S1 E3: The Secret to Growing Your F45 Gym Franchise
What do you do when the bottom falls out of your property investments? You sell up and retire. Then you start over as part of a billion-dollar franchise. Meet Gavin McConnon, serial entrepreneur.
Still in his 20s, Gavin was riding high in Ireland on the back of selling 900 numbers and ringtones. Having invested millions in commercial real estate, he was hit by the 2008 collapse and forced to sell everything.
The Wolf talks to Gavin about how his semi-retirement to Australia triggered his interest in franchises and why F45, in particular, caught his eye.
Gavin shares what it’s like being part of one of the fastest-growing franchises across the globe, his experience as a serial entrepreneur who founded multiple tech startups, and why franchises are so appealing .
You’ll hear the benefits of having a brand with an established playbook already in place, how to expand your team and grow your locations from one to three, six, and even more.
When you’re looking to launch your own franchise empire, like Gavin, having a team behind you is a great place to start. FranShares is making it easy to build, manage and grow your portfolio from as little as $500. Find out more: franshares.com
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Stay up-to-date on all things Franchise Empires by following The Wolf on Twitter: https://twitter.com/franchisewolf
Episode Transcription
The Wolf of Franchises:
Welcome to Franchise Empires, where aspiring entrepreneurs learn exactly what it takes to become a successful franchise owner. From one location to 10 and beyond, I’m the wolf of franchises.
Hey guys, welcome to Franchise Empires. This is The Wolf. On today’s episode, we have Gavin McKinnon. I’m super pumped for this episode. Gavin is a franchisee for F 45 in Ireland. He’s the first person to bring that brand to his country, and this episode’s awesome. We get an inside look at what being a franchisee is in one of the fastest growing franchises ever. So after starting to franchise in 2013, F 45 today in early 2022 is already a public company worth over a billion dollars on the US stock exchange. So getting to hear from the inside what that was like to be a part of that system since 2016 was super cool. And also right, despite Gavin being a serial entrepreneur, he founded multiple tech companies before F 45. One of them was a mail order D b D business that he eventually sold off because he saw the writing on the wall that Netflix was going to dominate the market. So we really get that perspective of why he prefers franchises over the glamorous tech startups like a Netflix or a Google. And that’s kind of just a big theme of the podcast is that you don’t need to compete with those companies to make a great living and be a successful business owner. So yeah, I hope you enjoy, and I think you’re going to get a lot out of this episode with Gavin.
Narrator:
The Wolf of franchises is the CEO of Wolf Pack Franchising as well as a creator at Workweek Media. All opinions expressed by the Wolf and podcast guests are solely their own opinions and do not reflect the opinion of Pack franchising or workweek. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. The Wolf Week and Wolf Pack franchising may maintain positions in the franchises discussed on this podcast,
The Wolf of Franchises:
Want passive income each month without having to do the work. Yeah, that sounds pretty good to me. And now that’s actually possible with the brand new investing platform brand shares, invest anywhere from $500 to $500,000 and sit back and let the F Shares team manage your franchise portfolio while you receive your check each month. They haven’t even launched yet. So be the first ones to join the wait list [email protected]. Good place to start would probably be, you know, a lot. You’ve had a lot of entrepreneurial experiences before F 45, so do you want to just give a summary of the different projects you took on and where you were before F 45?
Gavin McConnon:
Sure. I suppose I was always super entrepreneurial. My dad actually had a chain of two coffee shops in Dublin. So growing up I worked making sandwiches, serving coffee, all that kind of stuff. And I was always hungry to run my own business and to earn my own money. I was a computer geek. I wanted to buy software and hardware and all the bits that went with growing up. So I dropped out of school. School for me. I wasn’t very academic. I knew I wasn’t going to succeed in school. Tried to start an internet venture in 1995, didn’t really work out. Tried another one, didn’t quite get there, didn’t quite get a mix. And then some of across mobile content, digital content games and apps and mobile phones. And that business took off and snowballed. And over a few years we ended up opening offices in the uk, Australia, South Africa.
We went to English language countries because we knew we could, we’d understand what’s going on there. And that business boomed for about five or six years. And out that I built a commercial property portfolio in Dublin and Ireland where I knew and this was just pre 2008 before the world kind of collapsed in the financial Armageddon and things went downhill in ar, Ireland was probably one of the hardest hit countries with regards to property. Property prices dropped here by at least 50% residential, about 60% commercial buildings, 50% rents also dropped. So the rents, people are paying up high street or off office buildings went down by 50% as well. So if you take a capital value down 50% and rents down 50%, sometimes your asset was down 75% in value from what you bought it. So there was a total wipe out and banks were repossessing everything and we had to give a lot of assets back and negotiate our way out of considerable debt and kind of start again. And to a certain extent, we still had our mobile content business, but it was not as big as it was in the early two thousands. And we worked hard at that for a few years to build it back up to a good small business with my brothers and my family. But I was looking for something else to do at this point and I was kind of taking some time out and that’s kind of where I ended up discovering franchising and F 45.
The Wolf of Franchises:
Awesome. So yeah, I guess how did you approach, and there’s multiple levels to this, but coming from more tech oriented background, was franchises more attractive in a way because it was like, you know, were done with the tech and you wanted more of that reliable like a brick and mortar business versus just competing with giants like Netflix or Google?
