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Golds vs Fitness First in Australia

musclenz

By musclenz
in Gyms & equipment

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  • 3 weeks later...
iwilson Junior member

iwilson

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As a gym owner it's interesting and informative to read members perspectives on the industry. The music issue is potentially a biggie for the industry. As others have mentioned we pay both APRA and PPNZ fees for not only music and TV's but even for having music on hold (phones). While it would seem the majority of people posting on these forums are hard core the majority of members in most Clubs are not and expect music to be played and classes provided. My Club for example has over 30 classes each week and we pay for each class. The bill for APRA and PPNZ are certainly not ones we look forward to but I would consider them to be reasonable. Should the new fee structure come into effect then classes would have to be cut back. PPCA (The Aussies) are proposing a 4,000% hike in fees :shock: Which is ironical given Australia's fat epidemic. Story here

At the end of the day like any business it's always going to be customers that pay - who else is there after all? Additional fees of this nature just mean there is less in the pot to spend on equipment. It's bad enough at the moment with the dollar worth bugger all. We're currently replacing a good chunk of our strength equipment and the numbers are frightening, well north of $100K and if I could get everything I want add another $100K to that. A new all singing and dancing commercial treadmill from a reputable brand will currently run you nearly $20K for ONE! You can buy a pretty decent car for that!

The problem in NZ is members pay in Kiwi dollars and Clubs pay in US dollars. A chunk of my hard core members would probably be just as happy if I dumped a load of rocks in one corner, but they are the minority. But I have to say since I installed a new Hammer Strength Olympic platform, Olympic bumper plates and multi rack, Even they grudging admit life is a little better now.

The rack is not this one but similar and the platform has been separated to make two stations.

HS_hero_hdr.jpg

The difference between this platform and a cheap one may not be obvious to the eye but my members who are into BB or weight lifting think all their Christmas's have come at once!

The problem with most small Clubs is they often don't have the capital to invest in quality equipment. When I say equipment we're talking plates and dumb bells as well. Ever loaded a bar and felt it wasn't balanced? That's because cheap plates are often miles away from their rated value (most Ivanko plates btw are poor Chinese copies). Plus or minus 10% is the norm meaning a 20kg plate can range from 18 to 22kg in weight. The difference in price to go to a 5% difference is double! As an owner when you're looking at quotes and have a small 'cheap' membership base it's almost impossible to finance the extra expense of a BMW over a Holden/Ford.

Anyway what has this got to do with Fitness First and Gold - bugger all! So sorry for the major thread drift! My 2c is that we won't be seeing to much action with franchised Clubs in NZ in the current economic climate. Given the monster franchise fees they have to stump up with each year the numbers don't stack up. The NZ market is unfortunately very price conscious the first thing most people ask is 'how much' without even looking inside. A cheap membership is still an expensive one if you don't use it and lets face most Clubs couldn't cope if all their members used the Gym three times a week. Shame really but that's the reality. Far to much money is spent on clever marketing imho at the expense of decent equipment.

My first post - off topic not a great start...

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teamfatboy Veteran member

teamfatboy

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:ditto: Great post, very useful to know....is the same franchising cost true of cardio brands?

I was just thinking today that my gym didn't seem to have had the same uptake over the summer/ New Year as usual, and the word is there's a couple of new franchises opening up Willis St Way. Plus I've heard of folks turning up to Franchise cardio updates, making notes and essentially ripping-off the franchise developer's hard work. Only gossip, mind you - but plausible enough.

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musclenz Veteran member

musclenz

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Great Post iwilson. We need more of this information from gym owners so us Gym Rats can appreciate what costs are associated with setting up & refitting gym equipment. Maybe gyms are going to have to split their membership into classes & resistance training if the music fees come about. At my gym I never use the classes & rarely the cardio gear, so I would not be happy subsidising the class people. I will be forced back into the Hardcore Gyms that are only resistance equipment based. Actually, I can train & get into the zone without music to listen to or tv's to watch. :D

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iwilson Junior member

iwilson

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If you're a franchised club then you pay fees to the master franchisee simple as that. It's big money but it's business confidential so I won't be telling (and I'm not a franchise). In return the fit out cost is much reduced due to the buying power of the franchise. In some cases this means local equipment companies never get a look in as containers arrive (usually from China) and in goes the gear. What follows is the usual hard sell. Most Clubs employ the services of outside companies that specialise in generating memberships. I have used their services in the past and I lose sleep at night sometimes wondering if its the right thing to be doing. Why's that you might wonder?

