Stay tuned as in this episode, we discuss the history of the Alloy brand and why we decided to move to a franchise model.
We share with you our journey from when we started this place, to kind of where we evolved and to where we’re at today. It would be pretty impactful for people that are looking to speed up a business or start their own.
Key Points of Discussion:
- A client was willing to invest. We opened a 1,500 sq ft training center (2:17)
- In 1998, we did $1 million in training; we’d expanded to 3,000 sq ft (3:14)
- 1999: I was almost out of business as I had independently contracted staff (4:18)
- We systemized what many consider more of an art – personal training (5:29)
- Around 2000, we finally scratched our way back (6:02)
- We switched our one-on-one training over to “small group training” (6:05)
- Around 2003, we transitioned everyone over to this small group setting (9:37)
- We started to see there might be something for even a larger group (11:05)
- Larger groups: A lower price point drew younger clientele (11:36)
- We expanded eventually to around 8,000 sq ft (12:28)
- Started doing a lot of consulting for other trainers (12:54)
- Birth of licensing: A gym owner said, “Can you bring it into my facility?” (12:56)
- Fast forward to earlier this year: We had licensed 2,000 clubs worldwide (13:47)
- Alloy fitness franchise is a personal training franchise, but it’s scalable (16:30)
- Two types of people that would be good for any fitness franchise (21:02)
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Mentioned in this episode
Alloy Fitness Franchise has had quite the journey from when we started this place to get to where we have evolved today. I think it’s pretty impactful for people to start their own business to learn from our mistakes, lessons, and experiences. We’re in our 28th year right now!
I was paying my way through school as a personal trainer, and personal training was a very new industry. There wasn’t a lot of validity around it. No one really knew what we did, but everyone needed a coach and that still holds true today. What were we really doing? Showing people proper exercise, coaching, basic good nutrition and holding people accountable. There’s always a market for that.
Everyone’s had a sports coach since the beginning of time. It just wasn’t really an industry. I was bouncing around between different health clubs and going into people’s homes. I thought it’d be neat to put all of these experiences of private coaching into four walls. To bring that in and try to control the customer experience around it, have a place just dedicated to training. I had a client that was willing to invest, it wasn’t much, but we invested enough to open a 1500 square foot training center. Some friends of mine were in the industry came to work with their clients. That was the birth of it and there was no internet of things. I can’t pretend to know for sure, but I think I was the first-ever dedicated personal training facility.
1992 when we opened in 1996 I got married, had kids and had this normal life now. However, I still had a bit of imposter syndrome. I’m wearing sweatpants to work every day. Certainly, this isn’t going to last. Right. Yet in 98 we did $1 million in training at that time we’d expanded to like 3000 square feet. I look back on that now, that’s a lot of personal training.
A lot of our clients at the time were really high end, these social movers and shakers. Atlanta is a big RMB city. People like Usher, LA Reed had a home down the street. Usher bought his home and had a studio in the back. We had this banner year and now I’m again with a mortgage and kids and everything. Then 1999 rolls around and I go from the smartest guy in the world to almost out of business. The reason that happened was that I had independently contracted employees.
They were good folks, but it’s like they were running their own business in my business. A few of them went to do their own thing and I look back on it now, I really don’t blame them for wanting to try that. It devastated our business. $1 million a year is around 83k a month in revenue. We went from that down to around $12,000 because we had a couple of other issues as well, because of a lack of leadership and business systems. Going from 83,000 to 12K, even though I wasn’t living a lavish lifestyle, was a massive hit to my ego. Some mentors in my life that I asked what am I doing wrong? I loved what we were doing, and I wanted to continue to do it.
What I Realized
There are very few jobs where you can go home and put your head on the pillow at night and know that you’re making a real difference in people’s lives. Selfishly, I really like that. This is one of those businesses where you can do that. It went from the wild west, everybody doing what they want and it doing well to “Wait a minute. We need to take a step back and start to systemize.” Which is what a lot of people consider to be more of an art. We started with the easy stuff, which was the training itself. For example, if a client comes in and they move this way and they have these injuries, and figuring out how are they to be trained. At the time I’m sitting on a facility that I’ve personally guaranteed is my lease.
Finally Scratched Our Way Back
In 2000 we finally scratched our way back. At that time we started to notice a couple of interesting trends. We would see that somebody that was doing personal training would bring in a friend of theirs and we just called it partner training and they would pay a little bit less because there were two people and the coaches could make a little more. Therefore, the business would make more and it looks really fun as well. People participating seemed to stick around longer and they had a lot more fun and the little bit of the social part of the session made a difference. That was such a strain as a coach was now being handled by the participants.