Gavin McConnon:
That’s exactly what it is. So you build a tech business and if you can get outside funding great, and you feel like you’re building this a hundred million dollar billion dollar company, but the people who actually get to that a hundred million dollar billion company, it is not everyone. It’s a fraction of a fraction of percent. And we all idolize those stories and they’re wonderful stories and we believe we can be those people. But ultimately it is a long shot. And at a certain point, I’d done tech a few times and I’d raised some money and I just quite didn’t get there. And in hindsight I could see what maybe the issues were with the product or what we were trying to do. And exactly as you said there, I knew exactly what franchising was going to be. I knew if I opened this gym that I would get customers through the door.
I knew that I could market it and run that business and I could build a financial model that I knew then could be replicated. So if I had one location, how would I get the two? How would I three? Could I get that to 10 and what does that look like? If I can make X profit one, can I make 10 times that profit if I get to 10 of them? So it definitely felt like I was never going to be a billionaire opening a few franchise locations, but I certainly felt like I could definitely succeed at this and it’s could be a very good income stream for me.
The Wolf of Franchises:
Yeah, no, definitely. I mean think that’s part of the message I’m trying to share is you don’t have to mean most people, you don’t need a billion dollars to live an amazing life. I’m sure it would be lovely, but
Gavin McConnon:
More money, more problems
The Wolf of Franchises:
<laugh>. Exactly. But going after a business venture that sure has a lower ceiling, but a higher chance of success is for a lot of people, I think just a better path and can still yield to an extent life changing money and where you can live a very comfortable life.
Gavin McConnon:
Absolutely. And the high point to get into franchising, depending on the brand, it doesn’t have to be millions of dollars. And if you’re creative can, so we’ve opened six locations at this point and they’ve all cost different amounts to get in there, but depending on the fitout and stuff. So if it’s your first one and you just don’t have that cash flow or financial ability to do your dream location I’m not saying go for a bad location, but we’ve where the landlord has made a higher contribution. So there are ways of figuring out deals and being entrepreneurial and just striving to get that first unit over the line. And once you have that first unit, if you want to be multi-unit, once you have that first unit, the economics of that business, what it costs you to get there financially, but with your lifestyle and your personal commitment as well. And then whether you want to do this again and again in my case.
The Wolf of Franchises:
Yeah, no, definitely. I mean that’s a big point I try to stress. It’s just that the first location can definitely be the hardest, but once you have it, it should, as you said, the business inside and out. And it should get easier from that point operationally because you already have the experience of building one, but then also even from a financing perspective, it’s a lot easier to all of a sudden tap into financing once you have an existing location up and running.
Gavin McConnon:
For sure. No of the banks here, Dublin, Ireland is a small country. None of the banks would touch us with location one, two, or three. And it was only when we got to location four and pre covid, but location four that we were able to go to banks and get financing for equipment and for fit outs and stuff like that.
The Wolf of Franchises:
Yeah, no, I would imagine part of that too, and we can touch on this later, is just bringing a new brand to the country, whereas if your brand’s established, you might have more lenient from banks in the country.
Gavin McConnon:
Yeah, for sure. I’m sure if you’re going to go open up a McDonald’s wherever you are, the bank is going to know who this is. And McDonald’s probably have their own bank. I don’t know how they finance you, who knows? But yeah, it’s an absolute proven business model. And so it was definitely different coming with a fitness business model that hadn’t been in Ireland before. And I remember talking to a finance guy who, I wasn’t even trying to get finance for fair 45, I was talking to about something totally different and I said, yeah, I’m in the gym business, we’re opening gyms. And he just goes, oh yeah, don’t mention that to the bank. But a lot of gyms closed down and I was really too late and I didn’t know much about the big box gym model, but I was like, I don’t think any F 45 s are closed down. So per perceptions are out there about an entire industry and it can be challenging to overcome those.
The Wolf of Franchises:
So I guess let’s just for folks who maybe aren’t familiar, so F 45 was founded in 2011, franchising since 2013 they started in Australia. Fast forward to today, they’re already a public company, probably around a billion dollar market cap on the US stock exchange. They’ve got about 2000 locations nationwide. So from a franchise, or sorry worldwide 2000 franchises open, I’m sure thousands more in development. So from a franchisor perspective, it’s been an absolute rocket ship of growth. So given that timeline, Gavin again, F 45 in Australia, started franchising around 2013, when did you start engaging in conversations with them?
Gavin McConnon:
So we randomly came across this. I was on my honeymoon on Bondi Beach and I had five weeks of spare time that I just wanted to relax and enjoy a beach lifestyle. And we came across F 45 there. I’d never heard of it before. I wasn’t looking for a franchise opportunity. I wasn’t really looking for a business opportunity and did an F 45 class and just totally loved it. It was something just very different about it. Anything else I’d done before, I had been in fitness before, as in I went to the gym and I worked out, I worked out with a pt, but this was just different. It felt very, very different. There was a community feel within the room, the music was great, the workout was varied and I left and I, we joined up straight away for the five weeks we were there and we just went back every single day and we totally loved it.
So when we came back to Ireland, we were like, will we do this or we, or it just feels like, it feels a bit alien as well to bring what was an Australian brand there at the time all the way across to Ireland. It’s a 24 hour flight really to get from Sydney to build them <laugh>. It’s pretty much the two furthest points in the world. I was like, how can they support us if they’re in Sydney and we’re on a totally different time zone. And there was a little bit of that. But we also, because we’d been in that studio in Bondi Beach for five weeks on nearly a daily basis, it felt like we actually did know the business inside and out as well, or we certainly knew it from how it was delivered to the client and to the consumer. So it felt less daunting, say than buying into a brand where you’re really been a customer of that brand.
