When Chuck Runyon and Jeff Klinger joined forces in the late 80′s to start an independent consulting business for health clubs, they already understood the importance of good old fashioned people skills. Over time, with a “less is more” formula and a sharp focus on convenience, they developed the user-friendly Anytime Fitness concept. Currently opening clubs at the astonishing rate of one each business day, Anytime Fitness is quickly establishing itself as one of the most successful franchise operations the fitness industry has ever seen.
In the mid-90′s, club owners began asking Jeff Klinger, Co-Founder & CEO of Anytime Fitness, why he and partner Chuck Runyon, Co-Founder and now President of Anytime, did not own and operate any clubs of their own. At the time, they were operating a consulting firm that gave advice to struggling fitness clubs, and it’s obvious that this question struck a nerve, because they soon invested in a distressed club and began to turn the failing business around.
Through hard work and an unfailing determination to make sure club members were satisfied, this first attempt became an undeniable success; the club went from a run down facility of only 600 members, to a prosperous 3000 member club at the time of sale. Bolstered by this early accomplishment, Runyon and Klinger moved on to purchase, rehab, and sell several other struggling fitness clubs before they began to grow tired of the employee and infrastructure costs associated with traditional health clubs. Both true entrepreneurs at heart, and both committed to the fitness industry, Runyon and Klinger began to consider other options.
“The success and small footprint of Curves was the first franchise to really grab our attention,” says Klinger, and it prompted them to conduct a survey in their clubs to find out what services mattered most to members. The results were staggering. Over 80% of members named convenience as their number one concern when joining a club. “At this point, we realized that the sweet spot from the consumer perspective centered around location and the ability to create an inviting, hassle-free atmosphere in the club,” Klinger states.
Through their years of involvement in the industry, both as owners and consultants, Klinger and Runyon held a unique understanding of the main concerns of both owners and members. According to Runyon, many members only use a small portion of the available space in a club. In addition, the areas of the club that members claimed to use the least – like pools and daycare – were the areas that required the largest overhead in maintenance and employee costs. “I learned that our core group of members wanted increased flexibility and the convenience of being close to home more than they wanted a huge facility with specialized amenities,” Runyon says.
He and Klinger also learned that many members felt intimidated by the oversized body builder culture that is associated with certain fitness chains, and wanted a friendlier, more intimate environment to work out in. On the other hand, most of the small to medium sized health clubs they had encountered while consulting had poor customer service, a dingy environment, and extremely outdated equipment. They also realized that people wanted to be able to work out whenever they felt like it, and began to think about the importance of staying open 24 hours. “We saw that the small to medium sized markets were largely under-serviced, and recognized an opportunity to bring the best to this market,” says Klinger. So they started working on a business plan, and in June of 2002 the first 24-hour Anytime Fitness location was established in Cambridge, Minnesota. It became apparent fairly quickly that they were providing exactly what many club goers really wanted, and they realized they could do so in a smaller, more cost effective environment by simply stripping away the bells and whistles of larger gyms. “I realized that many people really want to get in, work out, and get on with the rest of their lives,” he adds.
So together he and Klinger began to work out a plan to franchise their hassle free workout concept. From the beginning, Klinger and Runyon have been different from many other franchisors because they provide new franchisees with a fair amount of autonomy, specialized training, and a real support system at a reasonable price. This support network includes relationships with Franchise Financial and Franchise Real Estate – companies that specialize in helping potential franchisees understand how they can afford to become a club owner and where they should put it once they do.
“We recognize that in order for growth to continue, our franchisees need to be happy,” says Runyon. Since memberships comprise 90% of a club’s revenue stream, the first step is to make sure Anytime Fitness club owners know how to sell memberships in their own market. The strategy to accomplish this is both simple and effective, as Klinger explains, “When dealing with a large market that is saturated with other fitness clubs, our club owners are shown how to take a rifled approach with very targeted marketing, pulling in the majority of members from neighborhoods very close to the club. On the other hand” he adds, “a smaller market requires a shotgun approach, and we will try to reach as many people as possible.”
