P360 Franchisee Ownership Q&A with Co-Founder, Dave Thomas
The following brand interview should not be taken as a guarantee of experience, earnings, or personal happiness. Experiences and outcomes will vary greatly.
Today, Performance360® Co-Founder Bryan Pritz, sits down with fellow Co-Founder, Dave Thomas to talk about the state of the industry and ownership opportunities at P360. Dave has a wealth of experience in all parts of group fitness ownership that includes 12 years of multi gym ownership, group program design, brand positioning, operational scaling, and nearly 5,000 classes coached on the floor.
His work now consists of guiding Performance360 growth as our CEO, and today he will share some of that knowledge with you.
Bryan: “Are you excited to do this interview?”
“That depends, how honest do I have to be?”
“Alright, just remember that you asked for this.”
Bryan: “Let’s start with what made you want to get into gym ownership?”
“I loved fitness and despised taking orders. A combination that spit out “gym ownership” as my most logical path to happiness, from my very complex self designed career generator.
I guess in all seriousness, beyond that, I think there is something romantic about owning your own gym that many active people are understandably drawn to. It’s that feeling of walking into an empty facility in the morning, before everyone else is up, sipping your coffee and knowing that a gym full of members are about to come through and refer to your business as one of the highlights of their day.
I think back to those days where you and I were in our first location every morning and just the excitement and energy we knew was about to fill our entire day. There was nothing at all like it and I have not experienced anything close to as thrilling since in my days moving into more of a brand development role.”
Bryan: “Not even signing our first franchisee?!”
“That was an amazing moment, no doubt. But I really believed in and felt confident that franchising would have a strong start so that was not as much of an emotional success. It was the thrill of building something from scratch I loved most, even though it was much riskier.
This new chapter is exciting in its own way but there is just absolutely nothing like building that gym community with your bare hands.
I greatly miss being a Coach and a Head Coach, and the days where it was all about that focus on one gym. They are the most enjoyable days I’ve ever had here, and I am so fired up for all of our franchisee partners who get to experience that thrill. Where the possibilities of positive outcomes in every day are endless.”
Bryan: “What do you like and dislike most about owning a gym?”
“For me, a few things stand out as loves.
I love the fact that we are in the business of personal development. Love, like, or hate our experience, you leave every workout having progressed in your health and personal ownership of your own outcomes, and you left a place where someone gave a shit about you for 50 minutes. To me, that is the best kind of business to be in because at the very least you can always sleep at night knowing that you’re one of the good ones in the grand scheme of capitalism.
I also love the feeling of seeing someone who has never touched a barbell in their life be consumed by P360 in the best ways and turn into the healthiest and strongest version of themselves. Getting emails from diabetic members about no longer needing such high doses of insulin, having someone share with me that the P360 culture has “cured” their eating disorder, or turned them into a great example for their kids, watch two members go from strangers to spouses to parents together – all because of P360.
These have happened countless times in 12 years and, I mean, where in the hell else can you get that kind of reward from your community?”
Bryan: “You can’t get out of the second part of the question…what do you dislike the most?”
“My most genuine and sincere answer is not much. I love what I do and who I get to do it with. You will not find me complaining about my professional career on any level, but that said, there are challenges in every line of work and for us its always going to be two things.
1. Continuity of Coaches – We’ve been fortunate enough to always attract and keep great talent for our desired life cycle which is about two to three years, before we want to create opportunity for our people to move onward and upward. But, in a world where so much can be done online and people have more lifestyle flexibility than ever, team retention will always be a focus that keeps us on our toes.
We’ve worked hard to create a great system of finding and developing coaches, and we have a full time Director of Coaching Development in John Main to help us always put a good service in front of our members. But we work very hard at this.
2. Adhering to Your Brand Values – There will always be a few people who want to tell you what you should do, what classes you should offer, how you should write workouts, etc. The businesses that make it are those that value the right kind of feedback while also sticking to their principles they know to work. I believe we’ve done a good job at that, but you have to learn how to endure occasional criticism and not waiver. If you don’t then you’ll turn into a hot mess of trying to please everyone so you’ll be great at nothing.
