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(Franchise Pick) Related reading:
Will the 1-2-3 Fit Franchise be the Quiznos of Health Clubs? Is That a Good Thing?
9,509,657 Reasons to Read Disclosure Documents Before Investing
“Quiznos of Fitness” 1-2-3 Fit in Financial Trouble
“They Lie”: 1-2-3 Fit Franchise Owners Sound Off
The 123 FIT organization and franchise concept has taken some heat from commenters on this blog – in part because it is owned and operated by the much maligned (in franchise circles) executives of Quiznos. But 123 FIT is not an isolated target for criticism; the very viability of the women’s 30-Minute circuit training club as a sustainable business model has been called into question. Industry critics and failed franchisees alike complain of high recruitment costs, low retention rates, oversaturation of the market and profit centers that are too limited and too small.
Commenter Pete (anon) claims to be a successful 123 FIT franchise owner. He contends that the 123 Fit company have been given a bad rap, that the 123 Fit concept is sound and, contrary to what many would have you believe, women’s circuit training is “hot.” We invited him to share his view, which he has graciously done. (I’ve edited slightly to delete the side chatter, added line breaks and formatting for readability)
Pete (anon) writes:
Ok. Here are some specifics… these numbers are mine – rounded off… what I will share is tested and true. So let’s get to the business.
Overhead should run $11K – $12K per month. Here is a breakdown.
- Rent $4K.
- Labor (to cover 77 hours – total coverage) $4K.
- Marketing $1000 – $1500.
- Royalities $600.
- Credit card fees and member service fees $600.
- Utilities/insurance $500.
- Eqpt/Debt Service $600 – $1000
Someone had posted they spent $300,000 in 9 months – so they probably paid cash for equipment. If not, add $600 – $1000 for equipment. Either way, this is a good baseline of monthly spending. My experience is that this is accurate month after month after month.
Revenue. For the revenue. I will use 250 members with an average of $33 dollars per member. The avg per member will vary by club. Rough formula for why I am experiencing that. 125 members at full price of $44 and 125 members at $22. The ones at $22 are add ons or members we signed up on special deals whe we first started.
So here is the math –
- $8250 in monthly dues.
- 12 new members per month.
- 10 pay enrollment fee of $100 plus first months dues. That is $1440.
- $2000 – $3000 in personal training.
- 2-3 of the new members prepay $1100 – $1700.
- So you get to $13K – $15K per month this has been my experience.
I know the math is rough. This is where we are but adding the 10 – 12 new members per month. Even if we lose 6 members per month and add 12 we have a net gain of 6 members per month. In 12 months we go from 250 members to 322 members and you can redo the math from there. More monthly dues and more members to sell Personal Training to. So there is the revenue.
Here is where we have found success.
Price. We strictly adhere to the corporate sales tour. It is incredibly effective in showing the value of what we offer. Price is not the issue when the tour is done. So we get full enrollment and $39 plus $5 towel for all new members. The towel program is not optional. We just include it and quote $44. When the towel program was rolled out I can recall several clubs on the call resisted charging for towel service. Most if not all of the big gyms do – the YMCA near us charges $1 per towel. So unlimited for $5 is a good deal.
Advertising. We focus on “weight loss” rather than exercise in our advertising. We do this at the suggestion of corporate. Last spring they launched the weight loss marketing. Once again many clubs resisted it. We embraced it. The respones we get from weight loss ads VS exercise ads is in the multiples.
Employees. Our employees are such a big part of whether we sell things or not. We hire people that are passionate about helping people. They are paid on production. They know they are valued and they belive in our exercise/weight loss programs. Not only does this help us get new members but it helps us sell personal training. People get results, have a positive experience in our club so they spend money with us.
Capital. Fortunately we had the the capital to get through the normal start up and operating period. It took us longer than 9 months to reach where we are. So when I read that someone only gave it 9 months it is important to understand that it sometimes takes a bit to build a business and to get to a tipping point. So I don’t mean berate those that did not have the capital to get to the tipping point – I just assumed people knew it can take some time.
So with all that said I now want to offer a sincere apology to Barb and any Sean and any others I offended. Just as you are passionate about your experiences, I am too. And members and potential members do read these blogs. When a potential member came in recently and told me that 123 Fit was being trashed on some sites and that caused them to decide not to join I became engaged in this and other sites. I just want to get the word out that many 123 Fits are experiencing what I am. That the future for 123 Fit may very well be better than the experience Barb had with them.
