The new direction of World Gym

Below is World Gym's new motto ... I'd love to hear what you think of it!

In 1976 it all began here. The iconic celebrity fitness scene. The serious no-nonsense workout. The commitment to always remain a true gym, not a resort. A place where great shape is an authentic passion. Where you belong among friends. Where everyone's a star, and you have the power to lift yourself to greatness. This is World Gym.

2009 Changes

Some interesting things happened in 2009. Planet Fitness corporate sold the World Gym brand to private investors. The new owners are taking a new approach with World Gym, focusing their efforts on revamping the brand. They have some very good ideas about how to rebuild the World Gym brand into one that grow in the future while still paying homage to its past.

I'm sure the image to the left caught your eye! Well that is one of the images WG is using in its more edgy advertising. Now you might be wondering where this leaves the 1440 All Axcess clubs ... and I've sort of wondered the same thing. In fact, it looked to me as though these smaller footprint clubs wouldn't really have a place within the WG brand once they moved fully into this new brand image. And I think that is evidenced by the fact that when you visit WG's corporate site, there is no mention of the ability to purchase a franchise of the 1440 brand.

At the same time, I don't blame the new owners. After all, at the end of the day, how much money can really be made on a fitness center of 5,000 square feet or less? Enough for an owner operator, but not a lot of money left over to pay a franchisor. For now, I'm just happy to be part of a brand that I think will be getting a lot of attention as the economy rebounds. Who knows, maybe the rebranding will even make its way into the smaller clubs, but that remains to be seen.

Stay tuned if you want to be kept in the loop about World Gym's rebranding effort...

Final thoughts

Now that nearly a full financial quarter is nearing an end, I'd like to express my honest opinion about my conversion to a World Gym 1440 All Axcess operation. I'd like to start by stating that my club was not performing to my expectations. Although the club was only a year and a half old, I had underestimated the level of competition in the area where I located the club right from the start. For this reason, I had to make some major changes, whether that meant converting to a franchise or not.

With that being said, I felt like we needed to do something that really made a splash. Since we hadn't moved into the space all that long ago, the old standard remodeling, adding new equipment, and having a grand reopening was not a viable option. For those reasons alone, I felt like it was marketing and branding that we were lacking.

Enter World Gym. In this industry, who hasn't heard of World Gym? I knew that if I did decide to go with a franchise operator, I wanted it to be one that was quickly recognized as a real fitness center chain, and not here today gone tomorrow operator. After talking with Ben and Chris at World Gym, I realized that they were taking this 24/7 club concept very seriously. I feel strongly that these guys are going to be making some very big waves in this category, especially with the backing of parent company and industry phenom Planet Fitness.

In the next 5-10 years, the two companies are going to be making huge inroads into this industry, and I don't think I'm alone in my thinking that they are going to be putting the squeeze on the independently owned clubs. I may be wrong, but if I'm right, then I want to be in on the ground floor.

In summary, depending on the circumstances of your club, I think converting to a World Gym All Axcess may make very good sense for you. I would especially consider something like this if your club isn't performing to your expectations. Chances are, if your numbers aren't good, you probably need to make some changes anyways, and the branding that comes from affiliating with a franchise could be just the shot in the arm your club needs - I know it was for me.

On a side note, if you are thinking about opening a new club, I highly recommend a franchise. Opening a business (any business) is difficult. There are so many places that mistakes can be made, and so many decisions to be made, that having the marketing programs, operational guidelines, and purchasing power that a franchise offers can make the process immensely easier.

Good luck and please feel free to post your comments.

A warning about equipment leasing

As part of our conversion, we decided to add some equipment, such as a tanning booth, some cardio, and some Body Masters freeweight equipment. For the first time ever, we chose to lease rather than purchase. We opted to use our on hand cash for our marketing efforts instead of using it to buy equipment. On the plus side, leasing allows you to keep more of your money for other purposes such as this. In addition, from a tax standpoint, equipment lease payments can be expensed immediately. If you purchase your equipment, you will likely be required to depreciate it over its useful life, leaving you with less of an expense to apply against revenue.

On the negative side, you will never own the equipment, so you will be faced with either purchasing it at the end of the lease, or turning it back in towards a new equipment lease. If your club gets the kind of usage we all hope for, your cardio equipment will probably be at the end of its life within 3-5 years anyways, and replacing it makes sense. Strength equipment lasts much longer, maybe 5-7 years. (It will actually last much longer, but advances in technology make it somewhat obsolete by that time).

Here's a unique instance that occurred with us that I would like to warn you about. We are leasing equipment from 4 different vendors. One of the vendors is Body Masters, and we have ordered two pieces from them. Back when we first entered into the lease, we were required to make our first payment immediately, and to set up the lease to automatically pull money from our checking account for monthly payments. So in effect, the lease began instantly, even though we had not received the equipment. The reason for this is that vendors typically are not willing to ship product until they have money in hand.