So look, we explored, came back to Dublin, Ireland, we went to a lot of g walk around, a lot of gyms, tried a lot of fitness classes to see if there was anything like that here and there just wasn’t. So we kind of thought, what if we bring this here, it will be a hit, people will love it, and it is a premium product. It’s more expensive than most of the gym memberships here in Dublin. And there was a little bit of a concern about Sydney, Australia is a very, very wealthy city. Dublin and Ireland would not be as wealthy. We were concerned about the price point and whether we’d be able to get that level of we’d be able to charge that level here in Dublin. But we went in with the high price point and we just made sure we delivered the best workout that we could with the best trainers we could and it worked.
The Wolf of Franchises:
I love that. Yeah, I think an important piece there is the market research you guys did to scout the competition in Dublin. I think that’s something that especially, right, a lot of what I try to tell people, and I talk about this in the newsletter is if you start with an emerging brand, that’s how you can capture a ton of upside. Because an emerging franchise usually means there’s a lot of territory open franchisors will be willing to negotiate with a franchisee and give them a generous size territory that they can build a bunch of locations in. And if things go well, right, all of a sudden you can be sitting back with a portfolio of small businesses that are cash flowing and you’re the owner of all of them. But if you wait too long and a brand’s established, you don’t get that opportunity because someone else already built it or the franchisor knows the value of the territory and it’s just too expensive for one person to take down a massive one at that point. And so you obviously first person in Ireland, a lot of opportunity there for you.
Gavin McConnon:
And I think it was early, but it wasn’t super early with F 45 journey. They had mushroomed in Australia and they were kind of really big at that point. There were a lot of openings, but they hadn’t really gone international in a huge way yet. They were just at a few studios open in the us they had one other studio in London and that was it. So yeah, for sure we were able to get, they wanted to sign up as many studios as they could around the world. We got great deals on our initial establishment fees and our equipment and everything else. And I know that they’re things they don’t negotiate really on much anymore because they have an established brand. Yeah,
The Wolf of Franchises:
Yeah, definitely. And I’m curious, so I mean you came from a background of a couple cool companies in the era of when people paid for ring tones on cell phones, you know, were in a business that that you were doing the mail order DVD v d business, which is why we referenced Netflix earlier because you quite literally were competing with them. But those are ventures where I think you did it with your family, maybe some of your brothers, but you were the CEO effectively, right?
Gavin McConnon:
I was the founder, I was the one who started those businesses from the very beginning. But all business has the same thing. You’re selling a product and who, who’s buying that product? In both cases of the business I did before, we’re all direct to consumer businesses. So the consumer was the end product F 45 is a direct to consumer business. We’re selling the consumer a product. So it’s just about always delivering the best product that you can do. So what I find with when other potential F 45 franchisees come to me for and ask me how to operate the brand and whether they can do it remotely or whatever their questions happen to be, I’m saying, look, every five will deliver you a equipment in your studio and they’ll tell you exactly how to build it and your contractor will build that and you’ll end up with a box that looks like in their 45 studio, but you have to run it.
And that’s the difference. And the people you put in there, the employees who are running that studio for you is the difference between your studio and every other studio. And it’s the difference between studios that are profit and studios that aren’t profitable and your employees will be you or your employees will be delivering that client experience to your members. And if you don’t get that right, you’ll be running a non-performing location and a non-performing studio. And so that’s the single not hardest thing, but it’s the most challenging thing is you run that business because the franchisor is developing the product, if you like. Yeah. Whether that’s fitness or whether it’s hamburgers and fries, but you just have to make sure that the people who you hire inside that business to run it are the right people to actually do that. And that’s probably as we go forward now, it’s finding those people and motivating them to stay with our company as we grow and finding amongst that whole team who the stars happen to be and then bringing them up with us. And I think that’s the opportunity that lies in front for us to make sure we get this right.
The Wolf of Franchises:
Absolutely. Now, I mean it’s always easier said than done, but yes, hiring and retaining the talent is critical. I think for every business regardless,
Gavin McConnon:
It’s the hardest thing. And we’ve just come through this kind of huge covid wave omicron, and there was a time there over the Christmas period where literally half of our trainers were out with Covid and our child minder was out with Covid and our managers were sick. And it was incredibly difficult to keep the show on the road and keep the doors open. And it just shows you how important it’s to have good people because the good people will stand by you and will go above and beyond when the time comes to step up and assist you.
The Wolf of Franchises:
Yeah, no, absolutely. But going into your franchise conversations with F 45 just to acquire your first territory mean, did it give you pause where you were starting to realize, okay, this is a franchise, F 45 kind of is giving me the structure that I have to work between, whereas in your other ventures you could theoretically do whatever you wanted.
Gavin McConnon:
I knew going in, I was wide open that this was somebody else’s business and their model and I would’ve very little input on how that would be structured and they have a rule book and a franchise agreement, et cetera. And I have found that challenging at times where I’ve gotten, oh, this is not the right way to do it. We should be doing it this way. And F 45 we’re like, well no, this is the rule book and you have to follow it. And I do understand that and we can’t all be doing different things in our F 45 studios. And so I get that, and it can be challenging sometimes, but I think also if you get to a point where you’ve got a few locations and we weren’t super early in the F 45 system, but we were early enough that we don’t know some of the right people there where if we do have input, we can bring that forward to the management. And I think that is really important because it does feel like you’re being heard and F 45 has grown pretty fast, as you pointed out over the last few years. They’ve had their own challenges with growth and with Covid and getting their own back office and team in order to be able to scale like this as well. So I do think they appreciate some of that input from operators like ourselves who are bringing them the challenges we’re having and how we feel, how we see we might be able to overcome them.
