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Fitness Franchise Flexes its Muscle

Fitness Snap caters to those who like to work out without the circus atmosphere.

This story appears in the March 2010 issue of Start Up.

After two decades working among the sweating, Spandex-clad masses, Peter Taunton was finished with the big-box club scene. So after selling his stake in a chain of large clubs, Taunton set out to build a different kind of fitness facility, one that would cater to people who prefer to work out sans the circus atmosphere. Six years and more than 1,900 stores later, Taunton's Snap Fitness is among 's fastest-growing franchises, proof that his concept--small, neighborhood-oriented clubs emphasizing affordability, convenience and cleanliness--resonates with the exercising public.

It stands to reason that a fitness club concept developed by a former racquetball pro and self-described "court rat" would at least include racquetball courts. But Taunton, 48, purposely excluded such amenities from the Snap Fitness model because, he explains, when it comes to health clubs, "people for the most part want to get in, get out and get on with their lives. I've seen what members use most at a club, and it's not the pool, the racquetball courts, the aerobic studios or the climbing walls. Those sit idle most of the time."

With a modest footprint that typically ranges from 2,700 to 3,200 square feet, Snap Fitness clubs feature state-of-the-art cardio and training equipment but little else in the way of extras. No cushy locker rooms, childcare facilities, smoothie bars or spa services. Like the big-box clubs, most Snap Fitness stores are open 24-7. But they're not staffed around the clock, so members use a keyless entry system to gain access during off hours.

A lack of frills means less overhead, which translates into lower membership costs of $30 to $35 per month. Snap Fitness members also get reciprocity--access to all Snap Fitness clubs worldwide--at no extra cost, and they get it on a month-to-month, pay-as-you-go basis. That's a particularly important differentiator, says Taunton, because "people are sick and tired of being shackled" to long-term contracts.

Having surpassed a half-million members in 46 states, and with plans to open 300 to 400 new clubs per year in North America and abroad in places such as India and Australia, Minnesota-based Snap Fitness is proof the public is primed for fitness clubs that lack the flesh-and-mirrors club scene and the price that comes with it, Taunton says.

"People see us, I think, as a breath of fresh air," he says. "There are no hooks, no catches, no hidden agendas. We're earning people's business by providing a good product, a product that delivers good value because people actually use it more."

That strong value proposition makes Snap Fitness a compelling business proposition for potential franchisees, according to Taunton. "It's an affordable franchise to get into," at $160,000 to $180,000. What's more, he says, the model works in a variety of markets. "We have gotten this right by scaling up very conservatively. The concept is proven for an urban market, a mid-sized market and a small-town market. And we've made sure the systems and processes are in place and well-documented."

Such an approach has paid fast dividends. Despite the flagging and a tightening credit market that made it difficult for the company and its franchisees to secure financing to open new clubs, revenues for Snap Fitness grew 5,900 percent, from $960,000 in 2005 to $34 million in 2008. That kind of growth is bound to get a company noticed. In Entrepreneur's 2009 franchise rankings, Snap Fitness placed first in the fitness category and second in the new franchise category.

"We're growing and our stores are performing," Taunton says, the pride evident in his voice. "The animal just gets stronger the bigger it gets."

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