Here's how it works, in my case we contracted an Australian company. They fly in a couple of 'membership consultants' who don our uniforms for the duration of the campaign. Meanwhile an Australian call centre phones everyone living in my campaign area with an offer of a couple of weeks free membership. A percentage then turn up at the Club and speak with one of the Aussie sales people. They then make the offer of turning the two week free pass into an 18 month gym membership (normally with a company like Adfit). Before we go any further you have to understand that when they contact the Club they make it known that if you don't use their services then maybe they'll go to your opposition instead...

I have to give them their dues they are very good, hell I nearly became a paying member of my own Club when they phoned me at home :lol: Secondly although the majority turn into non-active paying members a percentage do go on to become regular members with all the benefits that brings. That's the bit that makes me lose sleep - can you justify saving a few at the expense of the majority we never see. Thirdly they charge hell money to do the campaign, we paid for accommodation, commission, call centre charges and an ongoing chunk of any memberships they generate. There is bugger all left in the pot when it's all said and done. If you rely solely on their campaigns you find an increasingly large proportion of your members are very low quality i.e. pay very little. If you extrapolate the situation you can end up having to run campaign after campaign to generate enough revenue to pay the bills let alone upgrade your facility. Hence why many Clubs in this country have crap equipment THEY'RE SPENDING ALL YOUR MONEY ON MARKETING CAMPAIGNS! But it's a difficult cycle to break out of. The trend now is for well financed organisations to come into an area and break the back of smaller Clubs with loss making membership packages. These Clubs tend to be full of cardio equipment with scant regard for you lot, since you represent a tiny minority of gym users. End of the day businesses provide what the market wants and the market today wants bling so that's what it gets. The NZ market is tiny so it's difficult for Gyms that provide to BB, powerlifters etc there's just not enough of you to get beyond small facilities in low rent areas with a motley selection of cast offs from bankrupt clubs or cheap 'trademe' gear. Some on here have managed to go beyond that model by the looks of it and more power to them. But these are people who are in it for the passion rather than putting food on their tables!

To answer the question about splitting membership fees. It will never work in most cases. To difficult to control firstly and although you may argue why should I be paying for classes I never use, those who do classes would argue why should I pay for equipment I never use... There are already Clubs that cater for women only, or who offer no classes or who have very little equipment. I try to be a jack of all trades, but it's an expensive option since you are trying to please everyone i.e. spending lots of money in all areas. It's fortunate I have the resources to do so, it certainly makes no sense from a business perspective to have this approach in a Club my size, but I do it because I enjoy it and have other business interests which subsidise the Club. I joke to myself that I pay myself in social dollars (whatever they are), I get a kick out of talking to members and seeing the pleasure they get out of the constant upgrades. But the reality for most Clubs is they get by on the smell of an oily rag.

Yet another long meandering post and I haven't even touched on Council owned facilities...

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Optimass Veteran member

Optimass

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Amen iWilson ....

What you have said is pretty much on the nail from a franchise perspective. The tragedy is that in this economic climate, if you master franchisor is struggling in their own clubs, they are not likely to supress their royalty to allow you to move forward. They also tend to align marketing with their own needs ....

i.e If a major club in the vacinity of their clubs does a no fee recruitment drive - the whole franchise has to follow suit. no joining fee membership all year round kill your cashflow.

In my experience your monthly dues and cash memberships are your break even. Personal training is a real winner - the more packages and events you have that meet the needs of your clients the better off you are.

