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Oct, 12 2010

FOR THE FITNESS OF YOUR BUSINESS

THE fitness industry is open for people who are passionate about fitness. Even a person without any background in the fitness industry is welcomed by the fitness chains as franchisees.

THE fitness industry is open for people who are passionate about fitness. Even a person without any background in the fitness industry is welcomed by the fitness chains as franchisees.

Business potential

As per Health & Beauty White Paper released by Franchise India, the fitness market in India is estimated to be worth around Rs 2,500 crore, growing at about 40 per cent year-on-year. The segment has only 20 organised players, forming about 6 per cent of the market. Major organised players include Talwalkars, Gold's Gym, Fitness First and Leena Mogre's Fitness. Talking about the industry, Prashant Talwalkar, MD and CEO, Talwalkars Better Value Fitness Pvt. Ltd, says, “The gym industry is going through a nascent phase. While there are few organised players, the rest are very much like mom and pop stores set up by people with access to real estate (builders developers) assisted by some trainers, etc or small-time operators, who see it as a hole in the wall operation (set up machines within four walls and you are done).”

Experts believe consolidation is on the horizon as rising rentals and electricity costs are now hurting many players in the unorganised sector. “We have seen lately that lot of small-time operators are shutting down in Mumbai and this trend will only go up. Only the organised players will be profitable in the long run,” adds Talwalkar. One such merger took place recently wherein Evolve Gym was merged with Gold's Gym. According to Manoj Shah, CEO, Foothills Wellness Systems Pvt. Ltd, “Evolve is now acquired by Gold's Gym. This deal got closed just this month.”

Talwalkars will be adding about 100 centres by March this year. International women's gym Contours International has six centres in India with an average membership of 250 members per centre.

Flip side

Right now, there are no standards or laws governing gym operations. Explaining the lack of such norms, Chandra Gopalan, Director, Contours International, India, says, “There is no regulatory body for the fitness industry. Today, anybody can open a gym. You do not need a licence to open one, except for the normal company establishment procedures. Hence, you have a lot of local gyms which offer rock bottom rates with absolutely no trained personnel.”

Talwalkar informs, “Not having a proper perspective on the management issues, not knowing how much to invest in which location are some of the key issues an entrepreneur faces while establishing a fitness centre.”

“Unlike beauty, fitness is not a priority. We still have to reach the stage when people realise that 30 minutes of exercise is as important as bathing and eating,” concludes Gopalan.

Franchisability

Standardisation of operations is a must in this business. Says Talwalkar, “A good franchisor in this industry must invest substantially in creating SOPs and processes to ensure high and consistent level of service delivery. Another key area is HR policies and procedures. We train franchisees in all key areas viz operating standards, HR policies, member management, fitness delivery maintenance and cleanliness processes.”

Contours International offers extensive 10-day training to its franchisees at its head office in Bengaluru. Since it is graded, the company teaches further levels in regular refresher courses. Its franchisees get complete branding support, including marketing templates and ideas for membership promotions in their areas.

Expansion

Talwalkars is eyeing 300 franchises in the next three years. The company recently re-engineered its entire store design and experience. “To penetrate into tier II and III towns, we have identified about 300 plus cities across India with population of 3 lakh to about 6 lakh,” informs Talwalkar. Gopalan suggests, “We would like to have 75 to 100 gyms across the country. Our target for the first stage of expansion is metros and tier I cities.”

Exit option

Sharing his opinion on selling out, Talwalkar says, “In our industry, valuation models for selling the business have not been developed as yet. As they evolve, franchisors will certainly look into it, but there are many issues like quality of the buyer and commitment level, which need to be looked into.”

Contours' franchisees are permitted to transfer their franchise rights. But the new owner should be approved by the company.

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