Not many entrepreneurs are willing to risk $250,000 in a rocky economy. But, Peter Taunton feels the odds are in his favor.
Taunton, CEO of Snap Fitness in Chanhassen, Minn., is giving would-be business owners the chance to win a Snap Fitness franchise in his "Partner with Peter" competition.
"I have been an entrepreneur my entire life, and during these tough times since 2008 I got to thinking about how wonderful it is to be an entrepreneur," Taunton said. "I want to provide that opportunity for someone who has never had the chance to do this. One of the best industries in the world right now is this healthy lifestyle space."
The winner will receive $250,000 to open up their own Snap Fitness location, and the franchise will come completely stocked with brand new equipment and hands-on training from corporate offices and Taunton himself.
"We want to set them up in a position where they will really succeed," Taunton said. "We will stack all of the chips for them, and build this store as if it were corporate."
Snap Fitness franchises typically cost between $180,000 and $220,000, he said, and have one full-time employee as well as six-to-eight personal trainers. Most currently operating clubs have between 350 and 600 memberships, Taunton said, which can be for just one person or a family of six. Annually, franchisors do about $32 million total in top line revenue, he said.
The "Partner With Peter," competition is accepting applications through August 15, and has received more than 1,000 applications thus far. Taunton said he hopes to head to Snap Fitness' national convention in September with the applicants narrowed down to 25, and will then take input from members and franchise owners on who the winner should be. He also hopes to sit down with all of the finalists and hear their stories.
"We have complete confidence that we can teach you how to run a successful club," Taunton said. "There will be a fairly extensive interviewing process with these people."
Currently, Snap Fitness has 1,188 open locations across the world with an additional 839 in development. Since the recession in 2008, 52 locations have closed down.
Scott Needham, 37, owns four clubs across Minnesota, with his largest club in the Twin Cities location. Needham opened his first club at a brand new location in December 2006. The additional three he opened up over the next few years were Snap franchises he purchased from the existing owners.
Across his four locations, Needham said memberships range from 300 to 400 members. On average, the clubs together bring in about $600,000 annually, he said.
Although he took a bit of a hit during the recession, he said his franchises managed to stay afloat.
"We tried to do a good job of tracking why people leave the club when they cancel or terminate memberships," Needham said. "It could be for a job loss, financial reasons."
Needham said the franchise competition is a great opportunity for an entrepreneur to get his or her chance, even if they wouldn't be able to startup on their own.
"A franchise has a lot stronger of a chance of success than going out on your own," Needham said. "If someone likes the model, the franchise support system is basically a business in a box. You have your own support system and business brand."