How Planet Fitness Aims to Become the McDonald's of Gym Franchises
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In the beginning, Planet Fitness had a juice bar, spinning classes, freestanding weights – and not enough members. The fitness franchise's secret to success? Getting rid of everything that made a gym "good."
When Planet Fitness was founded in 1992, it wasn't very different from the competition. Founded by Michael and Mark Grondahl, Planet Fitness competed for customers with two similar gyms located in the small city of Dover, N.H. Members paid $29 a month for the usual amenities.
Soon after, Planet Fitness decided to turn the turn the time-honored equation for recruiting new gym members on its head. At the time, around 12 percent of Americans belonged to a gym. Today, the figure is closer to 15 percent -- but still, in a small city like Dover, that's a limited number of customers.
"We realized we were competing for the same 12 percent [as the other gyms]," says Chris Rondeau, who started at the gym in its early days and ran operations from 2003 until becoming CEO in 2013. "It just wasn't enough people."
Instead, Planet Fitness decided it was time to try and reach the 88 percent of Americans who, for whatever reason, weren't going to the gym. In 1996, the gym cut its membership price to $10 a month, where it has remained ever since. Then, in 2000, it stripped out the features that members weren't regularly using – the juice bar, classes and some equipment.
The big cut went against everything that those in the fitness industry believed people looked for in a gym membership. But it achieved exactly what Rondeau hoped it would: It brought in people who had never had a gym membership before.
Throughout the '90s, Planet Fitness added programs that now define the brand, like having a pizza party on the first Monday of every month. It strove to be seen as a place where members could work out without pressure.
"If people commit and try to make fitness part of their life, they deserve to splurge once in a while," says Rondeau.
Finally, in 2002, Planet Fitness decided it was time to take itself to another level and begin franchising. In 2003, Eric Dore and Shane McGuiness opened the chain's first franchised location in Altamonte Springs, Fla.
Today, Planet Fitness has 827 locations, with only 54 corporate-owned gyms. With membership still at $10 a month, Rondeau is now combining speedy expansion and budget-friendly memberships to create a fitness franchise that copies the best of the fast-food industry.
"We wanted to really come up with the McDonald's of the fitness world, in the sense that we wanted the customer to experience the same product no matter where they were," says Rondeau. "I always say it's the Big Mac approach – that the Big Mac always tastes the same no matter where you're at."
Having franchisees who are on the same page as Rondeau is key to creating a strong, universal Planet Fitness brand. That means franchisees who aren't necessarily from the fitness world, who will keep the gym a judgment-free zone.
While the rest of the fitness franchise world used to scoff at Planet Fitness's unconventional and pizza-loving methods, now that the gym is the largest fitness franchise in America competitors have changed their tune. Increasingly, if they aren't aiming for the boutique, studio-style model, new fitness franchises are adopting Planet Fitness's budget-friendly tactics. For example, Anytime Fitness, Entrepreneur's No. 1 franchise on 2014's Franchise 500, was founded in 2001 and advertises affordable membership and 24/7 access. Retro Fitness, founded in 2002, offers a few more services than Planet Fitness, but only charges $20 a month.
Rondeau isn't worried by the copy-cats. "We always say, let's do what's in the best interest of the customer. And if we do that, which the rest of the industry doesn't seem to do very well, we'll win."
That doesn't mean membership prices will rise. Rondeau says he hopes to never raise the cost above $10 per month. The inexpensive and accessible model has certainly served the chain well so far. Rondeau says that he predicts that Planet Fitness will hit one thousand locations early next year – a figure few gym franchises have ever reached (Anytime Fitness, Snap Fitness and Curves are the only American fitness franchises with more than 1,000 locations).
"If we break 1,000 stores, we're in uncharted waters, the industry has never really seen this before," he says. Bigger, cheaper and more streamlined than any of the competition – Planet Fitness might as well rename itself the "McGym."
Correction: An earlier version of this article misstated Chris Rondeau's title. He is the CEO.