I can understand the bitterness and hurt from folks that were first in with 123 Fit or many other concepts. Certainly there is a learning curve for any business. Even with experienced and long standing businesses mistakes are made – New Coke? But I am sorry people get hurt in the process.
But several of us are making it. I am just here to protect my business – not hurt or berate others. So you have my sincere apology.
….please know that success or failure with 123 Fit does not make you OR 123 Fit bad people. You mentioned I may be Brooksy Smith. Well I am not. I have no love lost for him just an arms length relationship. Trust but verify. But I have come to learn that he is not evil. He did not start 123 Fit so that he could oversee failure. I believe he is doing his best. And based on recent changes and the profitability of many clubs – they may have actually figured it out…
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
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Ok my gosh, lets back up for a minute – Barb has real concerns lets not attack her business ethics, I would be psst to if I had an investement that went sour because of corporate lack of professionalism and business sense. Quiznos may know fast food, but what of health club?
After all – it was not just Barbs club that went under it was all 123 Fits, so Rita are you saying that all owners of 123 Fit were ignorant!!!. I beg to differ I was there – and from what I saw – lack of business sense.
I was shocked to hear Ray was involved – I worked for Family Fitness for 15 years, and Ray has always ran an excellent franchise. He may have given 123 Fit the concept. but Corporate chose to do what they wanted.
I’ll give an example – Family Fitness survived because of it’s concept, 2 weeks free, and 1 month free – lots of personal service and lots of referrals.
Door hanger were a very small percentage of our sales, the referrals and the personal touch is what kept us above the rest. I suggest the club franchise owner and corporate at Parker CO. to do the same,one on one marketing they refused, Instead they wanted us to sell this outragous membershps,
before even trying the club. Many people in Parker were psst at 123 Fit and how they handle everything. I left the club because I brought in 60 members and never saw a dime of commissions… I have the contractts to prove it and I did it all through referrals. It was a joke. I saw the writing on the wall, within 3 month he went under. If Ray really had his hands on these clubs, they would still be around – 123 Fit gave the impressions that Ray was behind them, not true – I new better. So Rita, am assuming you are related to Ray – instead of faulting the franchisers of 123 Fit who lost their shirts,
Give them some helpful advise – And lets not forget the reason Family Fitness did so well, it was after all a fmaily run business …. no outsider really had a franchise with Ray. So if you really want to help the 123 Fit owners, why don’t you offer them franchise in your clubs – or maybe they should contact Jack La Lanne, the Pioneer of health clubs. I’ve been watching clubs pop up all around me for the past few years, Lifetime Fitness, Mountainside Fitness… but I can tell you this, none will survive -unlike Family Fitness – their concept is all about money and not personal touch. Today anyone can be a personal trainer, it’s a joke to me, that they even charge for that service. Back in the day with Family Fitness the instructors as they were called,were part of your membership and had to read a huge manual before even becoming an instructor. There is room for great health clubs – just go back to the basics. Barb don’t give up your dream, peruse your own clubs, the concept is easy. Keep the initiation fee feasible, low dues and lots of personal touch– work your referrals, – find your target market yourself it’s not hard. Work those markets like a politician, become a positive influence in your neighborhood working with the area businesses and merchants is your best bet.. That’s how we did it back in the days with Family Fitness, people haven’t change – they still need to feel cared for and service plays a big factor. Trust me, you do this and the money will come – members will come to you – These big clubs are missing the boat on all levels. Don’t give up – don’t sit back and accept what happen with 123 Fit go out and create your own success. Infact their is a hugh need for the ederly in Parker, no one caters to them – this market is untapped, and am sure other thier are other places like this. The baby boomers are ready for their own place, not hugh clubs with balsting music and glitter, but somewhere they can get serious results.
I’ve been looking to get to the health club business, but quess what..I get turned down because am older and over qulified. When the truth is I’m interview with 21 year managers who are afraid I may take away their jobs.
How sad is that…
Good Luck
How long were you open?
Sorry about the typos. Following the system is an excuse to throw the blame on the zee. Every failing system says the same thing. They didn’t follow the system. It is so obvious. They are making excuses for their failure to care about their zees.
It is obivious your system was tried and proven. If you are successful I am very happy for you. Since yours is not a fitness business I don’t think your advice is applicable. Persistance is good. There is a point where when you do something over and over and it isn’t working you have to do something else. I am not making excuses. It is the reality of what was happening. If something is not working in is pure insanity to do it over and over and over. There is a point where you have to try something else. The proof is in all the zees who have went out of business. Even before the recession. Everyone said the same thing. The first generation is just about wiped out. Only a few are left.