It allowed you to have more bandwidth as a coach and coach more people on a given day and help more people and they were able to pay less. I thought to myself, this is probably where things are headed. We switched our one-on-one training business over to what we called small group training. In the Alloy Fitness Franchise, it really just means six people or less working with one coach. That’s what we felt was a reasonable amount of people in one session so that we could still make a brand promise of personal training those people. We scaled our personal training services. Which made it less expensive and that made it more scalable for us as a business. All of a sudden, we could help more people and we could make better margins at the same time. It’s really a win-win.
How The Clients Took The Transition From One-On-One To Group Training
At first, we were really worried that there was some magic in that one-on-one connection. Before, we would be able to do things like, fetch a towel or grab someone’s weights and bring them over to them. We were really worried that when we lost that little bit of connection, something would happen and that we might lose those customers. But what happened was the exact opposite of that. It was funny how just getting people to own a little bit of their own fitness made such a huge difference in their success.
I’ll give you examples. It would be something as small as saying to you, Matt, go grab a 16K kettlebell. In the past, I would have grabbed it for you because I had nothing else to do except tell you more stories and hear you tell me stories about your kids. I’ve seen you three days a week for three years now. I would say, Matt, you go get your own kettlebell. At first, we would get a look, like “how dare you to ask me to get my own kettlebell.” We were worried that somehow in that disconnect we would lose customers because that’s what they were paying for. What we found was the exact opposite. Meaning, if someone could go and grab their own kettlebell, which is something that they’d never done before, there was just enough ownership of their own program to then cross over to things outside of the gym.
Now maybe I can make a better choice for lunch. Or, I won’t have, a pint of Haagen Dazs at night.
What we feared ended up being the exact opposite. All of our success stories skyrocketed with the same clientele that was somewhat enabled in a one-on-one training setting, suddenly started owning their fitness just by default. Then coaches had more margin. Because they could coach people as a coach and that social dynamic changed where it wasn’t all carried by the trainer. Which was somewhat carried by the group. With that came better professional boundaries and all these ancillary benefits that we never could have anticipated came up, which was awesome.
When We Transitioned
2003 was the time we transition everyone over to this small group setting and had really figured out how to really apply personal training to a group of people in a way that felt in every way was as good and maybe even better because of the social dynamic than one-on-one training.
Once we launched that, then we started to see that there might be something for even a larger group. Our personal training was now more affordable, and we were helping more people and our business was making more money. Then we thought maybe there’s an even lower price point that could expose us because we were only one brick and mortar at the time. We started essentially a boot camp for lack of a better term, which is 20 people getting sweat. That went really well at first, we had on average 40 people in each group. Not to mention the boot camp was at an even lower price point.
It exposed us to a younger clientele at the time. If you look at overall our trajectory, it was 10 years of one-on-one training. We understood that really well. Then moving into this small group setting, just from seeing intuitively what was happening with clients. Along with starting a boot camp on top of that. What we settled on was this layered approach at the time.
There were a couple of other layers of things in there and it went really well. Our team landed on this crazy model. We expanded eventually to around 8,000 square feet. We had really high revenue at one point. Because it was one of the highest revenue per square foot facilities in the country, it put us on the radar with some educational platforms to come and speak. We started doing a lot of consulting for other trainers and then around 10 years ago someone introduced me to a Gold’s gym owner who is local to Atlanta. They’re not exactly in our market. He came in and stood in our facility on a Saturday and there were about 40 people doing team training and I think there were six coaches with small groups.
That day was an absolute madhouse. He basically said I’ve never seen anything like this, “Can you take this and bring it into my facility and replace my personal training department?” This became the birth of our licensing. At the time I wasn’t sure I wanted to do that. It sounded like an interesting challenge and I thought this would be a way for us to help more people, to take what we’ve built and actually take it to market. That went over really well and we ended up with more people in the Gold’s gym brand. From there, it took off.
Fast forward to earlier this year and we had licensed a couple of thousand clubs worldwide and some really big brands that we built white-label versions of and some independence and all over the world from India to, Tasmania and everything in between.
Then that became essentially what the Alloy fitness franchise is now. What seemed like a disaster ended up being the perfect opportunity for us to the system as what we were doing.
Why Franchising Made The Most Sense
One of the reasons we started the franchise was because I think it’s an amazing vehicle for people to take something they love and make money with it and help people at the same time. That’s the only reason we did it. We could’ve stayed with a license and just continue to sell that worldwide. You saw the progression from personal training to small group training, the evolution. The same thing was happening with franchises. We could not compete long term with licensing with what other franchises are doing. If you’re going to power everyone else’s franchise, you might as well start your own.
It’s an amazing vehicle for our end users. We can bring people into the fold and even closer to the brand that we’re so proud of. The response from clients has been amazing. Not to mention so much simpler.
My advice to those thinking of buying a franchise, I would find what speaks to me as a brand. Look at market conditions and trends and I would buy something that I believed in that had staying power.