The Wolf of Franchises:
Yeah, no, definitely. And I think that’s another benefit of being earlier in a franchise is that you do get to establish those relationships, whether it’s with the founder itself or just high level executive management. And because you’re a big part of helping that brand grow, those early days are super critical for any franchise. You do have that in with the people at the top who can hear you. And a lot of times I’ve heard this from other franchisees, they sometimes do make changes if they’re early franchisees are saying things and they test it out maybe in a corporate store and they realize it makes sense, that can lead to a system-wide change at times. Yeah,
Gavin McConnon:
For sure, for sure. Yeah, and I do feel like I wish we got in two years earlier. I often think that and either did it in and did it in Australia, in Sydney, which is a city I love, and I feel like we could have 50 locations there now because that’s the scale of Australia. Or instead of doing this in Dublin, we should have just packed our bags and gone to the US and done and done the same thing in the US in California or Florida or somewhere sunny. And I feel like we could have scaled quicker and faster because I think the business environment is more positive about in both of those places.
The Wolf of Franchises:
Yeah, the market you started, I mean it really can dictate partly the ceiling. I mean there’s only so many businesses you can put in a certain area and that depends on geography, just the way the population’s laid out, if it’s spread apart or condensed in Dublin, like an urban city. So for
Gavin McConnon:
Sure. Yeah, definitely. Yeah.
The Wolf of Franchises:
So in America, the sba, the small business administration is a pretty big resource for owners who are starting up. They give out quite a bit of loans and it’s considered one of the more secure forms of debt. So how did you approach that first location given that F 45 is new to the country? Were you able to secure any financing or was it pretty much all cash on hand?
Gavin McConnon:
No, it was nothing. It was all cash. Wow. So our first three locations pretty much had to be financed all cash. And I just know, and that’s kind of why I said that there in my last piece was just that if we did this in the ux, I think it would’ve been a lot easier. I just feel like I’ve never built a business like this in the US but I just feel from just reading Twitter and reading news and information that it does seem to be easier to access things like finance and there’s parts of that that just would help would’ve helped our business grow quicker and grow to more units. And I do read multi-unit franchise magazines and you’re reading stories about these people who, they have 50 of this brand and 50 of this brand, and I’m just like, wow, I’ve eyes are open and going, first of all, how do they manage all that?
But also how did they get there? And some of these people, they’re no older than I am and they’ve built these huge businesses with these franchise brands and I just think it’s incredible that you could do that. But I think the US has, it’s got access to capital that we don’t have here, but it’s also just a huge market that all speak the same language and is quite interoperable. If I go to expand my business in France, it’s a totally different country, even though it’s Europe and we have the Euro. Apart from the language barrier, it is different culture and there’s just things that are done differently while in the US it just feels to me like it’s, it’s different states and whatever, but the business culture appears to be fairly similar. Yeah, yeah,
The Wolf of Franchises:
No, definitely it is an advantage. And I mean I think there are franchisees of multiple brands who own over a thousand locations and they’ve done it in two decades, which is pretty astounding. I mean that’s definitely top 1% of the franchisees, but it can be done. And so as you’re expanding from location one to three, were you able to cycle the cash flow from location one into two or are you just doing this from your
Gavin McConnon:
That’s exactly what we did. And we were fortunate that our first location is still our busiest and most profitable location. So that absolutely gave us the ability. And our second was performing is still our second performing location, so we were very particular about the locations we chose. And I do think that’s important. If you want to go and your first location is not the right location, there’s a bit of a dut, then you’re really going to struggle because not only are you not going to be able to prove the business model to a banker or finance person, but you’re not going to be able to sell it to yourself and you’re going to lose the dream yourself and the momentum to go forward. But because our first two locations were really good, they paid for the third one and we were able to refinance something else to pay for the fourth one, and it just kind of snowballed.
So at this particular point, I don’t have to contribute any more cash to this enterprise, if you like the enterprise is producing enough cash and now we’re credit worthy that we’re getting a little bit of credit for each new location so that we can keep growing. And I suppose that will compound. So at a certain point it’s like where we might have the ability to open one every year at the moment with the cash flow maybe in a year’s time that might be two a year. And as we come out of covid and numbers come back up again, maybe that’s three a year. And then maybe we look for something outside of F 45 because we’ve conquered the market here and we don’t know where else to go. Yeah,
The Wolf of Franchises:
Amazing. Yeah, no, I mean L locations one and two, you can just really set such a strong foundation for the rest of your growth if you get that right. So it’s always super critical. It’s probably, it’s got to be the most stressful time for the owner, but you get that right. I mean, things really do can compound in a positive way from there. So yeah,
Gavin McConnon:
For sure. If you even look at in the US, you’ve got these franchise disclosure documents, we don’t have anything like that here, but I read these all the time and it’s incredible to see if you look at the sales of the top performing and the worth performing locations and you’re, it’s the same product in the same kind of building. So that shows you the difference between these two and you want to strive to be in that top performing bracket. So what’s the difference there? And it’s mostly down to location. Yeah,
The Wolf of Franchises:
Yeah, absolutely. And I mean in certain cases in the us, if it’s in just a smaller market, it can be, I don’t want to say misleading, but essentially if you’re building in New York City, you need a lot higher revenue to make some profit versus Myrtle Beach, South Carolina. So we’re the cost of living and the real estate and everything is less expensive, you know, can get away with a lower return. So that should be factored in for most franchisees. But I do want to ask, given just the importance of those first few locations, you know, signed your franchise agreement, so it’s official Gavin, you’re bringing F 45 to Ireland and gym number one, you pick the spot, it’s under construction, you’re getting ready for launch. What are you specifically doing to educate the market, the people of Dublin, what F 45 is? So you can get off to a good start.
