How to run FOUR 7-figure gyms

& why we’re seeing more gym owners transitioning to small group biz models

Author

John Franklin
July 28, 2023

Gym World, I hit two PR’s this week.

The first: an 11mm L4-L5 disc herniation. That’s a 4mm PR 💀.

If you have any tips for getting my disc back into my spine, reply to this email & let me know.

The second: this viral tweet that got over 12k likes and 1M impressions. I guess the rest of the internet hates morning routine videos as much as I do.

Now, back to our regular programming.

This week I sat down with Matt Wilber.

Matt was Fit Body Boot Camp’s star franchisee. Pre-COVID, he had 10 locations and four were doing 7-figures a year.

Since then, Matt left the franchise and started his own fitness concept with 4 locations in West Michigan.

Today, we’ll highlight why his franchises outperformed other FBBCs and why he pivoted to a different concept.

Let’s dive in.

Scaling to 10 locations

Matt went from 1 to 10 locations in 7 years. Three things helped him scale quickly:

1. Marketing hard

Matt grew his locations using challenge-based marketing. He was operating his FBBCs during the glory of years of Facebook ads where you could get people to show up at your gym for under $20.

Few gym owners understood the opportunity and Matt capitalized on that. He said at the peak, one of his 5,000 sq. ft locations had over 800 members.

A few of you probably ran New You Challenges during this time and understand how you could absolutely pack out a gym if you had the right marketing.

Copy like this absolutely KILLED from 2013-2017

2. Accessing cheap real estate

If you want cheap real estate, West Michigan was the place to be. Matt said he was able to open his first location with $30,000 and his second location for $150,000. Since he could fill a gym quickly with paid ads, it didn’t take long to save up enough cash to open another location.

3. Hiring constantly

If you want to open a lot of gyms fast, you need a system for hiring good talent. Here’s how Matt approached hiring:

  • Phantom equity: The hardest hire for any gym is a GM/operator. You really need someone that acts like an owner. Matt gave his operators phantom equity, which basically means they get to keep a share of profits as long as they work at the facility.

  • Internship program: Matt formed a partnership with a local university. They hire about 20 exercise sci majors for their internship program each year, and the best interns get offered a job.

  • Outbound: Matt befriended GMs and coaches at other gyms in the area and would reach out to promising candidates when he had jobs available.

He also had edge. He offered a salary and benefits, and because the company was scaling so fast there was clear opportunity for advancement, which helped him stand out in his market.

By the end of 2019 Matt had 7 profitable locations. That’s when he was given the opportunity to take over 3 struggling franchises.

Matt had a winning formula, so his gut feeling was to pass on the opportunity. He ended up buying them.

Success breeds confidence in entrepreneurs, but sometimes a hot streak creates over-confidence, which has killed a lot of great fitness businesses.

Shortly after Matt took over the new gyms, the COVID lockdowns started, which decimated his revenue. The economics of an FBBC only work if you pack out the classes.

In addition to losing most of his revenue, he had:

  • An entire facility quit on him

  • A blow out fight with an operating partner

  • A difficult time hiring staff

Something had to change.

Breaking up with FBBC

For the next few years, Matt worked on creating a more resilient business.

He closed the 3 struggling studios and sold 2 other ones.

He also started experimenting with small-group training.

With a small group model he could sell higher ticket services, which could be fulfilled with fewer staff members. One problem: FBBC doesn’t allow its franchises to do small group training.

So Matt left the franchise and started his own concept, Tranzform.

Matt says the transition from large group to small group was ROUGH. He said he lost about $20k of monthly recurring revenue per location.

Brian Bott has mentored a ton of gym owners running small group models. He says pivoting from large to small group is incredibly difficult once large group is already the established model.

If Matt had to do it again, he says he’d do a slower transition to avoid a mass exodus of members.

Side note: I think we’ll see more CrossFit gyms running a small-group training model.

Plenty of box gym owners average less than 6 people per class, so they’re already doing small group BUT they’re charging large group prices.

The average small group membership is about 3x the cost of a large group membership.

For most gyms, pricing their service properly will be easier than doubling or tripling membership.

Matt Wilber on Gym World 🎙️

Want a deeper dive on Matt’s story? Check out his full interview on Gym World’s YouTube, or listen to it on Spotify or Apple.

P.S. If you find my newsletter helpful, share it with other gym owners and tell them to subscribe.

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