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In the past couple of years, Indian fitness industry has lured an increased number of global fitness brands via franchise business model, Let us witness the growth of this segment with a glimpse of the list of opportunities in this segment.
In the past couple of years, Indian fitness industry has lured an increased number of global fitness brands via franchise business model. Backed by a growing confidence in this business format, the industry saw lucrative disruption with the entrance of global players. And not just global brands, fitness segment has also roped in Indian celebs and cricket stars like Mahendra Singh Dhoni, Zaheer Khan and Virat Kohli to make a mark in fitness franchise as well.
Indian fitness industry is valued at a whopping Rs2000 crore. The Rs.500 crore gym market is rapidly growing at 35-40% per annum and is estimated to see Rs. 3000 crore by 2017. “It has taken a leap at a scorching average of 28 per cent year-on-year,” informed Amrith Rao, CEO, Talwalkars Franchising Division.
A Deloitte-IHRSA report indicated that there are 4.8 million fitness seekers across Mumbai, Delhi and Bengaluru. A pan Indian presence of about 1,200 clubs and independent local gyms, brings fitness to the lives of about 1.35 million Indians. Out of 80 million middle class households, 55 million (69 per cent) reside in Tier-II and Tier-III cities and towns, which is the main target of leading fitness franchisors.
The fitness industry earlier chose to operate via single unit franchising, but multi-unit franchising and FOFO (franchise owned & franchise operated) model is gaining popularity for several well established global brand at present.
Nevertheless, in rare of the rarest cases, the country is increasingly witnessing the growing popularity of Area Development Model (ADM) and Area Representational Model (ARM). In the ADM, partners manage outlets within a specified region. While in ARM, the partner focuses on expanding the presence by finding new franchisees.
Sharing views on the business format, Nikhil Kakkar, Vice President - Franchising, Gold's Gym said, “The success of franchisee is acknowledged with a fact when a single franchise owner start opening or operating multiple franchise of the brand. We have numerous cases wherein a franchisee started with single unit and has gone to 2, 3 or 4 units. We have 11 franchisees owning 27+ Franchise of Gold's Gym.”
Decoding strategic location
Like in other industries, location is equally essential for the success of a fitness franchise. With the desire to expand fast, most of the brands miss on selecting a fitness friendly location where it can enjoy better visibility. Sometimes locations also restrain a gym brand to meet or maintain quality standards. “Any location that meets our extensive selection criteria is fine. Backed by our expertise of launching and operating 150+ outlets, we need not to restrict ourselves in any way. However, we do give preference to tier II and III locations with population of minimum 3 Lakh, as they are up-coming and with low rentals, which ultimately reflect in higher EBIDTA. We target carpet area of 2,500 sq ft as this is a compact model,” said Rao.
As per the experts, each business has a different requirement when it comes to real estate, and the call on locations should be centralised in the franchise business to make each store profitable.
Getting the right franchisee
Finding the right franchise partner is inherently important for cultivation of a business. The experts in the industry swear by three golden rules of franchise selection:
The franchise partner should be an owner operator.
The investment required should be fully funded through internal resources and not by bank loans especially on the first store deal.
And, most importantly, the franchisee should have some prior business experience because business requires a lot of effort.
However, the new age fitness franchisors believe in the power of both- young and experienced. “Young entrepreneurs are open for challenges where as experienced ones are very calculative in their approach. Experienced ones will dig into rock bottom to understand ROI,” said Sheru Angrish, Co-owner, Sportsfit Gyms, a Mahendra Singh Dhoni initiative.
Significantly, Fitness franchise isn't banking on this newly dawned realisation alone. It is also working on ensuring franchisee training and education, Hiring certified trainers for the gym, operating through advance technology and continuously introducing innovative workout activities to lead the game.
Seeing the fast moving growth and rising celebrity quotient, in terms of investors or brand endorsers, the Indian fitness industry is expected to bag major amount of franchise deals in the near future. Thus, making a move towards this space in the present scenario won't prove as a wrong decision as the Fitness Franchise foresees a way bright future ahead.