Gavin McConnon:
A bit of my background was internet marketing. So it was like our target group for F 45 is kind of 22 to 45, it’s the age bracket. These people are online and they’re all on Facebook or Instagram or they were a couple of years ago Anyway, so all of our marketing was digital, it was Facebook and Instagram, it was targeting people because we’re in a physical location on Facebook, it’s very easy to target a random location. You need to have a pin on the map, you can see what the population is there. And we built email lists we got people interested in the brand by liking the Facebook page and we just started building interest that way. And over time we always grab people’s email addresses as part of any of our marketing. It’s the first thing we try and get there, email and phone number actually.
And it just means that if they don’t become a customer now they’re on our mailing list. So if every, this is not the right time to join an F 45 or it’s not the right time for your diet or it’s not the right time for whatever else, maybe it will be in a month’s time when I send you an email or two months time when I send you a different email. And we try to educate, use those emails to educate people about our brand as in what is F 45 and why is it different to say some other fitness concept, but also show them the results of people who come in our door. It’s like, this is what Gavin used to look like and this is what he looks like now. And it’s not just about vanity, but also here he feels better and he’s got more energy.
So we do that and so it’s constant. So our email lists for each studio kind of continually grow. Some people unsubscribe all the time and that’s fine, but we find out a really good marketing tool when we send out the right emails, we can get really good results from that and get people in the door. But we’re always marketing across all of our locations. We’re always running something on Facebook, Instagram, I need to figure out TikTok now I feel like I’m too old but I need to get that right. And I know other franchisees in our space have experimented with things like door drops and leaflets and things like that. We haven’t yet gone there because we still get a good enough return just from purely digital.
The Wolf of Franchises:
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Gavin McConnon:
Yeah, we did actually. So we got some of our trainers in downtime who were wearing kind of F 45 branded gear that just handed flyers at a local. Okay, our first one is kind of in a business park and there’s a train station there. So handing it out at the kind of train station and where people congregate who are in those office buildings close by where they congregate for lunch and stuff, handing out to flyers there. So that kind of stuff is really important because it does give the potential client an opportunity to interact with your brand and your trainers as well. They can ask questions there and then what is this F 45? Where is your studio located? Oh, will I be able to do it? Is it too difficult? And they’re all the challenges and the questions that we get all the time.
So by having your actual trainers doing that, rather than hiring a third party marketing company that might know the brand reading at all, I think adds a lot of value. That’s something we should be doing a bit more of honestly, is trying to do those on street activations. I think they call them, the local councils here don’t like them because people drop the flyers and if you don’t pick them up you get fines and stuff. So trying to navigate it can be a bit tricky, but I do think there’s a lot of value in that as well.
The Wolf of Franchises:
No, definitely. And I think even just it gives F 45 in your market a more local feel speaking to people who are Irish, right? Sure. From your country they probably live or near Dublin whereas sometimes these franchises at the end of the day, they can obviously lead into global brands and behemoths, McDonald’s worth tens of billions of dollars, but they are still owned by local small business owners. So I think that that kind of boots in the ground marketing efforts can be just very impactful to say, Hey, yes, it’s a brand that’s built up elsewhere, but it’s still owned by a native small business owner which sometimes people forget that and especially if it’s next to Dublin gym or something like that.
Gavin McConnon:
And we have two sides of that. So we’re like F 45 have been great at getting brand ambassadors, mark Walberg and David Beckham, and we’ve got some great video assets which we put up on social media all the time. But that then feels like for the average Irish person that feels like this is some world away brands filled with American celebrities or UK people who are unattainable. And so we create our own videos in studio as well. And we’ve been really just lucky without getting a good videographer early on who came to our studio and chatted to some of our clients and he recorded some really good video testimonials and we kind of, oh, that’s great, condensed it down to under a minute. But we put these in our emails and we put these on our social media and they really tell a story of how fitness changed people’s lives and in certain of these clients and characters that we spoke to, it really had changed their life and it motivated them in other ways too. Once they got their fitness rights, suddenly their business took off. And there is, I think if you’re, you feel health and healthy and fit inside, then that spreads through every other part of your life that you touch.
The Wolf of Franchises:
Absolutely. Yeah, I especially in fitness, right? There is certainly an easier way to do that than maybe if you’re a restaurant owner, but just tapping into the emotion of how your business is impacting
Gavin McConnon:
People. That was something I didn’t expect from F 45 when we opened the first studio and I was there every Saturday morning and on Saturday we kind of have this Hollywood class it’s called and everyone’s high fiving at the end of the class and it’s a really positive experience and I think on a Saturday people aren’t not running straight out the door to get to their office afterwards either. So I just noticed that standing at the door there and chatting to the clients, everyone was just so positive and in such a good mood and it just felt like what I was like, this is actually a great place to work. It’s a really fun environment where your clients are loving it and they’re loving the product. And it just felt like I was like, this actually is, and not just are we selling a product to making a profit, but we actually, this is life changing and this is a really positive impact on people’s lives. So it was nice to be and it is nice to be part of something that is so positive like that.
The Wolf of Franchises:
Yeah, no, definitely. I mean honestly I said this to you on an earlier conversation, but I usually just work out on my own in a gym, but now I’m kind of thinking this would be fun to be in an F 45. I wouldn’t do it. Yeah, yeah. So after location number one goes well, and you’re starting to build two and then three, how did you manage the workload? And we’ll get into three through six, but is it double and then triple the work? How did you scale up?
