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hen looking for a place
to open your next Planet
Fitness® club, there are a
million things to consider. Make that
a million and one if the fitness operator
down the street decides he wants out.
Although purchasing a space previously
occupied by a competitor isn’t extremely
different from a typical deal, there are still some
unique advantages and challenges.
First things first, while it may be tempting to jump on
the opportunity to take a competitor out of the market, the deal
still needs to work for you and your business.
“You should only acquire a competitor in a market where you
would put a Planet Fitness anyway, and you should only acquire a
competitor that is in a better location than you could find on your
own,” suggests Victor Brick of Planet Fitness Growth Partners,
LLC. “Location is critical. It makes no sense acquiring a club that
is not at ‘Main and Main,’ which would leave you susceptible to an
attack from another competitor. My main word of advice to other
franchisees is to do your homework.”
Verifying EBITDA, membership, the lease and the condition
of the equipment, among other things, are crucial steps that you
need to take to ensure you’re putting the right price tag on the
club. The closer the box is to a typical Planet Fitness (18,000 to
25,000 square feet) the better. Fewer renovations means more time
and money in your pocket.
Another word of advice, create a win-win situation with the
seller. Work with them, not against them, and make sure you have
a solid team of professionals, such as lawyers and financial advisors,
who will consider every angle and protect your interests at all
times.
“Get everything in writing,” Brick advises. “For instance, once
you have taken possession of the site, it is too late to go back to the
seller to haggle over who should repair the HVAC system that was
never in proper working condition.”
Michael Hicks, owner of Major Management, LLC, suggests
ess
looking at the
deal through
the eyes of other
competitors in the
market.
“You have to go
in there and assess how
much competition would
by Christina Cannon
pay. If a real competitor
would actually move in, how would
that affect you and is it worth taking those guys out?” asked Hicks.
“What is it worth to have that draft and that market control and
that kind of dominance?”
Once you’ve made the decision to buy a competing location
and convert it, and after the deal is done, it’s now time to decide
what approach you want to take to make the turnover as smooth as
possible.
“When considering how to convert a competitor’s club or
other fitness center to a Planet Fitness, there are two schools of
thought,” says Brick. “The first is to ‘rip the Band-Aid off right
away’ by closing for two weeks to a month and completing all
renovations and re-equipping in one fell swoop. The second is to
do it in stages and close for as little as possible, making renovations
and re-equipping the club as you go.”
What you decide depends on a few key factors. While your
financial strength and competition in the market do come into
play, the largest factors are often how much needs to be done and
what time of year it is.
“We would never advocate closing a club during the first
quarter of the year except for a limited time period, one week
at the longest,” Brick says. “At the same time, closing a club for
upgrades, renovations and re-equipping in August, especially if you
have other clubs in the area that the members of the closed club
can use, is not a problem at all.”
If you are going to close and do it all at once, it could be
anywhere from two weeks to a month, depending on the condition
of the physical plant. If locker rooms need to be gutted, floors