I wish you continued success and may you prosper because you must be doing something right. I have been out of business for over a year. I know what went on. I still have relationships with some of my club members who miss the gym.
Following the system is an excuse that zors use to throw the blame off the zee. If you are in a flawed system it will not work. Tell that to all the zees in 123 Fit who have closed their doors. One lady closed her doors after a few weeks. Could it be that the numbers we had before we opened were not true. Could it be the zor gouged the zees so much that they could not reach success. Like one area director told a zee that never opened, “You can go out anytime.” Real good of him after they paid the franchise fee, bought a second one for a deal of $1000. They never opened and are having to sell their home. Their build out came back $50,000 more than the original bid. You are not listening are you? By the way our’s came back $50,000 more than what corporate said it would be. Is there a pattern here.
Stick to what your doing because it is working for you. Just because you say you are successful doesn’t mean you are. All I know is I wish you well and hope you never get hurt in any way.
My name is Rita Wilson and I own Weight Loss Centers (non-exercise). I have been in the business for 6 years, followed the formula of the franchisor and succeeded.It is a different company, and I cannot speak for 123, but everything you give is excuses on here.
It sounds like you are too busy keeping up with everyone else’s gym, how could you have given it 100%? Sometimes, to cut through the clutter in marketing you have to be persistent. You may get turned away, but that is no reason to give up! Giving up is for losers. Didnt you want to be a winner with your franchise? You can’t just try the zors suggestion once and say it does not work. My centers do over 5 million a year in gross sales and I have a 25% net. But I have been hung up on, told to remove email lists and to never call back, but my staff is persistent.
This is truly a case of not following the system. No wonder you were a failure with your franchise. You did not play by the rules.
Why do you think people buy franchises? Hoping to get advice. While we were there there was no good sound business advice. If this is the case they need to put on the UFOC, “We do not give you any advice.” They did say “We give you advice when we see it appropriate,” The key word is appropriate.
The problem is Ray Wilson wasn’t there and the leader had no knowledge in building a fitness franchise.
YOu must be one of the area directors or VP. 128 sold, 21 open. Everyone was bad, right?
It was the business people in our club that pointed out was wrong. The door hangers were expensive and it took weeks to put our that many door hangers. There was other door hangers that were from other fitness centers and yoga, jazzercise and other fitness bussinesses. People were not happy us putting something on their door. People were not happy us putting flyers on their cars. We got kicked out of parking lots, businesses, churches would not call us back, schools would not call us back, hospitals would not call or allow us to talk to Human Resources. You know why? Then other fitness businesses would be at their door. It was obvious their marketing strategy was fruitless. Remember we did pre-sales before we opened. Did it their way. It was costly and not many responded.
YOu must be Lisa. You tried to sell your club. You are not always there because I have tried to call you many times while we were in the club. Why don’t you just come out and talk and reveal your identity. Spokane claims your hardly there in Moses Lake. Your husband is either golfing and you are rarely there. Which explains why you were not there when we visited your club. It was on a Sat. afternoon before we signed the agreement.
Obviously, you were not knowledgeable in setting up a business either, or you would be thriving. Your mistake was not following the operating system. Maybe if you would have done the door hanger over and over with frequency, you would have gained momentum. You should have listened to the SOR for advice. I listen to mine and have reaped the rewards. In reviewing all your posts above, it appears you were so worried about who was closing, who was in bad financial shape, and “investigating”, there is no way you could have had a strong hand on the wheel of you own business. As a franchisee, your business is to follow the system, not create your own.
The problem is we listened to our zor from the beginning. A franchise consultant would be better than 123 Fit. My oldest daughter who is a business major would give us good advice, much better than the way they got us started. When the trust is gone from early in the business I doubt if you would of done any better. They were suppose to be our leaders. They lead us to fail from the beginning. It is obivious after you are out of the middle of the storm.
We did at the beginning. We put out 5,000 door hangers and only got 1 member. It was expensive.
