What’s missing? The repetitive boom and bust cycle of fitness business models

March 6, 2023/by Ian King

It looks like the Australian originated, global fitness franchise F45 is getting very wobbly at the business end.

Can’t say I’m surprised, but it’s disappointing. Disappointing for those who have chosen to put their careers, businesses, and money into this path.

Some background to boom and bust.

The fledging fitness industry was very young in Australia when we witnessed the arrival of a new beast – the US modeled fitness center –

In the late 1970s and early 1980s, slick, glitzy fitness centres modelled on US gyms appeared around Australia at a rapid pace…. Membership agreements and contracts were often deliberately vague and many clients paid hundreds of dollars for badly planned and ineffective courses. [1]

My first personal exposure to this boom-and-bust fitness industry was in the early 1980s when my exercise physiology tutor was hired to consult to a new fitness chain named ‘Vigor’, and hired me to help him. He must have liked what he saw in the fitness chain because he then purchased a franchise. A year or so later, it collapsed.

The wheels started to fall off the fitness boom in 1983-84….The first significant fitness failure was the Vigor group in NSW and Victoria, which collapsed in 1984. Several small, independently run gyms soon followed. In the second half of 1984, the John Valentine chain of seven clubs (six in NSW) crashed, owing creditors and customers $1.6 million [2]

It was incredibly coincidental that I was part of that history, and very helpful because it gave me a perspective that would serve as many flashy and attractive fitness industry business models boomed – and the busted.

The list of fitness industry boom busts business is long. Some of the bigger more recent cases in the US have been Bally Fitness (filed for bankruptcy in 2007)[3], and 24 Hour Fitness[4] (filed for bankruptcy in 2020).

What’s missing?

Everyone’s going to have their own theories on what is behind this fitness industry business model boom and bust cycle.

Here are some thoughts:

Business model commission structure

Maybe it’s the commission model of the business structure? In the case of F45, the CEO Adam Gilchrist apparently earned $500m AUD when the company floated on the NYSE.

F45 fitness founder and CEO Adam Gilchrist has just become one of the wealthiest people in Australia after a staggering result from floating his company on the New York Stock Exchange…F45 is valued at $US1.4 billion ($A1.9 billion) after it was put up for $US325 million ($A437 million) in its initial public offering on the New York Stock exchange at Thursday local time. Shares skyrocketed to $US17.75 ($A24 million) from their $US17 open, before closing on Thursday at $US16.2. Considering Mr Gilchrist holds 28.9 million shares in the company, that means he made around $US371 million ($A500 million) in one day.

And the founder, Rob Deutsch apparently pocked $67m AUD when he sold out in 2019.[5]

Sure, the franchisees made profit along the way – at least until they didn’t – however was the business model sustainable?

Same product, different packaging

Essentially F45 was another group training fitness model. With unique color in the logo, clean lines in the branding. So same package, different packaging.

For decades fitness industry business models have competed on price, equipment, space, and appearances. If that is all they have to differentiate themselves, perhaps this is not enough?

Serving the needs

Some suggest this group fitness model meets the needs of those who need to be ‘motivated’, and who seek social interaction of group fitness. This is a reasonable argument. But at what stage does value adding stop and start.

Let’s imagine you had 100 people with knee pain. There are going to be individual differences in the needs of each of those 100 people. But let’s say the only alternative they have is to go to a group class for rehab. It’s better than nothing, until its not. Until they realize their bodies specific needs are not getting met. Until they realize they are still in pain. Until someone comes up with a better way to serve their needs.

Perhaps one day the industry will choice the needs of the individual over short-term profit for a few?

Interestingly…

Apparently F45 used my 3-digit timing system as an integral part of their training systems. Imagine if our industry could adopt the musical or similar creative industries values and procedures where intellectual property and royalties are taken seriously.

Conclusion

F45 are not the first and won’t be the last in the fitness industry business models to boom and bust Our goal with our KSI Coach Education is to guide our coaches towards sustainable business models. Whatever F45 and the others have done is not sustainable. Somethings missing.