Gavin McConnon:
No, I think the first one it feels overwhelming because you’re trying to build and fit out something and you haven’t done this before. And it just felt like we were there every day and every night and every night after we opened we were fixing problems and getting it to be this perfect location that we wanted it to be. But absolutely when you get to number two and number three, it just becomes easier and what you’re doing and you kind of have this playbook and if you had a good contractor who did your construction and you used the same guy again and now he knows how to do it. And so moving from one to two to three, it definitely got easier. Our workload got a little bit more because we were still doing all the backend stuff, still doing all the digital marketing, hiring the team, making sure that people were there on time in the mornings and yeah, so one to three it felt like we were able to manage that ourselves and it wasn’t overwhelming. But I do think when it gets past that point then it starts to become more difficult to manage all of those tasks without it becoming taking over your life.
The Wolf of Franchises:
I guess there are certain things at scale that you are quite literally doing double the work when it comes to hiring, marketing, and then other things though, from your past experience, it goes a lot smoother and you have the skillset to get it done quicker
Gavin McConnon:
I suppose. You have to figure out and it’s difficult how not to micromanage when you get past a certain point because you can’t be in every location all the time fixing all of those problems. And that’s where it’s about getting the right person. Then it’s like do we get an operations manager who looks after three or four locations and they’re responsible now for say, hiring of those staff and maintenance issues and everything basically and meet that person once a week and you call them on Zoom on a daily basis or whatever just to make sure that it’s all working correctly. And that’s where we’re going now is we’ve got six locations open and it’s like we’ve got an operations manager over three of those beautiful and that that’s working really, really well and we’re still there, but it doesn’t mean we don’t need to be in every location on a daily basis and it just takes the pressure off us
The Wolf of Franchises:
I guess. It sounds like you just got to a point where you needed to outsource certain things and at sell it’s it did it take to six locations to get to that point
Gavin McConnon:
And it kind of like the, do you know what it was? It was just strange. Cause the last three all happened during Covid. So suddenly you’re closed down for a few months, you’re closed down, you’ve got more time to figure things out, but then when you open back up it’s chaos because you’re suddenly opening six locations again from being closed for a few months and it’s like, oh my God, on one day we need to staff everywhere, we need to make sure the showers are working and all that. Just everything that goes along with opening a location, suddenly you’re doing six in one day and that becomes a little overwhelming. But that was unique and that was Covid, but we did have lockdowns here that three lockdowns in total and two of them were, one was five months and one was six months. So it was quite a incredible time to try and manage through it.
But yeah, I think then because those three locations, the second three happened, we opened them during these between lockdowns it was less hard to figure, it was harder to figure out where that point happens to be. But for sure now we’re open for the last two months are open since New Year post Omicron and we are coming up with these challenges all the time. It’s like we don’t have a manager in this location and maybe we’re not delivering the product correctly or the showers have stopped working here and our members couldn’t shower this morning and that’s bad. And it’s like suddenly it’s like, oh shit, we need to get all these things fixed and I’m running around trying to figure all this out and I’m no longer concentrating on planning number seven and eight and nine and it’s like, so where do I want to use my skillset and my time and it’s planning those future ones. So I got to put in place the right people to manage what we currently have before getting totally distracted with more locations.
The Wolf of Franchises:
Definitely. And so when you think about hiring then mean, do you have a structure in place now where new employees coming in see that there’s that opportunity for career development?
Gavin McConnon:
And I think they do see it and I think we want to highlight to them that is an opportunity there because I think that is the best place to find the right people. If you’re hiring in somebody who you haven’t met before and you’re reading a their resume and you don’t really know who they are, but if you’ve worked with this person for the last few months and they started as a trainer and then they became a manager and you see all this potential in them and you’re like, oh, now they can manage three locations to say that they can’t manage 10 or 20 locations in a couple of years time, if you bring them up properly through the system and there’s no shortage of great stories all around the world of CEOs, of huge companies that started off in the mail room or flipping burgers or whatever it happens to be. There’s people with incredible skill sets that are at the bottom of all these organizations that have an opportunity to work up. Yeah,
The Wolf of Franchises:
No, I think that’s a really smart way to structure it and it becomes a win-win where the employees get great opportunity, you retain talent and incentivize them to stick around to help you build your system. And I’ve seen some really cool things here in the States where at a certain point, if an owner does, as you mentioned earlier where in the US it is much more feasible to build into the forties, fifties, sixties locations. There’s a certain point where the person who started that just feels an obligation to give back a little. And I’ve seen employees who earn their way into true ownership where they take on a handful of locations themselves. So yeah, it can be a pretty awesome thing to see and watch those stories develop. I’m curious about you’re in Ireland, so being the only franchisee in Ireland with six locations now that’s not a small amount, but F 45 is probably biggest in Australia, in America. So are you able to chat with other owners? How are they supporting you? Are you on your own island there? Yeah,
Gavin McConnon:
You’re kind of on your own to a certain extent, but do you know what? I think as a brand of franchise, they’ve done an incredible job of managing the system to the point of opening the location as in they do all look the same and they don’t come and visit your store and approve it to be opened. It’s all done digitally with photos and video calls and everything is approved that way. So there’s a challenge to get open and getting all of that. But once we’re open, as long as we’re delivering a good product, they’re kind of hands off and they do support us in, there’s a great network of owners who, we’ve got our own intranet system where people can converse with each other, but I’m also part just as separately, all the owners in the UK are together in a WhatsApp group and we support each other questions about challenges with our software, especially during covid.