And the support doesn’t stop with the initial training program. Anytime Fitness prides itself on giving a great deal of ongoing support to its franchisees even after they are up and running, and they only require a low monthly franchise fee that is not based on revenue. This is undoubtedly why 53% of Anytime’s franchisees operate more than one club. Equally impressive, the independent franchise market research company Franchise Business Review has given them its top rating for three years in a row, and they’ve also received the company’s FBR 50 Franchisee Satisfaction Award. This award is special because it is based on actual feedback from franchisees. Combine this with the fact that the company has only seen seven closures in six years, and it’s obvious that we all have something to learn from the way they do business. Both Klinger and Runyon believe that a large part of the success of Anytime Fitness can be attributed to an understanding of how important the personal touch can be. If you look closely, this simple idea can be seen at every level of the company. For example, when hiring new talent for the dynamic team they’ve assembled at the corporate office, Runyon admits that he looks for “personality and characteristics more than a certain type of experience or background.” He adds, “It’s important to find people who are good at cultivating relationships, because life is too short to work with people you don’t like.”
Anytime Fitness franchisees are also encouraged to be passionate about people, and, according to Klinger, the most successful owners are the ones who take the time to get to know members and develop a friendly club culture at each location. This may explain why Anytime’s member retention is currently above 80%, which is well above industry averages. In many ways, Klinger and Runyon seem to be on the cutting edge of a new kind of old fashioned thought. In this day and age, when everything seems to be getting bigger and less personal, they have found success by doing exactly the opposite.
But don’t think for a minute that the backing Anytime’s franchisees receive is only about emotional intelligence. Because of the company’s growth, club owners get to take advantage of tremendous leverage on equipment costs, resulting in discounts that have even been known to beat the employee discount offered by some vendors to their own staff members! Anytime Fitness club owners also enjoy 24-hour access to the company’s Phase Program – an interactive, online support mechanism that acts as a virtual “living document” that is continuously updated to take franchisees through every phase of opening a club. It also allows them to share personal experiences with one another, so they can describe successful tactics in detail.
Being open 24 hours a day might make members happy, but because the facilities are not always staffed, some local authorities weren’t so sure about the idea. According to Runyon, their biggest challenge has been dealing with objections from lawmakers who are worried about members working out unsupervised. By providing education for local authorities about the AED devices, state-of-the-art security systems, and portable security devices developed by Anytime Fitness and ProVision Security for each location, this potential roadblock has been consistently overcome.
Obviously, having the right security software has been a key component in the fight to win over local authorities, but it’s also proven to come with other benefits. Most importantly, perhaps, it has allowed Anytime Fitness to be the first club to successfully roll out a comprehensive reciprocity program. ProVision’s member recognition software not only identifies who is coming and going from each club, but it also gives members the freedom to visit any location of the franchise at no additional charge. This perk makes it easy for members to work out when traveling, and will become even more convenient as locations continue to open up in the U.S. and abroad.
“Careful selection of software has really helped us monitor the clubs and maintain a cohesiveness to our company culture, despite being a franchise,” says Klinger. It’s also allowed franchisees to enjoy greater freedom. Not only does the security system allow the club to stay open even with no employees present, but it also takes the guesswork out of billing for membership fees. If a member doesn’t pay, their access to the club is automatically placed on hold. These advances in technology simplify some of the challenges that come with running a business, and allow franchisees the freedom to have a life outside of the workplace. According to Runyon, “Anytime Fitness franchisees can truly experience a balanced life once a club is off the ground and begins to turn a profit.”
The profitability of a new club depends on reaching the “magic member number” which is determined by assessing variables like the cost of the lease for the building, and the number of employees. The “magic” number usually hovers around 400-500 members, and takes the guesswork out of the break even point. Once they have reached this number, franchisees become more like a caretaker of the business and begin to focus on community involvement and catering to the needs of members.
“Our franchisees understand that the customer is #1. Responding to people and becoming entwined in the community is key because people in a community buy from those who are involved – it’s that simple,” says Klinger. “Although technology enables the business to thrive,” adds Runyon, “we believe the personal touch is the life blood of success.”
At the end of the day, Runyon and Klinger are optimistic about the future of Anytime Fitness. John Kirsch (formerly with IHRSA) has recently joined the team and is spearheading the company’s international growth, which has already started to see some success with the sale of several Australian markets. And on the home front, even a supposedly sluggish economy isn’t managing to slow them down. They have 1000 clubs projected to be open in the U.S. by the end of 2008, and an additional five to six hundred projected for 2009.
Runyon explains, “Due to our scaled down business model and the low-cost nature of our franchise investment, even small towns across the U.S. are part of our realm of possibilities. They can support an Anytime Fitness club even if they can’t support a larger facility. This gives us tremendous growth potential for the foreseeable future.”