generate cash within the first few years. But the parameters of rent review, amount of service charge and schedule of rent deposit can all tip the scales and squeeze margins further down the line. Make sure you look into the details of the offer as it will save you time and stress in the long run, and set you up for greater success.
Evaluate the total costs
Evaluate all build and property costs when setting your budget, a detailed unit analysis serves to ensure that Unit Level Economics are realistic.
The rent, service charge and business rates may be your biggest outgoing, but there are several other property related costs such as stamp duty, legal and survey costs, architectural services, construction and fit out with decoration and health and safety fees that need to be costed in.
Avoid making commitment based on the headline rent number and understand what your monthly payments will be to your landlord and any other finance agreements. With the support of your franchisee, you should evaluate these costs in their entirety against a projected P&L and don’t be afraid to negotiate.
When making a final decision you should have all the data to hand. When you combine the data with your own observations along with the experience of your franchisor to help interpret the findings, you should be able to make the right decision on the property that is going to drive your business forward.
This article is brought to you courtesy of Snap Fitness 24/7 is a leading fitness franchise with 1000+ clubs in 20+ countries, operating since 2003. By the end of 2021 there will be 81clubs open in the UK & Ireland.