I think the national average membership churn in NZ is about 15% - which is quite bad really when you think for every 100 members, you will have to replace 85 of them within 12 months. So sales are the key drivers for keeping your head afloat - doesn't matter if you are franchise or not. Mine sat at about 35% due to the PT business being run effectively. (But took a long time to get there as its hard to find confident and competant staff).

Too much is spent on marketing and not enough on retaining members - its way cheaper to keep a member than to find a new one. thats why a great PT program will always pay off.

If the music fees were brought to NZ the cost of membership would see a lot of the small operators killed off - and would seriously impact on the larger ones being able to expand and/or refresh their equipment.

Good post anyways :) :nod:

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mr natural Senior member

mr natural

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what was the marketing company you used wilson?

council owned gyms are extremely wrong in my opinion. The best way to change things is to lobby the new right wing government as they are more in line with free enterprise, everything that the council and former labour governments polices fly in the face of.

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mr natural Senior member

mr natural

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Amen iWilson ....

What you have said is pretty much on the nail from a franchise perspective. The tragedy is that in this economic climate, if you master franchisor is struggling in their own clubs, they are not likely to supress their royalty to allow you to move forward. They also tend to align marketing with their own needs ....

i.e If a major club in the vacinity of their clubs does a no fee recruitment drive - the whole franchise has to follow suit. no joining fee membership all year round kill your cashflow.

In my experience your monthly dues and cash memberships are your break even. Personal training is a real winner - the more packages and events you have that meet the needs of your clients the better off you are.

I think the national average membership churn in NZ is about 15% - which is quite bad really when you think for every 100 members, you will have to replace 85 of them within 12 months. So sales are the key drivers for keeping your head afloat - doesn't matter if you are franchise or not. Mine sat at about 35% due to the PT business being run effectively. (But took a long time to get there as its hard to find confident and competant staff).

Too much is spent on marketing and not enough on retaining members - its way cheaper to keep a member than to find a new one. thats why a great PT program will always pay off.

If the music fees were brought to NZ the cost of membership would see a lot of the small operators killed off - and would seriously impact on the larger ones being able to expand and/or refresh their equipment.

Good post anyways :) :nod:

yeah but how many people wanna pay personal trianing fee's on top of gym memberships espically at the moment? The best retention stratiges are long term contracts cause most people are unfortantly lazy and lack the drive to work for what they really want and once they realize it takes hard work and consistancy they decide its to hard and want to quit.Its about lifestyle change, you can lead a horse to water but you can't make it drink.

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iwilson Junior member

iwilson

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what was the marketing company you used wilson?

council owned gyms are extremely wrong in my opinion. The best way to change things is to lobby the new right wing government as they are more in line with free enterprise, everything that the council and former labour governments polices fly in the face of.

AFM - good bunch to deal with. There are a few sharks out there. Website HERE

Council Gyms are wrong for a whole bunch of reasons. They should stick to providing parks, playing fields, outdoor pools etc. I can even handle the odd indoor pool. But Gym's absolutely no way.

Firstly they are not providing a service to the general public - since you have to pay close to commercial rates to use them - so you're being double taxed. Firstly via your rate bill and secondly via your membership payments. Secondly can you imagine if a council decided to setup a subsidised supermarket, I mean surely it's more important to make sure people can eat right? The supermarkets would scream at how unfair it was and take them straight to court. Yet it's ok for them to spend hundreds of thousands of dollars of our money on facilities that most cannot afford to use! If they then decided to make access free or highly subsidised where would that leave private Clubs. The thing that really winds me up is that I have to paid rates to the council on the building I rent - some of that money ends up in the pocket of my competition! I laughed last year when I opened my rates bill to discover a flyer for the local council gym included in the envelope!

