Tuesday, July 22, 2008

Pumping Up The Franchises

“Minnesota has long been a hub of fitness innovation and businesses. It's the birthplace of Rollerblades and waterskiing, the headquarters of Life Time Fitness and consistently ranks at the top of polls for its physically active populace. It's also the home to two of the nation's fastest-growing fitness franchise companies -- Anytime Fitness and Snap Fitness. After years of blockbuster growth in the United States and Canada, both are ready to take their no-frills, 24-hour fitness club concept overseas. Anytime Fitness recently signed a revenue-sharing agreement to launch up to 350 franchised clubs in Australia and New Zealand, with five centers expected to open in the next year. The Hastings-based company also recently hired a director of international development, who'll explore markets in Western Europe. But as a recent press release also trumpeted, the company envisions its members someday visiting clubs in Tokyo, Berlin or Dubai. Snap Fitness, based in Chanhassen, launched its first outlet in 2004. These days it has about 1,500 franchise agreements and 750 clubs currently open. Last month, Snap announced it had taken on an undisclosed minority investment from Summit Partners, a Boston-based private equity firm, which Snap said will help it move swiftly into international markets. The $18.5 billion health club industry remains a healthy one, even as Americans are stung by rising costs of food, fuel and housing. Some 41.5 million of us belong to a health club of some sort, and revenues have increased 60 percent since 2000, according to IHRSA, the International Health, Racquet and Sports Club Association. Retail analysts are often cautious about overseas expansion given various real estate tax laws, franchise fees and even cultural differences. But both Anytime's Runyon and Snap's Taunton are not dissuaded. Taunton said international growth will make up about 10 percent of Snap Fitness' business next year. He sees it as key to reaching the 6,000-store range in five years. Though potential franchisees are getting stung by the credit crunch along with consumers and other businesses, Runyon notes that it's much easier to get lender approval to launch a $150,000 Anytime Fitness than some other kinds of franchises that require $1 million-plus investments. “


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