What are we doing for our members, how are we doing that? So they’re all supporting each other. And actually as they’re selling franchises now in France and Spain and some of the locations, they’re joining the same WhatsApp group here and I think that’s all over the world. I think there’s kind of local studio owners are together in smaller support groups, but and then as a brand, they come out at 45, come out with online conversations about new products and where the brand’s going and things like that every now and again, which keep us engaged a little bit. And they’re also good at, they’ve brought some we have our star trainer, the guy on the tv, I don’t know if you’ve done an F 45 workout, so you might know exactly how works, but there’s TVs around the room and there’s this Corey who’s this guy who’s this kind of PT who’s on the TVs and he goes around the world now going to local places. So he was in Dublin a few months ago and we did an outdoor workout in the park and then we were able to bring all our members there and it just feels like studios are interacting with other studios and we get to meet the people from head office. So there’s that kind of interactivity happening as well that just make people feel like you’re part of something bigger and you’re just not on your own in whatever country you’re operating in.
The Wolf of Franchises:
Okay, that’s awesome. Yeah, I mean if you’re a US based listener, hear hearing this, most brands, you’re going to have the franchisees in the same country. And so there is that embedded support system and there’s usually an annual meetup for those franchisees.
Gavin McConnon:
We went to the ones that they had an annual meetup in Las Vegas and just before Covid and there was one in LA. And we went to that because we just thought it was important to get some FaceTime with the founders and with the other franchisees. And it was motivating for us as well just to meet some of the other people who are in the same business that we’re in. So we thought that was great. I’m dying for it to happen again. Now in a post covid world, I’m very happy to take a trip to Las Vegas and now with some other F 45 studio owners. But look, the online tools that we have nowadays as well, we’ve just been through a pandemic where we all communicated digitally for, so it doesn’t feel like you’re that far away from whether you’re talking to somebody in Sydney, Australia or whether I think F 40 fives HQ now is in Texas. It doesn’t feel like it’s the other side of the world anymore.
The Wolf of Franchises:
That’s good to hear. Yeah, no, I mean just think you really do, you’re buying into the network, but once you’re in, you have that as a resource, which if you started Gavin’s Boutique Fitness it would just be you.
Gavin McConnon:
Yeah, exactly. Yeah, no, there’s a lot to fall back on. Yeah,
The Wolf of Franchises:
Absolutely. So I’m curious, you know, got location seven through 10 kind of on your development schedule left you think’s next more F 45, more fitness, more franchises.
Gavin McConnon:
Yeah, I’ve been thinking about this a lot recently because I feel like we’re going to 10 F 45 locations in the greater Dublin area with just a population of over a million people here. I don’t think we can take any more than that and we’d just be cannibalizing our own members. So it’s like, where do I go? And the UK is right next door. It’s a 40 50 minute flight to London or Manchester, and we could do F 45 s there, but the best sites are already taken and it’s still a flight away to manage and stuff like that. So we’ve just been kind of thinking of if we want to go to 20 or 40 locations or 50 locations, then it will have to be a different brand. And I don’t think it would be in fitness because I think we have one of the best brands and in fitness, and I think it’s what we do at F 45 is great.
So our eyes are open at the moment as to other brands that we might take in. I’d love something that kind of fits in the price point that we found with F 45 where to develop a site is kind of the two 50 to three 50, 400,000 mark. Anything more than that seems like it’s harder to scale because it’s just bigger amount of capital. So bigger amount of risk. Yeah. So I’d love to find another brand that really loved that I’d be able to then do another 10 or 15 locations in an around Dublin or Ireland but I haven’t figured out what brand that is yet or Yeah, but I’m looking Yeah,
The Wolf of Franchises:
I gotcha. Yeah, I mean, well look, you did well on the first one. Pick an F 45 and the brand you choose is incredibly important. That just really is going to dictate some of the things you’re able to do
Gavin McConnon:
And it’s going into a marriage if you’re investing in this, and I kind of didn’t think about it at the time, but we went into F 45 and we’re now five years into this and we’re going to be another five years with this for sure. Yeah, God, it’s consuming our lives for the last five years. So it’s a 10 year relationship where all you think about every day is this particular brand and your studios and your locations. And so if you’ve got a brand don’t, like, it’s not going to be a good relationship. And if you’ve got a business that you don’t enjoy running, it’s not going to be a good relationship. So you do need to pick a brand and a business that you think you’ll really enjoy being a part of. Yeah. And then I think if you’ve got that right, obviously the economics of the brand at the locations got to make sense too. But if you merge that then together, then it can be a, not only is it a great business opportunity and a financial opportunity, but a lifestyle opportunity as well that you know, can enjoy your time building this business
The Wolf of Franchises:
A hundred percent. And I think that’s the key. And you definitely just strike me just from all your other ventures as someone who, you’re a builder, you enjoy that process. I can just tell.
Gavin McConnon:
Yeah, for sure. And at a certain point, I think if it’s managing 50 locations that have been established for five years at that point, and probably going, you’ll get somebody else to manage this or there’s the point to sell it on or something like that. But there’s definitely a lot of fun in building it and making those relationships along the way and building your team and just providing a great service to their clients as well.
The Wolf of Franchises:
Yeah, yeah, no, I mean the positive impact mean you really got me now on boutique fitness. I definitely have to do a class somewhere cause it sounds like a good time. But it sounds like you’re very much a believer though then that a good franchise can train you and teach you how to run the business, right? Because you’re kind of talking about potentially doing a different industry where you might not have experience.
