Franchising & Licensing


A look at the pros and cons of both.

While looking for a new health club recently, I found I was asking salespeople about their Spinning classes. In this day and age, it's a given that any club would offer the class. And I assume, since I've been taking Spinning classes for three years, that I would be able to walk in, hop on a bike and follow along without starting from ground zero. Such is the value of licensing or franchising an exercise program.

Here's a look at what a club can expect from such a program:

* Familiarity with routines. With a franchised or a licensed program, club members know what to expect, no matter where they are. "If a person takes a class in New York, her experience will be similar to the experience of someone taking a class in L.A.," says John Baudhuin, president and CEO of Madd Dogg Athletics Inc., the licensor behind Spinning. "Such consistency helps facilities."

How? When a member relocates, looks for a new club or travels for business, chances are he or she will "look for a club that offers Spin-ning," says Baudhuin. And that can mean more business for a club that offers the program. Madd Dogg Athletics even operates a Web site ( that offers a club locator for Spinning devotees.

* Instructor training. Madd Dogg Athletics requires that li-censees use only certified Spinning instructors trained by the company. Anytime a facility purchases a bike, its instructors attend a one-day orientation session at their facility, which covers crucial matters such as how to set up a bike, safety issues and how to conduct a Spinning class. "We lay out everything an instructor needs to know to conduct a Spinning class," says Baudhuin.

Over the next six months, in-structors progress through the 180-page Spinning manual and then take a graded open-book test. "By passing this exam, we know instructors understand the issues we feel are important to conducting a proper class," says Baudhuin.

Applicants for Jazzercise (a franchised exercise program) are screened by a district manager and, after obtaining CPR certification, participate in an instructor certification program. Most training happens by video, and candidates then meet in a central location for a final audition. That's followed by about 13 hours of training in areas such as anatomy, exercise science, teaching techniques and safety.

* Instructor follow-up. Madd Dogg Athletics provides licensees with an assessment program that allows the fitness director to determine whether the instructor is teaching the class properly. "We provide a lot of tools and resources for facilities to help them keep their programs alive," says Baudhuin. "We help the clubs implement their own quality control." The company also offers nearly 100 certification courses, as well as classes in continuing education and the opportunity to attend two conferences a year.

* A robust aerobic program. "A lot of clubs have trouble hiring staff and getting people to stay," says Maureen Brown, director of franchise programs and services for Jazzercise Inc., in Carlsbad, Calif. "If you hire a franchisee, she has already invested in her business. She's serious. She's in there for the long haul." With a turnkey program, the "aerobic part of your programming will be taken care of and you don't have to hire the people and train them."

* Variety and freshness. When you franchise an exercise program, the routines are provided to you and kept updated. For example, every 10 weeks Jazzercise franchisees receive videos of new routines. And the company offers classes in a range of formats such as Step by Jazzercise, Body Sculpting, Cardio Quick, Circuit Training, Musical Chairs by Jazzercise and Jazzercise Lite. There are also kids' programs and a nutrition and weight-loss program.

* Access to fitnes information. "We can provide a club with resources that even the largest clubs can't offer," says Baudhuin. "We can afford to spend $5,000 on a study and spread it out. If an instructor has a question about exercise parameters for someone who is pregnant and taking a Spinning class, he can call an 800 number and get the answer. We have access to quality, timely information and a huge library that puts resources into the hands of those who need them, when they need them."

* Name recognition. Madd Dogg Athletics spends about $6,000 a month on public relations and is cited in magazines as a leader in indoor cycling. So a club that licenses Spinning "gets the benefit of having a leading program that people have heard about," says Baudhuin.

A club that brings in a Jazzercise franchise gets prepared newsletters, ad slicks and flyers to promote the classes. "Nothing has to be recreated," says Brown.

* Equipment requirements. When Madd Dogg Athletics licenses its Spinning program to a club, it requires that the club use the Johnny G. Spinner by Schwinn. The bikes are fully warranteed through Schwinn. "We encourage clubs to adopt a program of preventive maintenance," says Baudhuin.

The company also urges clubs that purchase the Johnny G. Spinner to follow the trademarked Spinning program. "From an own-er's standpoint, it's a liability issue," says Baudhuin. "Here they have bought a piece of equipment and yet they decide to shortcut the very training that could help prevent an injury."

* Trademark policing. Madd Dogg Athletics clearly spells out the terms of its trademark to licensees. "We allow a club to use the Spinning trademark to promote classes," says Baudhuin. "In return we expect the club to use trained instructors and our bike."

Madd Dogg Athletics owns the Spinning trademark worldwide. Included within the trademark are the Spinning program, the bicycle, the videos, the music, nutrition, clothing and body products.

How does Madd Dogg Athletics find out when someone is infringing upon its trademark? The company checks class schedules at clubs to be sure classes are being taught by certified instructors. Every month, Madd Dogg Athletics combs the Internet looking for sites that are misusing the name. And Madd Dogg Athletics follows up on complaints.

"Instructors feel a lot of pride in the program," says Baudhuin. "Often we'll receive an e-mail from an instructor telling us that a facility is using untrained instructors."

And plenty of clubs turn in trademark infringers. "Believe me, if you've paid for the Spinning program, you're not going to let the club down the street advertise Spinning," says Baudhuin. "We send every infringer a nasty letter that essentially tells them to stop.

To Franchise or License?

While franchising and licensing may seem similar, there are distinct differences between them. For example, Jazzercise franchises, Madd Dogg Athletics licenses. Here's an overview of what this means:

FRANCHISING: "Franchising is like buying your own business," says Maureen Brown, director of franchise programs and services for Jazzercise Inc., in Carlsbad, Calif. Basically a company, such as Jazzercise, develops a program and trains an individual to implement that program. A club then hires the individual to put the program in place and oversee it. For a club it's a good deal: The club works out a financial arrangement with the individual. In the case of Jazzercise, the individual has invested an initial franchise fee of $650 and pays 20 percent of her gross revenues to Jazzercise each month. She also absorbs additional expenses, such as a liability insurance premium, audio recordings, musician's royalty fees, equipment such as the appropriate sound system for the class, a VCR to view new routines, a telephone answering machine, and facility rental and promotional costs.

The franchisee is then responsible for teaching the classes, keeping the choreography fresh, making sure a sub is in place if she can't make it, and providing the music. And the company franchising the program handles the advertising, promotion and choreography. "What franchising does is give you a structure," says Brown. "The processes are all in place, from what to do if an instructor gets ill to what to do if a class doesn't like an instructor."

LICENSING: This means a company has created a program and licenses the right to use that program to a club. The licensee provides the framework of the program, the training, the name recognition and, in some instances, the equipment. Once the program is in place, the club oversees it. "We provide a club with the tools to understand the parameters of their program and to create the programming that will work for their member base," says John Baudhuin, president and CEO of Madd Dogg Athletics Inc., "but we leave the actual programming up to the facilities."

What does it cost to put a Spinning program in place? A typical program, which calls for 20 bikes, might cost $14,000 to $16,000. This includes the bikes, the training of about eight instructors, as well as access to the company's resources.

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