You are probably with a good zor. Good zors are there for you to reach success. Instead this zor gouged us at the beginning. Messing up our numbers from the beginning. They implied good faith in business and what a nightmare. Not only for me but many zees who went in business with them. They sold 128 clubs, many SNO’s and only 21 left. All the zees that went to training are out. Only one SNO. He was the lucky one. Like Sean Kelly says when it is a win, win, win deal you are dealing with a good zor. This zor was not good. If you believe all zors are good than you live in dream world. When we signed the agreement there wasn’t alot of bad things on the internet. To be honest after studying the franchising world there is only a handful that is good. They all have the bomb clauses that allow them to lie and steal and cheat people. Until franchising cleans up their act it isn’t safe. Until lawyers study franchising in law school than people will be safer. Even the FTC warning doesn’t cut it. Franchise lawyers is not considered a speciality therefore what is our chances of getting good advice. The warning from the FTC says “lawyers.” Not all lawyer’s are qualified to give sound advice. Killer franchise lawyers is a small sector.
Franchising is a brilliant concept when done open, honest and ethically.
Sounds like you did not want to follow any of the advice of the franchisor. Why did you franchise then? Did you stop to think that they had a proven system and if you followed it precisely, you may have succeeded? I am a franchise with another company and I follow the operating system to the letter and reap the rewards. Why would you think your “localized/homeade” marketing would pull better than a corporate ad? If you wanted to re-create the wheel, franchising was not a smart business decision on your part.
What I would do different is not listen to any of the people who set us up. I would of taken everything in my own hands told them to stay out of any of our plans. When we found something than we would contact them. After what we went through I would not listen to any of the 123 Fit people. They are not knowlegable in setting up a business.
We thought since Ray Wilson was indeed a part of the corporation and they mentioned his name all the time that we needed to do what they said. It was Ray Wilson this and Ray Wilson that giving us the impression he was helping run the show. “It is the Ray Wilson Way of marketing, Ray Wilson set up the circuit with help from cardioloigist and physioloigist.”
Unfortunately it is positive thinking that hurts many zees. You have to be cautious. Too many inconsistances especially after we opened the club.
First of all they gave us the demographics of the area. Which didn’t mean much. I believe I should not of gone to CA. on real estate business because my husband never had any business experience and believed everything they said. I would of moved slow as slow as a snail. 123 Fit is about hype and that is all. They will rush you and I know if I was there I would look at many more sites.
The area director said not to make any cold calls. There is a list of names that you can call. Later to find out many clubs cold call. Very short and inviting them for a week to work out.
The key is when you buy a franchise they imply doing business in good faith with you. It is not negative pointing out what is wrong. In fact it is constructive. I believe 123 Fit led us down the road to fail and was not there for us. They hired a marketer that wasn’t worth a hoot. When did they do this? When they knew were close to closing to make them look like they gave us support. I saw the guy take only 10 flyers and a few free week passes. Their expensive marketing was not worth anything. It needed to be more personal. Not corporate looking. People hate corporate looking marketing materials. First of all we were open, too open with them. I would never be as open because they knew how much we had. I believe with all my heart they were just waiting to take over our club. When the area director came in our club he always said, “I love your club.” Now I know why, because they had every intention of taking it over with two years of them not paying us anything and we paid the equipment and are still paying on the build out. What vulgers. Sorry it is not being negative when it is the truth.
The first thing I would of got rid of is corporate, period.
Sorry Barb, didn’t mean to upset you in anyway, not defending him in anyway -
I was there when 123 Fit was growing – I suggested a concept that was from the old Jack La Lanne days – and they basically brushed me off. It seem to me that money was more important up front for 123 Fit. After all, Jack La Lanne and Ray Wilson didn’t become sucessful by being money mongers, they became successful by giving people what they needed, low prices and lots of personal one -on-one customer attention. Lets not be ignorant here – Ray gave 123 a concept, and the owners of 123 Fit did what they wanted – that’s why they failed. Ray, Jack are still in business and where is 123 Fit.
Don’t kid yourself, it’s easier to point the finger at someone else when things fail. but the truth of the manner is, 123 Fit owners miss the boat on their target democragphics, and their marketing had a lot to be desire.
Don’t get me wrong, I love the 123 Fit concept, they had a gold mind but no sense of business when it came to Fitness. So if you want to be angry at someone, as yourself this question – what would you have done different?
A loser cries over spill milk, a winner regroups and goes back to the drawing board, the concept is great – but what will everyone on this board do to make it better, instaed of being negative.
Than’s all I have to say, after all what do i know I only learned from the Best – …..
Ray Wilson was there and gone real fast. Why are you bringing his name up now? You have to be a shill.
Many lives have been devasted.
Am shocked, that 123 Fit are going out of business – The concept was given to them by the most genius fitness person I know – (Ray Wilson) he built an empire with Family Fitness Centers in the 80′s, I know I worked for him – and before him I worked for Jack La Lanne, The Father of all Fitness Centers.
