Don’t Get Burned by the Hot New Franchise Syndrome

(FranchisePick.Com)  Club Industry’s Fitness Business Pro is a leading trade publication and website read by fitness industry professionals, including club owners, equipment manufacturers and industry vendors.  I read their website regularly and, it seems, they read FranchisePick.com.  As Managing Editor Stuart Goldman’s story on ShapeXpress in their November issue sparked unprecedented reaction and interest, they will continue to cover the struggling 30-minute fitness and express club segment of the fitness industry, as will FranchisePick.com. 

In a phone conversation with him earlier this week, Stuart Goldman asked me for my take on the struggling express club franchise concept.  Was this situation unique to the fitness industry?  Were other franchise segments going through similar difficulties? 

“Hot New Franchise Syndrome” Strike Again

My take on the subject is that, no, this is not unique to these concepts nor to the fitness segment of franchising.  Since I entered the franchise industry nearly 20 years ago, I’ve witnessed a parade of exciting new franchise concepts explode onto the scene only to disappear without a sound 3 – 4 years later.

The franchisees of the 30 minute fitness concepts are suffering from what I call the “Hot New Franchise Syndrome.”

Think about it:  What is franchising?

The power of franchising comes from the duplication of successful, established systems, right?  The premise is that the franchise fees, royalties and advertising contributions a franchisee pays, and the autonomy he or she forfeits, will be more than offset by the benefits of the established brand, systems, and procedures that have been proven and fine-tuned in the marketplace.

Yet while many want the safety and security of something established, they also want the “hot new concept,” and with it the idea that they’ll get rich by being in the right place at the right time.

What’s wrong with getting in on the hot new franchise?

When someone buys a “hot new” franchise concept, they are saddled with both the financial burden and restrictions of a franchise AND the uncertainty of a new, experimental startup.  

Take Curves for Women, for example.  It seemed like a great idea:  get women off the couch with a local women-only club providing 30-minute circuit training.  As with any new concept, there were lots of questions:  Could the woman-only 30 minute model retain members in the 3^rd, 4^th or 5^th year?  Could a club be successful on membership fees alone?  Can they compete against the wave of new competitors?  The Unisex 30 Minute Model was an experiment, with lots of unanswered questions.  When you buy a franchise, you are paying for certainty, not questions.

Is the Hot New Franchise Syndrome unique to the fitness industry? 

Absolutely not.  Just last year, eBay drop-off stores were touted by the media as the “hot new franchise” concept.  Hundreds of franchise owners invested hundreds of thousands of dollars on the unproven idea that one can making a living with a storefront selling other people’s junk on eBay.  Hundreds of franchisees are chronicling their demise on FranchisePick.com.  Like the fitness club franchisees, they paid for a proven system but were really just buying an exciting, unproven idea.

There’s nothing wrong with exciting, unproven ideas.  But launch them as an independent start-up, retaining the freedom to adjust the concept as time goes on.  Once you have it fine-tuned, YOU can franchise it and make a fortune selling your hot OLD franchise opportunity nationwide.

WHAT’S YOUR TAKE?  COMMENTS WELCOME.

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