Gavin McConnon:
Yeah, and I think a good operator can turn their to any industry really because it’s about people and it’s about understanding your cash flow and a bit of accounting as well. But yeah, so whether I was running an F 45 or previous direct to consumer business, or if I opened a coffee shop or whatever have to do it is all a little bit the same. It’s it’s receiving information on a daily BA basis and making a decision based on that information you receive and just trying to make all the right decisions. I’m not saying it’s easy, but it’s like, but if you get those things right, then hopefully there, there’s a lot of variables and a lot of inputs to get to make it a success. But with franchising, the product is already there for you and therefore the hard work in that regard has already been done. And when we bought F 45, not only was the product there, but marketing assets were there, there were loads of videos that we could use on Instagram and Facebook and there was just so much stuff that was suddenly available to us thought if we were doing this on our own, it would’ve been overwhelming and we just wouldn’t have got there. Yeah,
The Wolf of Franchises:
Absolutely. No, and I think to some extent what you’re paying for the franchise fee is not time in a way because you have those assets, you don’t have to build them yourself. You don’t have to make any mistakes that the franchisor probably made their first few years running F 45. So you have to pay to get in, but then you kind of have a clean slate to start with.
Gavin McConnon:
Look, I, I’ve thought about this a lot of, if our franchise fee, it’s six or 7% or whatever it is, and I’m going, if we’ve got 10 locations, a lot of money, I was like, I can do this myself. I’ve built businesses before, why would I buy into F 45 if I can just do F 45 Gavin? But when you actually do the workouts and you’re in the studio and you see the technology that they use and how the program is delivered, I’m going, I can’t build this to be as good as this, so I will have something, I will have a product that won’t be as good as this, and therefore do I want to be the best in the market and be F and have F 45 or do I want to be second best and create, come up with my own brand? And I’m not saying that that means that I’m incapable of coming up with a brand as good as F 45, but I can see the way the workouts are delivered around the room and on the TVs and the investment and the years that it’s taken to get there. And I just won’t be able to build that overnight and deploy it across the network of studios. So that’s why I’m paying my franchise fees to get access to that.
The Wolf of Franchises:
Yeah, no, I mean that’s the name of the game. Obviously everyone wishes they didn’t have to pay ’em. But I’ve spoken to owners who, especially the big multi-unit ones who say, or they’re paying millions at points depending on the owner I’m thinking of where they own dozens and dozens of locations and so they’re paying millions in royalties to their franchisor, but they’re happy to do it at the end of the day because they’re successful. So my last question would just be, do you think as a owner of Boutique Fitness concepts, right, Dublin with Covid or do you see any trends in fitness that are going to be here to stay specifically, you’ve touched on the community aspect that class members get at F 45. Can that be replaced, do you think, via a Peloton via the internet?
Gavin McConnon:
No. I have a Peloton bike here, and I use this every morning during one of the three or four month lockdowns where we were in such a strict lockdown, you couldn’t go more than two kilometers from your home and you could only go out if you were going to get bread or milk or something. And I use ptan every day and I think it’s a great product, but I found it very repetitive and I was like, honestly, I haven’t been on it in months now since we’ve come out lockdown. So I do think there is a market for home fitness for sure. And that market has obviously expanded during covid, but I just think what we deliver in the studio, I think there’s a bigger market for studio fitness and gym-based fitness because if you’re working out in your living room, you are not going to get that community experience that I spoke about.
You’re not going to feel that energy that drives you to go harder in your workout. You’re also not going to have any of the equipment that we have in the studio. If you go around an F 45 studio in a workout, you could be using 10 or 20 different pieces of equipment at home. You might have a set of dumbbells or something else and you know, don’t have enough space at home because you’ve got your laundry over here and you’ve got something else over here and the dog is over there. So if you come to an F 45 studio, you’re just going to get the best of everything while at home. I just don’t feel like you’re going to get that. So I’m not saying there isn’t a place for home fitness, but I just feel it’s never going to deliver what you can deliver in a studio or in a gym environment. And if you’re going to dedicate yourself to 45 minutes or an hour to a workout day, then you want to get the best out of that hour that you put in. And I think you’re going to have a better experience in studio. Yeah.
The Wolf of Franchises:
Awesome. Yeah, no, I mean, I agree. I think there’s a place for it, but there are certainly limitations and I think most would agree with that just based on, like you said, size of the room you can work out in your home, the amount of equipment you’re actually going to financially support yourself with and purchase. So
Gavin McConnon:
That equip all takes up space to you. Any Peloton bike is, or a treadmill, it’s huge. Yeah,
The Wolf of Franchises:
No, for sure, for sure. And I got to wonder, do you work out in your own studios for
Gavin McConnon:
Yeah, and that’s how we came across
The Wolf of Franchises:
Undercover
Gavin McConnon:
Balls, loved the workout. So I need to get back into daily. I’m not daily at the moment, I need to get back into daily, but, and that’s what I said, if you love the product and you love the brand, it doesn’t feel like work. Yeah,
The Wolf of Franchises:
That’s great. I love that you’re in there sweating next to all your customers, essentially. Yeah, I think that’s just funny. Yeah. All right. Well, hey Gavin, this has been awesome. Really appreciate you coming on. Where can folks, if they want to kind of follow you to any extent, where can they find you on the internet and reach out if they have any questions?
Gavin McConnon:
Yeah, I’m on Twitter under my own name, Gavin McConnon. Not a big tweeter. I don’t have a lot to say, but if anyone wants to ask me anything or reach out, that’s probably the best place to get me.
The Wolf of Franchises:
Awesome. Okay. And we’ll have the link to your Twitter account and the show notes, so anyone can check that out if they’d like. But all right, Gavin really appreciate this and we’ll talk soon. Okay.
Gavin McConnon:
No, with a great chat. Thanks. Cheers.
The Wolf of Franchises:
Thanks for listening to Franchise Empires. We’re coming to you soon with actionable insights to take the next step on your franchise journey. So make sure to subscribe on Apple, Spotify, Google, or wherever you listen.