All in all, I have zero to say I dislike or complain about. I am very lucky.”
Bryan: “You mentioned a system of coaching development. Can you elaborate on why you think that’s important for our industry?”
“I think to better understand this people need to realize that most concepts begin to significantly decline around month 18 after the owner steps off the floor. Owners have the most invested, drive the relationships in the gym, and are the reason people come in the first stage of growth, years one through three. But if you want to be a lasting great business you absolutely have to solve the next stage when that owner is no longer there, and it’s the team members’ turn to run the show.
This is why I constantly refer to our model as “team operated”, not owner operated.
With franchising, the owner is there to guide the ship, not be there daily. Years ago you and I made the decision to channel significant time and energy into systems and processes that ensured the torch would be passed on, since we knew that Performance360 could be successful “without us”. As part of this process development, we learned how to best identify who will succeed on our floor, how to conduct interviews, how to onboard, and how to develop on an ongoing basis post hiring.
There is not a step in the lifecycle of our coaches that we don’t have accounted for.
This is all to say that I think coaching development is VERY important in group fitness, and why we invest so much into it. Right now, it is the single biggest ongoing investment we are continuing to make into the brand.”
Bryan: “Switching gears – What’s the hardest part about opening a gym?”
“There are two challenging parts about opening a gym.
- Finding a location
- Selling initial memberships
But, there is a major difference between Joe Schmoe opening his own concept and franchising a P360. As it pertains to the latter, these steps aren’t actually difficult at all for us since we outsource those to trusted professionals.
On a real estate level, your partnered agent is going to find your space and negotiate the lease.
On a membership level, our partner company ONLY does gym launches. We’re not trying to re-invent the wheel or be experts at something that isn’t our wheelhouse, like advanced analytical digital marketing and targeting. We bring in the best and pass them on.
My real answer is to say the hardest part for our franchisee partners is to resist the impulse to make things more challenging by interjecting their own strategies that often run counter to what we’ve proven to work. It’s about repeating what works in that sensitive first year, not guessing about what might.”
Bryan: “Okay, this is a perfect segue into my next question. What’s the difference between franchising a gym vs. opening one on my own?”
“It’s a complicated topic that doesn’t need to be.
When you start your own concept, you must come up with the following: branding, facility layout, budget, workouts, staff training, hiring traits, workouts, membership polices, flow of joining, ongoing member communication, workouts, opening and closing, trusted vendors, workouts, third party software, class schedule, workouts, workouts, and workouts. And over time, analyze it all to see what decisions lead to a better experience and better economics while ALSO having the fortitude to stick to it and present a consistent product.
When you franchise your list of that looks like this: _________
I cannot stress to you the importance of having a dependable core service (the workouts). It is by far and away the topic everyone in your gym will be most vocal about, so to have something that you can trust has been tested and proven for twelve years is very reassuring for our partners.
It’s why there is a fee. We’re your partner, and with that partnership comes our expertise and our efforts. If you don’t value that, go out and do it on your own.”
Bryan: “Can you elaborate a little more on the support? I think that most people will understand that we provide support, but what’s the human element?”
“I think this is an amazing time to franchise a Performance360 because you get to work with ownership directly. These are our “early years” for franchising and we have a ton to offer our partners. There is no one on our team who hasn’t logged expert level hours at every single aspect of running a gym. They say it takes 10,000 hours to achieve expertise and our ownership team has 30,000+ each.
Speaking more specifically, I believe you to be a huge asset on the back end that most people don’t know too much about. No one thinks about the unsexy side of operating a business and the un-sexy yet crucial infrastructure is what you have been responsible for: accounting, human resources, data aggregation and analysis, membership support systems, etc.
Lenny as our Chief Operating Officer, I think, is just one of the coolest stories we have for our brand. Over 8 years he went from member, to coach, to co-owner, to COO. He has done EVERYTHING in a business. You get to work with that guy directly in your monthly analysis and B.E.A.R. Mentorship Program? Come on.
