Expanding Your Franchise

Thinking Outside the Box

For Anthony Geisler, LA Boxing was merely an after-work destination--a dingy boxing gym where he could break a sweat and burn off stress from his day at the office. For Sean McCully, 35, who opened the Costa Mesa, California, gym in 1992, it was a place where he and other boxers, mixed martial artists and fighters could work out. They both knew the idea of a gym with a boxing ring, plenty of bags and classes taught by former fighters was a great idea, but franchising the concept wasn't the plan from the get-go.

In the beginning, McCully, who was working at LA Fitness, hoped to create a boxing-specific program within the LA Fitness shell. After receiving negative feedback from the higher-ups, he left the company and took his idea down the street--which was still far from the city in his gym's moniker. "Sean's original concept wasn't really that sophisticated," says Geisler, 31, of naming the first gym. "It wasn't that he wanted it to be ritzy Hollywood. The name just rolls off your tongue and sounds familiar to people."

Geisler joined as a member in 2002 but quickly saw the potential of the popular gym. So he approached McCully with the idea of opening additional locations. "In essence, I was the first franchisee," he says. His first stop: Aliso Viejo, California, a suburban town filled with "moms, dads, strollers and vans. I knew that's where the product would go." And he was right: The gym out-grossed the original one immediately. For the next location, he tested an older, lower-income demographic, and that gym also did exceptionally well. It was at that point that Geisler knew he was on to something. So in early 2004, he stepped in as president and formed LA Boxing Franchise Corp. From there, McCully and Geisler built their team, developed the brand, designed a line of boxing gloves and filled a warehouse with bags, mats and boxing rings.

As predicted, it wasn't long before their first franchisee came knocking. But to their surprise, the former police officer didn't actually live nearby--or even in California. "If anybody had to take a wild guess [about where] our first franchisee would come from, [it'd be] SoCal," says Geisler. "We [never] thought in our wildest dreams that we'd go to Albuquerque, New Mexico, right out of the gate." Still, the New Mexico gym held the biggest grand opening in LA Boxing's still-short history.

Even after that, the franchise didn't return to its regional roots. Instead, it headed to Chantilly, Virginia, when Tate Marshall, an athletic serial entrepreneur, discovered LA Boxing in 2005 just as it began expanding out of California. He and his wife, Nancy, 41, signed on immediately.

Though Marshall, 42, knew people would embrace the concept, he was worried about having a gym called LA Boxing on the East Coast. "When you're on the East Coast and you hear 'LA,' you think of Hollywood and movie stars; you don't think boxing," he says. "So the first thing I wanted to do was change the name."

Geisler says this was a common concern for many franchisees, but he was adamant about keeping the name. He was confident that the region-specific name wouldn't be detrimental to business and even saw it as a benefit. "I think the name has mass appeal wherever you are," says Geisler. "It just meant overcoming the objection that 'LA' has a certain stigma."

For Marshall and other franchisees, that meant educating customers. Once he got customers through the door, the perception of LA Boxing as a froufrou gym immediately disappeared, and they were hooked. In hindsight, Marshall, whose year-old business saw sales of more than $500,000 in 2007, is happy to have the Los Angeles association, adding, "I've made some bad decisions in business, and changing [the name] would have been one of them."

Having a regional tie has been valuable across the board, helping the franchise bring in $6 million this year. Geisler points out that the top five stores aren't even in Southern California, and the majority of top-grossing locations are actually on the East Coast--Marshall's being No. 1. "I definitely think the LA Boxing name had a hand in us moving across the country," says Geisler. "I don't believe we would be as appealing if we were Bob's Boxing."

Geisler sees his growth strategy as a player in the company's success. He focused on expanding as quickly and efficiently as possible before competitors had a chance to surface. He wanted to keep LA Boxing "the only boxing/kickboxing/mixed martial arts franchise in the world," protecting both his company and its franchisees. Once he had significant padding between LA Boxing and its competition, Geisler was able to concentrate on introducing merchandise, which was another area where the regional tie played an important role. Now based in Santa Ana, California, the 100-store franchise has to keep other regions in mind when introducing apparel. "If we based our goods off of what works in our climate, we'd be sending tank tops to people in the snow," explains Geisler, adding that regions with a military presence prefer camouflage boxing gloves, while the pink ones sell best on the West Coast. In the coming years, he plans to roll out more products and expand into the Midwest and the Northern states.

All in all, the stories behind these entrepreneurs show that research and education as well as a passion for your business are the most important factors in opening a region-based franchise in a new area. Though every audience may not embrace every concept, food or product, Flores puts it best: "If you don't try, you won't know."

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This article was originally published in the January 2008 print edition of Entrepreneur with the headline: Outward Bound.

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