Gene LaMott

With close to a lifetime of experience in and around the health club industry Gene LaMott, president and CEO of Gold's Gym International, is leading the company as it shifts it corporate culture and grows its brand worldwide.

Ci: You've had a long career in fitness, can you tell us a little about it?

LaMott: I've been around the health club industry since I was 15. I became familiar with the industry through the European Health Spa concept in Boise, ID. That concept turned into Family Fitness Centers. I was there from the pre-opening of that store and stayed for about a year. I had familiarity as a kid, but that was my first experience professionally. From there I used my education — I have a B.S. in exercise science with an emphasis in coaching — and put together a mobile human-performance testing lab as an entrepreneurial business. I then got an opportunity to take a position in Seattle with an eight-club chain called Pacific West. When that chain was sold to Bally's, I stayed there for a while until I finally opened my own chain in Portland, OR. I formed that company in 1988 and my first Gold's club opened in 1989.

Has that experience helped you facilitate the corporate shift at Gold's?

The entrepreneurial nature of Gold's was a little bit of a detriment in 1999 as it transformed from more of an informal, organic concept into more of a formal concept. That was with the acquisition of the East Coast Galiani gyms by the parent company. Once that happened, the company moved into a different segment of its life, which required some formalization. Really the biggest element other than my entrepreneurship was my three years with 24 Hour Fitness. I came onboard when there was just slightly over 100 24 Hour stores and started as a district manager for the seven stores I had sold them in Portland. When I left I was one of its divisional presidents over four states and more than 40 stores.

How have the older franchisees taken to the change in corporate structure?

I think early on it was taken on with curiosity and some of the unknown brought about some fear and apprehension. This really was an organic growth process and a lot of the franchisees — the real old-timers — were around from the beginning and the new organization was something new so I think human nature says to be cautious. We realized that we needed to do our part to communicate with the franchisees and listen to them to make sure that their wishes and needs were being met and could grow with what we wanted to accomplish as a corporation. I think it is important to understand that prior to the acquisition in 1999 that the parent company only had the one gym in Venice, and outside of that it was really only a franchisor. Now the new concept was to be part of the consolidating fitness industry as well as to grow the brand name and be a large contender in the operating of the gyms. Through this we went from one store and by the middle of April we were at 30 corporate-owned clubs. The most critical component of the business, and to the employee base, is the company-owned store division; the franchisees see this.

Is licensing still considered a key to the growth of the company?

There is a sense of uniqueness that is attached to our name — an authenticity that no one else has. I've sat in many meetings with other providers of fitness and they just wish that they have what we have. There is a heritage there. I compare us to Harley Davidson — we are the Harley of the fitness industry. I think that piece adds to an interesting licensing concept. This last year we put a new licensing company together for our light accessory division and our equipment division for retail with Icon as our partner. In a way this is a nice segue because what we find is that people that make their way to the health club make it a lifestyle and the home pieces are an extension of that lifestyle. On the other hand it also gives us an opportunity to go after those people that aren't familiar with the business by giving them top quality at a fair price that will get them interested in fitness and, perhaps, help them make the step from the home to the club.

What is the most difficult part of the equation for Gold's, and the industry as a whole for that matter?

The human side of enterprise is one of the most difficult elements of our industry. For many of our employees this is their first job or it is a part-time job while they are finishing school. In the past I don't think this was looked as an industry with career opportunities. I think the first thing is to start paining the picture that there is a potential for growth opportunity. As for providing an operating platform as a franchisor that is part of our continuing effort to improve our recommended operating platform, and that will stabilize the workforce out there.

What other forces do you see impacting the industry in the future?

You hear that health care costs are going to double by 2010. As a health industry I think there is an opportunity for club operators to work together to make sure we are sending out proper messages to educate and introduce people to the fitness environment. We also have a responsibility to start influencing some of the other institutional programming domestically especially school and youth programs that will develop healthy lifestyle habits now in Generation X and Generation Y that will affect us going forward. Within the actual boxes themselves we have a responsibility to create an environment that is welcoming, community-based, almost a Starbuck's feel. When I look out there people say that there is a certain feel and edge that makes you want to work out. That is a feeling that is inherent from our heritage and that gets translated into all of the stores that we get built from the physical structures and the images that brand the internal side of the club.

Does Gold's move toward a stronger corporate base signal a potential move to the public realm?

I don't know where we'll end up as far as going public or become some part of a larger entity at some point in time. The objective of the company is to continue to grow in our company-owned division, our franchise division, and in the outlets we provide such as equipment both in retail and at our stores. We are watching the fitness industry continue to evolve. There are some companies that are ahead of us in the curve and we are watching them to see how the public is responding to them. We are keeping our eyes open for what the right thing will be for Gold's Gym to do.

Gold's also seems to be looking abroad increasingly, is there real potential overseas?

We are seeing movements in lots of other countries that are indicators that there is a worldwide interest in fitness. We are getting a lot of interest from people looking to develop Gold's Gyms throughout the world. In response we have been licensing out master franchisors throughout the world to help develop the brand. This is a strategy that you see in more formal franchising operations. With the master franchise concept we feel we can grow the brand the proper way by taking into consideration different currencies, language barriers, and business practices. There are other companies that are larger than us in terms of company-owned stores that have tried to take a 100-percent American product apply that overseas without success.

Domestically, will there be a day when the major players will leave little room for smaller club owners?

I guess if you compare it to the other industries, people were forecasting that we were going to be like the video industry with a couple of major movers where 15 or 20 years ago that was more fragmented and made up of smaller companies. I think they've gone away from seeing fitness in that light and see us more like the pizza industry of all things. In that industry you have a few large, national players but you'll still find Gino's Pizza on the corner because it offers something a little different and unique to the neighborhood and the community. I think building community in the clubs is an important element that we always need to remember. The personal service will also continue to grow. Our consumer is so much more educated than 10 years ago due to the Internet and the media. They are going to ask for more and we are going to need to provide that to them to keep them happy.

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