The writing was on the wall for Fitness Together. The recession had caused many clients to cut personal training from their budgets, a problem when your franchise model is built on selling personal training packages. Many franchisees were experiencing revenue decreases because of this and because they dropped their personal training package prices to compete. Revenue for corporate also fell from $7.2 million in 2009 to $5.48 million in 2011, according to the company's Franchise Disclosure Document.
So, in late 2011 after a year of testing, Fitness Together introduced a small group training program option, which it calls PACK, to complement its one-on-one training packages. The company also began offering a monthly membership payment option that lightened the need to sell one-on-one training packages—and the temptation to discount pricing, says Jeff Jervik, president and CEO of Fitness Together Franchise Corp., Highlands Ranch, CO.
The new options have led to revenue increases for many franchisees, Jervik says.
"There were a few doubters, but that's why you test things like this first," Jervik says, adding that the company had seen the rise of small group training on lists of fitness trends. "You take it to franchisees who are willing to test it so we could provide results that you could share with other franchisees. We didn't have to sell it. The results sold it."
Scott Strini is one franchisee who is sold on the system. He implemented both small group training and monthly memberships in late 2011, leading to a 94 percent revenue increase in 2012 compared to 2011. That increase was a welcome change for the Louisville, CO, franchisee, who had seen his revenue drop by 25 percent during the recession and who had considered selling his franchise.
The new options as well as taking on a partner and expanding his 1,250-square-foot facility by another 1,000 square feet re-energized Strini, he says. Offering small group training allows Strini to attract clients who could not afford one-on-one training.
"With the one-on-one, I could market to 10 percent of the population," Strini says. "With the small group training, I can market to 60 percent of the market."
Small group training led to a few surprises for Strini: It drove more personal training sales, and it led to some clients increasing their training session frequency, he says. It also led to more energy and socializing in the studio as larger groups of members now gathered in the lobby and talked prior to their sessions beginning.
The social aspect was also one of the drivers of increased revenue at Erin Mellinger's two Fitness Together franchises, she says. Mellinger opened her first franchise in 2008 in Canfield, OH, and a larger second location in Poland, OH, in April 2012.
She says that small group training helps clients make new friends and motivates them to work harder than they did in their one-on-one sessions, leading to better results.
"Our biggest fear was that people would do PACK training because it is cheaper, but we didn't want that," Mellinger says. "We wanted them to do it because it was more fun."
Adding small group training and the monthly membership option has helped Mellinger increase her revenue by 25 percent, she says. Earned revenue has increased $4,000 to $6,000 per month since the changes.
Despite the move into small group training, personal training will continue to be an important part of Fitness Together, Jervik says. About 20 percent of franchisees have continued with a personal training-only model. However, other franchisees are seeing such large revenue increases due to small group training that they have added additional facilities or expanded their current locations from the typical 1,500 square feet. Many are using all three of their bays for both personal training and small group training. Some have added additional bays. To make all of this work, franchisees have decreased the amount of traditional cardio and strength equipment and added more functional training equipment, Jervik says.
The number of people choosing the monthly membership option continues to grow, equaling 25 percent of the company's revenues after just one year, Jervik says.
Fitness Together began franchising in 1996 and has 240 locations across the United States, Brazil and Canada.