The industry association FitnessNZ who are supposed to represent us is headed by a guy named Richard Beddie, who can you believe it also sits on the board of Manukau leisure services - which is a council owned company that runs Manukau's council operated Gyms. So you can imagine how hard he lobbies for a fair playing field for private operators... When I kicked up a fuss he actually came out to visit me in Pukekohe to try and convince me there was no problem (I remain unconvinced). The thing is FitnessNZ is made up of both private and council operated Clubs so it's a no win situation. But the bottom line is councils should not have any involvement in the private sector. Hell there's nothing to stop them opening council subsidised garages, beauty saloons etc. Remember subsidy means your rate money. And we wonder why our rates keep going up :roll: The bottom line is these politician wannabe's like to leave legacies for themselves. So when they get voted out they can point to their little Palaces and give themselves a pat on the back. They would rather be remembered for spending our money on useless buildings rather than being responsible for lowering our rate bills.

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mr natural Senior member

mr natural

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totally true, they also want to be seen as big fluffy hero's to the general public by helping them with their well being,lowering the burden on the public health system which is all good ,but they are totally going about it the wrong way. There are much better ways of doing it than competing against private gyms already providing the service.

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Optimass Veteran member

Optimass

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yeah but how many people wanna pay personal trianing fee's on top of gym memberships espically at the moment? The best retention stratiges are long term contracts cause most people are unfortantly lazy and lack the drive to work for what they really want and once they realize it takes hard work and consistancy they decide its to hard and want to quit.Its about lifestyle change, you can lead a horse to water but you can't make it drink.

Don't read too much into the doom and gloom. There are people out there spending money and for a lot of those good investors, personal health is not something they compromise. What good is wealth if you are not around to enjoy it. The god PTs out there are not suffering believe me.

If you are signing 100 memberhips a month and manage to close 20% of them into a 12 week package for say Thats an extra 10k in income (@$40 per session once per week) over and above. PT clients generally get the best results. As a trainer and club owner it is always my goal to get a some quick wins for the client than to start farming them for referals pretty much from week 2-3 .... results = referrals = more members @ low cost.

Referrals are free and easier to convert into memberships. If you can train your PT team to systematically convert results into memberships you win. If I was going back into ownership again I would probably try something a bit more radical in assiging bonuses to trainers for membership referral conversions and alternately incentivise membership consultants on PT packages and products only.

You are absolutely right about contracts - without them you are setting yourself up to failure. Adfit stats clearly acknowledge the average no-fixed term agreement lasts 3 - 4 months. Where as a 12 month contract generally last for 15 months as an average. It takes the average contract member 3 months to figure out that if they are not using it they are just going to stop payment.

It is a proven fact that if you engage you clients with PT sessions when they first start the membership they engage quicker - 3 months later if they havent had further sessions 85% of new members will quite. PT is the key ...

....

if you are signing 100 members and gain 20% in PT income - over 12 months thats over 100k of cash income assuming they all only buy 1 package.

If 50% of NEW member packages sold above are converted to 2 membership referrals (pretty conservative) = thats 20 new members at no cost.

A good club manager/team should be able to actually convert 50% into PT members. I personally would train a client unless they booked 2 sessions per week minimum. and rates varied from $70 - $95 dependant on what was required.

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Optimass Veteran member

Optimass

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The industry association FitnessNZ who are supposed to represent us is headed by a guy named Richard Beddie, who can you believe it also sits on the board of Manukau leisure services - which is a council owned company that runs Manukau's council operated Gyms. So you can imagine how hard he lobbies for a fair playing field for private operators... When I kicked up a fuss he actually came out to visit me in Pukekohe to try and convince me there was no problem (I remain unconvinced). The thing is FitnessNZ is made up of both private and council operated Clubs so it's a no win situation. But the bottom line is councils should not have any involvement in the private sector. Hell there's nothing to stop them opening council subsidised garages, beauty saloons etc. Remember subsidy means your rate money. And we wonder why our rates keep going up :roll: The bottom line is these politician wannabe's like to leave legacies for themselves. So when they get voted out they can point to their little Palaces and give themselves a pat on the back. They would rather be remembered for spending our money on useless buildings rather than being responsible for lowering our rate bills.

Agree whole heartedly.

Always frustrated me how council facilities continually get handouts without any firm performance measures in place. They should be run like standalone businesses for one - provide a finacial statement to the public each half etc. With out any measures you essentially have a bottomless pit. and no accountability.

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