Normally, this would not be a problem, and for 3 of the 4 vendors we purchased equipment from, it wasn't - since we received their products within 2-3 weeks. Not so with Body Masters. It has been over 6 weeks and we still have not received our equipment from them. Apparently they had a problem at their factory. Unfortunately, we have now made two lease payments and we're coming up on payment #3 - and still no equipment from Body Masters. Had I have known it would take this long, I would have cancelled the order and ordered from Life Fitness or Cybex. We're told we are now within a week or so of receiving the equipment - finally!

The lesson you can learn from this (and a mistake that I won't make again) is to nail down the details of delivery from all of your equipment companies. Work with the vendor and the leasing company and make sure that you will not be required to pay for equipment that you do not receive within a reasonable time, say 3 weeks. At the point I'm at, the lease company is collecting the lease payments from me regularly, as though I've received everything, but I guarantee that they haven't released the funds to Body Masters - which means that I'm making payments on money that I haven't used yet. The lease company is the beneficiary of this problem, even though technically, it's Body Masters fault. Make sure to work out issues such as this in advance - and make sure you deal with vendors that are customer oriented ... I would take Body Masters off that list.

February update

As promised, here are some pictures of the freshly painted club. I liked that World Gym gave us the actual Sherwin Williams codes, which will really help standardize the feel of the All Axcess clubs as they start popping up.

One thing I would point out is that since our club is a conversion, we were able to keep our existing equipment. If you were starting a new club, you would be purchasing the newly designed Life Fitness equipment, which is dark blue. I have seen the dark blue equipment in a WG All Axcess club and it is truly a great finishing touch. You'll see that two of our walls are white, which look somewhat plain since our white equipment has no contrast. It'll probably be a few years before we replace our strength equipment, so we'll probably install some additional signs in order to add some more color to our club.

Here are a few more pictures (you can see all of them by visiting us at www.worldgym.com/phoenix):

Final numbers for January

Now that our first promotion for our club conversion has ended, and January is behind us, here are the numbers I promised. The first section below posts just the numbers. Following that are my comments about them.

It should be noted that the figures reflect the influx generated primarily from the postcard mailer, and include revenue from new members rather than from our existing EFT members. The figures do not include ancillary revenue from personal training and product sales. So what you see listed is pretty much pure membership revenue.

Numbers:

• $3735 - Incoming cash from paid-in-fulls
• $635 - Incoming cash from first EFT payments (pro-rated)
• $735 - Income added to our monthly EFT base

Comments:

First, I am very happy with the numbers. The roughly $4500 cash that was brought in more than covered the cost of the mailer.

But the real success story is the increase in our EFT base. The EFT memberships we sold during this promo were based on a 1-year commitment with auto renew (auto renew means that after the year is up, we continue to draft members' accounts each month until they tell us otherwise).

The potential gross value of the EFT bump over the coming year is $8800! Realizing there are processing fees associated with EFT's, and understanding that some EFT's will go bad, I still think this promotion was a major success! With a few months of this type of growth, we would go a long ways toward covering our overhead and putting some money into the bottom line.

Worthy of note: 35% of the total revenue above came in by way of our website, which was $1500 in cash sales and another $300/month added to the EFT base. That's signigicant! I cannot stress strongly enough the importance of a well-planned web presense for a 24/7 club. You can eliminate a lot of payroll with this type of club, but only if you have an alternate method for collecting money and making new sales. A website provides you with this capability.

For those who are thinking of converting your club, I've got to say that the WG web presence is a huge benefit (and there are many others). Even if you do not plan to convert to a WG, do yourself a favor and hire a web designer who can provide you with the ability to sell online. You can probably accomplish this for $2,000-3,000 dollars. I believe you'll find this is money well spent.

In the upcoming weeks I'll post some pictures of our newly branded club. We think it looks great - stay tuned ...

Early numbers are in, and they're good!

We've been waiting for results, and at last I've got some figures for you. But first let me mention a couple of things to provide a frame of reference:

1. Only one full week has passed since the postcard came out advertising our conversion to a World Gym and offering the opportunity to purchase memberships online (last Thursday the 10th - till today, Wednesday the 16th).
2. The promotion expires on January 31, so there are still a couple of weeks left. However, I'm not expecting many more online purchases until the final 3-5 days when last-minute shoppers will get in on the deal.

I'll follow up this post with another shortly after the promo period ends so you can see exactly how things shaped up.

Now, the numbers ...

• $2,065 total incoming cash for the week. Of that, 30% was brought in online and 70% at the club.
• $315 total added to monthly EFT base (40% from the web, 60% from the club).

I think these numbers are pretty strong. I'm especially impressed with two things: 1) the bump in the monthly EFT base, and 2)the fact that over 30% of the sales were generated from the website.

Clearly web sales are the factor to watch - the more comfortable people become with joining online, the less dependent your club will be on staff to generate and process membership sales.