Snap Fitness opened its first fitness club in April 2004. Since then, more than 50 of the Chanhassen-based company’s franchises have sprung up in Minnesota, Wisconsin, Iowa, Nebraska, and Louisiana. It now plans to open as many as 10 new stores every six weeks. How did Snap Fitness bulk up so fast?
Maybe it’s the lean and fit business model.
Before starting his new company, Snap Fitness founder Peter Taunton—who has managed and owned health clubs for 24 years—owned Chanhassen-based America’s Fitness Centers, which had clubs in five different Minnesota cities. When he sold America’s Fitness Centers in 2001, Taunton signed a three-year noncompete agreement with the new owner. During that time, he and Chad Johnson, who’d worked for him at America’s Fitness Centers, created a business model for Snap Fitness.
Taunton and Johnson determined that most members of big-box fitness centers didn’t actually use the spendier items—the pools, racquetball courts, and group fitness programs. So they decided to focus on strength training and free-weight equipment, making these new clubs much less capital intensive. While Snap Fitness clubs have big-brand equipment like Nautilus, Cybex, and Life Fitness, their square footage ranges from 1,500 to 4,500; a big-box center typically has more than 100,000 square feet.
The company helps the franchisee identify and secure a site, negotiate a lease, and navigate the build-out process with step-by-step protocols. Three days before a new store opens, an on-site sales manager shows up at the franchisee’s door. “The sales manager trains the franchisee in how to sell memberships and operate their store on a daily basis,” Taunton says. “By the time the sales manager leaves three weeks later, the franchisee is well on their way to owning a successful business.”
Indeed, two months after opening her doors last July, Jennifer L’Allier’s 1,700-square-foot Snap Fitness store in Plymouth was profitable. “The whole process of opening the store, from advertising to leasing equipment to ordering carpet and computers, was set up through Snap corporate headquarters,” says L’Allier, who opened a second store in Hopkins in December.
To keep franchisees’ operating costs low, Snap Fitness negotiates equipment pricing and warranties in advance with a growing number of preferred vendors. “Our vendors understand and respect that we are a watchdog for our franchisees,” Taunton says. And once a store has reached enough members to break even (usually 6 to 12 weeks after opening), franchisees typically keep it staffed only 15 to 20 hours per week—even though every location is open 24/7. That’s right—members often work out in an employee-free environment.
How does that work? All interior and exterior lights are activated by motion detectors. Members gain entry through the use of access cards, which digitally document who enters the facility and when. The door access system is also tied into the company’s automated billing system, which electronically “collects” all monthly membership fees. And through the use of Snap Fitness’s remote surveillance system, franchisees can monitor store activity in real time from their home desktop or laptop computer.
“It’s no different than working out in a hotel exercise room,” Taunton explains. “Those facilities are unstaffed as well. While we provide posted emergency procedures, there’s a certain level of responsibility that needs to be assumed by the user. The good news is, we have not experienced one instance of injury, violence, or theft in any of our stores.” In short, the Snap Fitness model seems to be working out.