I worked for 123 Fit in Parker – it was the first to go out of business, why?
the owner new nothing of Fitness. I was so excited to bring to the table my 30 year experience but he was more interested in money.
If there is one thing I learned from Jack, and Ray is give the customers what they want – THE PERSONAL TOUCH, low initiation FEE and low dues. It’s worked for years I’ve seen it. To many clubs out there are getting greedy –
123 Fit concept is one of the best I’ve seen in a long time for a small club.
Lets face it there will always be big clubs offering the stars and the moon – but what about mom and pop, or Mr. & Mrs Smith who want just a quick place to work out before they go to work or after, without having to wait for machines or people grunting or music blairing in their ears. Trust me folks – 123 Fit
is the perfect club of the future – Hire me and I prove it.
This is the little club that could… Don’t give up, lets just regroup and hire the right people, I know everything there is to know about building a club from the ground up.. I can teach your team to get referrals without even trying … I don’t know who is behind the 123 Fit concept right now – but you need me on your team, I believe in this little club and it’s concept don’t let them dissappear, its not about the money, it’s about people – and the sooner you realize that the soone you can start making money.
Only 21 clubs left. 44 have gone out of business.
40. Austin Texas- I believe it was sold to another owner.
I haven’t heard about Pheinox, Arizona yet. Again I still haven’t got a hold of the 2008 FDD. When I do I will post the clubs that closed. I know the original owner name for Austin was Shanti. She closed before we did. I called there and another owner answered.
I believe the 40th store is Pheonix, Arizona. I am waiting for verification on this club.
In many states now they are suppose to disclose the clubs that closed if it is a significant. I know 12 closed in 2006. How many closed before we signed? We signed in May of 2006.
There were many inconsistances while we were in business and many after we closed.
Before you open they will tell you that 11 were 123 Fit Clubs. I know Joe Ocoha a business partner of Ray Wilson’s was the first to close and was a 123 Fit club. After you are in the club they say they were always Healthy Exercise. Before we signed I tried to get a hold of Joe but there was no current phone number. When the 2007 UFOC came out I did get a hold of him. He was a 123 Fit owner. I understand that zors have to now put current numbers for future zee wannabees. A franchise attorney from the securities department verified this is a new law that the zor put reachable phone numbers of past zees. Confirming why I could not get a hold of many of these zees when we signed the agreement in May 2006.
Many of the Quiznos lawsuits were not posted on the internet when we signed. Remember Bob Baber did not kill himself until Nov. 2006. My daughter is a business major and did an investigation on 123 Fit. She could not find anything wrong. The conclusion to all this is future zee wannabee’s do not sign a franchise agreement until there is transparentcy in a system. Many signed because Quiznos was successful. If we would of waited for six month to a year the transparentcy would be there and I know we would of never done the franchise.
I only know of two they churned in Co. Because of Quiznos many of the former zee owners of 123 Fit learned how Quiznos built their empire on the backs of the hard working people of our country.
I think people are educated about churning because of sites like this.
I could not get on the Cal-easi site to get 2008 FDD and 2009 should be coming out soon. I did read 3 of their disclosure documents. They are all different. 2007 seemed more direct especially about territories. They even said if they wanted to they could open a club right next to yours. Now who would sign a document that states something like that? I brought up the fact our’s said no territories but the rep kept reasuring me there would be a 3 to 5 mile territory. I kept saying but the UFOC says no territories. I was very concerned about that. The truth is it doesn’t matter what the rep says it is what is written on their disclosures.
I think you are right, Barbara! Obviously, it is fraud, if not “legally defined fraud” when franchisors fail to tell new buyers about other first-owners who have failed and are failing when they have these numbers in their possession.
They do this all under cover of the FTC Rule that permits them NOT to update this information, even in the transfer and termination columns of the FDD’s, until much too late for the newest buyers of the franchise. If they can CHURN enough visibility in the national market, they perhaps can stay alive.
The founders of this chain were the same as Quiznos and Quiznos grew its chain on churning and encroachment with full approval of the courts in Colorado, it appears. Maybe failed owners of 1,2,3 Fitness can move to Colorado and take up residence in the Homless Shelter that the Schadens have built or are building in Colorado.
The list above came from all three UFOC’s. Not only 2006. It will be interesting to see their 2008 UFOC which should come out soon. Thank God for Cal-easi.