Expanding your business through franchising might be a great opportunity if you currently operate a successful gym. When you franchise your business, franchisees can operate gyms in various locations under your business model. Also, franchisees will have access to the intellectual property you own and control. In this sense, franchising can offer up great opportunities for your business without you having to operate each store physically. This article will outline five steps you should consider if you wish to franchise your gym business.
Making the decision to franchise your business can be difficult. This Franchisor Toolkit covers all the essential topics you need to know about franchising your business.
This Toolkit also contains case studies from leading franchisors including leading Australian franchises including Just Cuts, FlipOut and Fibonacci Coffee.
1. Structure Your Franchise System
Firstly, you must ensure that your current business structure protects your business’s branding and will allow your franchise to multiply.
Typically, the founder of your gym business will own shares in a holding company. The holding company should also own the rights to your business concept, including the trademarks that protect your gym’s brand. Additionally, the holding company should own 100% of the franchise system’s shares in the operating companies. Most retail franchise systems contain more than one operating company, with each operating company dealing with separate matters such as:
- franchising;
- leasing; and
- operations.
Ultimately, the operating companies do most of your business’s trading, including entering into contracts with franchisees and employees.
This structure allows you to separate the franchise system’s liabilities from its assets. This way, you can create a legally sound business structure before growing the franchise system.
2. Promote Your Concept
Once you settle on an appropriate business structure for your franchise, you should consider protecting your fitness business brand through trade mark protection.
A trade mark is a sign you use to distinguish your services from others in the fitness industry. In Australia, you can register your details with IP Australia to gain ten years of protection with the possibility of renewal. These details might include your:
- business name;
- logo; or
- slogan
If you register your trade mark, you can prevent others within the fitness industry from using that trade mark. Furthermore, registering your trademark will make your business more attractive to franchisees as you indicate that you have taken steps to protect the intellectual property that forms your franchise brand.
It is important to note that the application process takes seven to eight months and is first-come-first-serve. Essentially, if someone else has already registered your trademark, it is unlikely you will also be able to register it. Therefore, you should start the application process as soon as possible if you have not already registered your gym’s trademarks.
Continue reading this article below the form3. Operations Systems
A key aspect of your gym franchise will be how potential franchisees run each gym branch. To ensure consistency in the quality of your services, you should do a few things to ensure your operations systems are in check.
Create an Operations Manual
An operations manual should contain all the information necessary to run your franchise branch successfully. The details within it may range from how you will train your staff to the core functions of your business. Moreover, an operations manual does not have to be extensive. However, you may include whatever you think is necessary to ensure consistency across the franchise system.
Branch Set-Up
To ensure further consistency across the franchise system, you need to create a system so that each branch you set up is alike. Furthermore, it is crucial that individuals attending one of your gym franchises have the same experience at every site. Ultimately, most franchise concepts will have a set of identical store fit-outs across all stores.
Training and Supporting Franchisees
In addition to an operations manual, you must consider how you will train and support your franchisees.
Supporting your franchisees will ensure that your gym delivers consistent and quality services.
4. Legal Documents
The Franchise Code of Conduct (‘the Code’) will regulate most aspects of your franchise. To comply with the Code, you must supply your franchisees with a copy of the:
- franchise agreement;
- disclosure document;
- key facts Sheet;
- the Code;
- franchisee information statement; and
- the lease or licence to the gym premises, if required.
A franchise agreement is a contract that will bind you and a franchisee together in business. This agreement will outline both parties’ obligations and the franchise’s main aspects. This includes who owns the intellectual property and what fees the franchisee must pay.
On the other hand, a disclosure document provides current and prospective franchisees with a detailed overview of your gym franchise. The disclosure document can help franchisees make decisions when running the franchised business.
In any event, you must provide these documents at least 14 days before a franchisee sign the agreement. Also, franchisees have a fourteen-day cooling-off period after signing the documents to back out of the agreement without any consequences.
5. Recruiting Your Franchisees
A franchise system cannot operate without franchisees. Franchisees will become your brand ambassadors. Therefore, they play a critical role in determining the success of your gym franchise. Furthermore, you must implement a good recruitment process to find suitable franchisees.
Key Takeaways
To operate a gym franchise, you should:
- ensure your business has a sound legal structure;
- protect your brand identity;
- create a sound operations system;
- prepare legal documents; and
- recruit your franchisees.
If you have questions about franchising your gym, our experienced franchising lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
The Franchisee Information Statement outlines the risks and rewards of franchising. You must provide prospective franchisees with the statement as soon as practicable.
A franchise fee is a payment your franchisees will make for the right to use your company’s brand, products, and intellectual property.
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