John Main coming over from CrossFit was a massive haul for us. He has over a decade developing coaches and is one of the only Level 4 CrossFit coaches in the WORLD in his past career. He also has this incredible ability to blend direct guidance and leadership anchored in strong values, while also maintaining a level of approachability that’s key to ensuring that our ecosystem of coaches trust that we have their best performance in mind. That is a rare, rare combination and we have it in John.
I could gush on and on about our team at HQ. But I’ll just leave at whatever holes we missed in our process and playbook, we more than make up for with the people who really care.”
Bryan: “What question or concern about franchising had you worried and what are you seeing now with that concern?”
“Oh, by far and away our ability to help generate sales. Pre-launch sales are everything. They will determine how quickly you reach profitability and how fast you see your ROI. Because we never had huge pressure to see big sales at our HQ locations, we never explored the world of professional launch marketing. And man…we should have way sooner.
I was shocked at how much the results have exceeded my expectation. It’s shortened our forecasting to success for our partners and made me optimistic in every way.
To be partnered with a nationally scaled marketing company is huge. We can just worry about being great group fitness operators, not digital marketing experts.”
Bryan: “Exact same answer for me. Okay – once open, how much time do I need to operate a gym?”
“Well again, there is a major difference between ‘a gym’ and ‘P360’. But I am going to assume you mean owning a P360 so in that regard, very little.
Everyone wants to talk about workouts and coaches as being the backbone for our process, but to me it’s the ability that you’ve given our partners to streamline essentially everything on the back end of the business. I always tend to lose people when I talk software, but the Become More® Technologies that you designed has been a game changer in our ecosystem of operations, allowing us to now support two types of ownership.
1. Owner-Coaches (Full Time): This class of partners will be both head coach and owner. It will be much labor oriented because you are on the floor coaching, and also managing the business. Even in this role I think that 15-20 hours per week or less is a far estimation, which includes coaching.
2. Owner Investors (Part Time): These will be owners who don’t coach but do passively manage the business. This role is around 6-10 hours per week.
Right now we have a solid mix of both types of owners in our ecosystem.
I go back to the entire point of offering a franchise is to be able to ensure that you are efficient with your partners’ time and waste as little of it as possible.
I have a wife, two kids, and two dogs so I need all the free time I can get. I operate as if every one of our partners is as busy as I am, and our systems are designed to support that.”
Bryan: “Are there advantages to part-time ownership?”
“Man, I think this is something that flies way under the radar. Yes, big time. I would even go so far to say that owning a gym part time is generally, for the average person, a more efficient endeavor than owning one full time. Why is that?
1. Cash – If you own a gym part time you likely have a primary form of income. This means you won’t be putting pressure on the business to pay you out as fast as possible. When you do this, you inevitably want to create shortcuts or put way too much pressure on your team to perform. Worse yet, it likely means playing an active role “in” the business versus sitting back and working “on” the business.
2. Time – Part time owners don’t sit around obsessing over every little thing like we full timers do. Let us do that for you at HQ. This inevitably reduces time wasting and decision redundancy and you tend to let things run their course in a positive way because you are not constantly diving under the hood to ask what’s wrong when most of the time the answer is, “nothing.”
Having more time to do something is not always your friend. Trust me.
3. Emotions – A part time business is typically seen through the lens of all X’s and O’s, you don’t have enough “creator’s equity” invested into it go get emotional about it. This means when you get that inevitable first nasty email from a member (it happens to us all), it won’t hit you on a personal level as much as it does to us sensitive full timers. I created the operations side of this business and to this day, I take feedback too personally. Our franchisee partners don’t feel that.
Add all of this up and part time gym ownership brings with it a lot of the positives and a lot less of the negatives. I recommend it highly.”
Bryan: “Totally agree. On the flip side what if someone does want to make this their full time job?”
“Awesome decision. I would say that’s a great decision as overall the past twelve years have been amazing for me. There are a few caveats I would make in that recommendation.