What do you think is missing?

References

[1] https://www.afr.com/companies/fitness-industry-gets-back-in-shape-19890811-kaiza

[2] https://www.afr.com/companies/fitness-industry-gets-back-in-shape-19890811-kaiza

[3] https://en.wikipedia.org/wiki/Bally_Total_Fitness

[4] https://www.latimes.com/business/story/2020-06-15/24-hour-fitness-bankruptcy-coronavirus-gyms-closed

[5] https://www.dailymail.co.uk/news/article-10678759/F45-gym-founder-sells-three-storey-ultimate-bachelor-pad-Sydney-mansion-18m-Rob-Deutsch.html

The best gift a physical preparation coach can give

December 23, 2019/by Ian King

At a time of year when giving is on the mind, I want to share that in my opinion the best gift a physical preparation coach can give is the gift of quality of life. And whilst the cardio-vascular benefits have decades of support, and the muscle density has now been raised to the same level of value through recognition of muscle mass loss as a correlate with aging and other risk factors, this is still not what I am specifically referring to.

I am referring to the muscles, bones and nerves.

In the early 1980s as I set out on my professional journey I realized the shift in posture from the 1960s and earlier bodybuilder (Reeves, Park etc) to the post 1970s bodybuilder such as Arnold. Their shape changed, and from my perspective for the worse. I trained athletes, however I respected the power of bodybuilding as a medium and knew that these ‘dis-eases’ would filter into athlete preparation. It was not happening, at least not on my watch.

This realization along with a desire to categorize strength exercises led me to the years of reflection that resulted in the Lines of Movement concept. Quite simply I wanted to avoid imbalances, and I ultimately shared this concept so the world could do the same.

Now that has not happened. Despite every ‘professional’ being able to recite the major categories in the Lines of Movement (albeit with that little one word twist that is a reflection of in individual’s attempt to be ‘original’), wax lyrical on the need for balance, and show the vernacular of push pull etc. in their training programs, the results show that knowing something and doing something are not the same.

Not that our Eastern philosophers are surprised, as they were very clear –‘To know and not do is to not know.’

In fact since the 1970s, more ways to create imbalance than I had ever expected have been added post 2000, as I speak about in Vol. 3 of Ian King’s Guide to Strength Training.

I don’t expect to save the world anymore. I have learned to let it go. I even witness young athletes see me one day and then be overwhelmed by the opportunities of professional sport and embrace all that is done to them, including the young highly gifted athlete whose shoulder relationship degraded by another say 10% in as little as 3 weeks. We know which bed he will be resting on soon and it is one with bright lights above and a person standing over him with a scalpel…

The greatest power I have is to identify and empower those rare individuals who are have come to a point in their career when they realize something is not right. Who have the courage to think for themselves, to train in a way that is not supported by the dominant trend or the current internet driven guru. It is these individuals that I now communicate almost exclusively with in a professional sense.

For whilst I have given up on expecting to save the world, based on the failure of the late 1990s teachings to achieve the intended goal in the ensuing 20 years, I have also given up the expectation that any but an incredibly small minority of the professionals in this industry either have the humility and courage to do what is best, or care enough for others to take these steps.

And for this minority, the best gift you can give is the gift of quality of life. The ability to move for as long as possible in the later years. The ability to play with your kids and grandkids in the back yard. And in the perfect world, your great grandkids.

For this gift will be the exclusive domain of those who listen to and are guided by my brutal search for the best way to train and remain injury free. A search I have been on for 4 decades now, and a few more planned!

So it is incredibly rewarding when I receive feedback such as this. And note this person has only just completed our Level 0 Coaching course! A very powerful experience, yet so many move levels to follow. If we can change lives through you, we are fulfilling our potential, for together we can do more than I an on my own.

“Really enjoyed it Ian gained a lot of information and knowledge (also when I look back at my training/ injury history it all seems very clear why I had those injury’s now. Incorporating a lot in too my training and clients. so far so good. Really like the way KSI goes about things. I am interested in learning more and progressing to level 1.”—CE, NZ