The chaos of the past two years has made some fitness franchise brands especially pleased with the franchisees that they have on board. That is true of Crunch, according to Ben Midgley, CEO and founding partner of Crunch Franchise.
“The franchisees never stopped impressing me and our team,” he told Club Industry in a video interview in mid-January. (View the full video above.)
The company lost just 2 percent of its existing members during the pandemic, and once clubs reopened in 2021, members came back at three times the rate that they were normally signing up at, he said. Crunch opened 40 clubs in 2020, 50 in 2021 and plans to open 70 to 75 this year.
Much of what Midgley considers the company's success had to do the engagement that the brand had with members during shutdowns and the two years of the pandemic, offering digital training, virtual personal training. But much of it also had to do with its small group of experienced franchisees, he said.
Crunch has an emphasis on “staying small to grow large,” Midgley said.
The company has 70 owners for its 410 locations. Working with a smaller group of owners allows for easier communication and the ability to personally reach out to everyone within a span of two days if needed.
Plus, it allows a brand to get better capitalized franchisees.
“Going forward, I think any franchise company—whether you're in fitness or not in fitness—you have to put a little more focus on bringing in a higher capitalized franchisee and someone ideally who has a larger base of experience running multiple unit operations,” he said.
Experienced franchisees are more organized and know their way through various processes, which came in handy during the pandemic and even now as COVID-19 wanes but inflation remains high. Operators had to have the experience to work with landlords and leasing companies during the pandemic. Costs increased for everything during the past two years, including the cost to build a new club, which Midgley estimates is about 25 percent higher than pre-pandemic. The supply chain is clogged even in areas such as ordering a new HVAC unit or garage doors for a group fitness room. Even the permitting process is bottlenecked in some places.
Not only does experience count in these areas, but capitalization is also important, Midgley said.
“The more capitalized you are going forward, especially if you're going to be a multi-unit operator, just the better prepared you are for the ups and downs,” he said.
Crunch has done a good job of choosing franchisees over the years, he said, noting that he is also thankful those franchisees chose Crunch.
“Going forward, you've just got to make sure that everyone is prepared for the expense, the management commitment, the time it takes to make these businesses successful in the current environment,” he said.
In the full interview in the video above, Midgley also talks about what the past two years have been like for Crunch, how the company’s leadership style did or didn’t change with the pandemic, the trends he sees for the industry in 2022 and why the industry was left behind in the federal relief packages.