1. Be Honest With Your Earning Desires – I am very honest with every potential partner about the financial opportunities. They are very strong, but like anything, the expectation needs to be a personal fit for you. I talk through this with everyone who shows interest as it’s important to me that everyone is aligned with and understands our model.
2. Be In It For Reasons Beyond Income – While the financial potential is very good, it is helpful to have a strong sense of purpose and desire behind it. I personally draw immeasurable satisfaction from identifying as a gym owner. It helps to have a real passion to bring a strong gym to your community and genuine satisfaction that it brings people together and improves lives. Owning any business will always present its trials and to have something meaningful as your North Star will anchor you in all the best ways.
3. Have Savings – If you are opening a gym and going all in on that as your primary income, awesome. You’ll want to have savings in place so that you aren’t pressuring the business to reach financial levels too quickly, too soon. No good ever comes of that.
4. Get Ready for The Most Fun Of Your Life – Professionally, there is nothing as rewarding as owning a successful gym concept.
These are things I help everyone work through when they go through our franchising process. To be honest, most of the time I am just guiding you to your own decision, not really selling the brand. I think it does that on its own.”
Bryan: “Finally, what are you seeing as a difference in gym ownership in 2023 versus previous eras?”
“I feel like I could answer an entire interview on this topic alone. Let me just say that overall, I believe there has never been a better time to own a high performing gym concept like ours. All industry market research shows brick and mortar is back in a huge way after COVID, and Performance360 has never been more in demand than it is today. Period.
I notice a few things in particular about this era.
Record Breaking Interest
We are seeing absolutely insane levels of trials come in through our doors at HQ on a monthly basis. For some context, a good month used to be about 60 trials per month and now we’re doing 100 in our sleep. I don’t know if it’s post COVID slingshot effect, or that higher quality concepts are more in demand than ever, but it’s probably a little bit of both.
Consumers Expect Your Best
Consumer demand is more particular than ever – as it should be. Post COVID, no one wants to put up with any bullshit. There are a ton of options and you need to be on your A-game at all times or members won’t tolerate anything less, nor should they. Take our Pacific Beach gym which is our most successful location. You can walk outside our front door and visibly see three other concepts with many more a few blocks away.
That keeps you honest in the best ways.
The great aspect of this is if you’re a concept that pays attention to quality and delivers, you’ll develop a very loyal following.
Rise in Secondary Memberships
Additionally, as brands have really focused on their niche offerings, we are seeing our customers maintain secondary memberships at higher rates than say, six or seven years ago. A place for yoga, a place for fitness, and sometimes even a place for two forms of fitness!
Again, I see this as only positive. Customers don’t expect you to be their one stop shop so it allows you do one thing exceptionally well which for us, is first class group strength training.
So right now, we are in this weird stage of seeing competitive options ever so slightly increased in combination with, and outpaced by, the elevated interest in joining rates.
The net result has been our all time highest membership and revenue which we’ve broken in back to back years and pacing to repeat a third time.
We’ve never been the highest priced concept, and this helps us stay desirable for our members in a tougher economy.
Attracting the Right Talent
On the coaching end of things, I kind of addressed this before but attracting top talent requires more patience than it used to. A lot of coaches now run private practice online with so many affordable tools to scale and present training to clients. That has its challenges, but I think our brand will always attract those who want to coach in person training, with lifts and movements that are effective and fun.
I honestly see this as a positive as it really has clarified what coaches want to do. Those who come to us have a passion for in-person coaching more than ever.
Help from Other Brands
I personally welcome the increased presence from brands that didn’t exist when we first opened. Here’s why – Orange Theory and F45 will always excel at attracting people to group fitness that might be intimidated and want to perform workouts where they can kind of just fade into the background. But, we see a lot of those folks outgrow those concepts and want more, so we get many former members from both of those brands. Previously, those are people that probably never would have tried P360 because they may have been too intimidated for a culture like ours as their first entry into group fitness.
So, in 2023 I see this enormous pie that’s bigger than it was pre-COVID, with more people hungry to eat it, and plenty to go around for all the brands who give a f*ck.
There’s insane opportunity for our ecosystem of owners to plant their flag and improve their communities.”
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