Expanding a Franchise Portfolio; Retail and Fitness Brand Success with Paul Rayner, Part 2

Following Part 1 of our interview, in this second part of our chat with franchise trailblazer, Paul Rayner, we discussed his move into the fitness vertical. He also discusses what it takes to maintain success in his Cash Converters stores during this expansion into new brands.

You gave great insight into your entry into the retail franchise and decided to make the move into the fitness vertical. How did you feel about the timing of your decision and ultimate choice of brand?

Timing is everything and with the explosion of the 24/7 market we thought we may be too late. The Gold Coast territories were really filling up but we traveled to Melbourne a lot because of our Cash Converters stores. So we decided to look down there.

During this time we came across Snap Fitness, a competitor to Jetts Fitness and Anytime Fitness, and decided to meet up with the head office team as we had heard good things. After reviewing the franchise terms, the Snap Fitness brand looked like a great fit for us; they were flexible, set fees and provided fantastic support too.  

We decided on the brand and due to the overcrowding of 24/7 gyms on the Gold Coast would look in Melbourne for territories. Brunswick looked perfect for us and that is where we would have our first gym.

Now that you had decided on Snap Fitness Brunswick, was there any immediate differences between retail and fitness verticals?

As a business owner and investor to me, there is no difference between selling in retail or selling memberships in a gym. Before delivering a world class experience inside the gym you need to get people in the door.

So we did not see any major difference. We could assist with the sales and hire the fitness professionals and customer service teams to take care of what happens inside.

You went on to buy another Snap Fitness location, was this always the plan?

We wanted to originally open three Snap Fitness locations and when another territory came up in Fitzroy we snapped it up. It is basically the next suburb over and we thought that would be easier to manage.  With Brunswick being such a huge success we thought we could get a great return on Fitzroy too.

You mentioned you wanted three Snap Fitness locations, did you achieve this?

No. After looking at the 24/7 models and thinking it was saturated, along with the explosion of F45 studios, we wanted to look into the boutique market and do something around group training. Lift Brands brought out 9Round to Australia, a 30 minute kickboxing workout, and we loved it straight away.

So rather than opening a third Snap Fitness, we opened two 9Rounds.  So in fitness franchising, we have both Snap Fitness and 9Round in Brunswick and Fitzroy.

You have nine franchise businesses across all of your brands – how are you managing them all?

We put a great team who is dedicated and trustworthy. This did not come easy. It took a while to get the right team in place but now that we do, it helps us to no end. 

The managers and supporting teams are all fantastic, both in retail and fitness. We would not be where we are today without them.

Glen and I work on the administrative side of the business and guide and mentor the teams as required. Getting told “leave us alone, we know what we are doing” has never sounded better.

2020 has been a year many of us would rather forget, how has it impacted you?

In the beginning, it was the uncertainty. Not knowing what this virus was, how it impacted us and so many conflicting views. There was some comfort that everyone is going through it at the same time. 

We were having a fantastic start to the year, our biggest ever to be honest and that was taken from under us. However, even the 10 days of reopening in Melbourne we nearly did our largest months ever.

We are just excited to reopen fully and get back to delivering valued services to the public in both retail and fitness. 

Victoria has been locked down since 16th March, QLD is open – can you expand of the impacts of each?

They are two polar opposites. 

Queensland has been open for around four months now and it’s really improved month to month. Our retail is nearly back at 100% and demand has increased in all areas. So I can not really complain. 

For Victoria, we have both retail stores and gyms closed at the moment with one difference. Our Cash Converters stores can open with the Click & Collect service. Like QLD, we are desperate to get all of our businesses open and get them trading once again, not only to ensure the financial success but also to get the people living in Melbourne training again and providing the much needed financial support. All of our teams are read to go.

How much value do you place on marketing, especially during reopening?

Marketing is absolutely critical during these times.

You need to have a loud voice to make sure you maintain awareness and remain the first choice. If some of your competitors close during the period, you want to be there to take advantage and provide the customers and members with an alternate option.

We found it is important to stay in touch with members as much as possible during the lockdown through our communication, social and virtual channels and ramp up leading up to the open date. 

Can you talk about the importance of digital in your local area marketing efforts?

Digital marketing is more critical now than ever before and it’s harder than ever before. Barriers to entry are lower than ever which means everyone can get involved.

I have learnt a lot over the last five years and maintaining an ongoing presence across all channel is critical if you are going to stand out from competition and maintain the level awareness required for success.

A key message during this pandemic is the constant message of re-assurance – our stores and gyms are safe, come and enjoy what we have to offer. Using all digital channels has allowed us to do this and will continue to do so when we reopen.

How much do you spend on advertising per month?

We get asked this question a lot.

We have established businesses and take this very seriously. Our spend is roughly: $1,500 to $2,000 per month for gyms and $5,000 to $8,000 per month for our stores.

How have you set up your marketing?

For all of our brands we get support from our head office or national teams. This is paid for via a marketing levy and used to generate awareness and build the brand which ultimately benefits all locations.

For Local Area Marketing;

Our marketing at a local level is all about our store or gym. Using combinations of organic content, paid advertising and direct communications.

Organic content allows us to sell our story through social media and Google My Business showing people what we do inside our stores and gyms.

Our paid advertising and communication is done through an agency, LT Network, who specialise in franchising. They understand our brands our competition and work well with our teams.

What I have learnt in having this setup is being able to develop segments and create audiences to market too. Doing this consistently allows us to have a great connection with our community. 

How do you coordinate all of your local area marketing efforts?

We use Digital Sack to manage all of our brands and locations. It allows us to run everything through a single tool and provide access to our teams, agency and head office also support us through it. 

Our teams are huge advocates of the product as it makes their life easier and provides us with full transparency on the plans and results of our campaign performance. 

There really is no other tool if you own multiple brands and multiple locations.

The additional service support you get from Digital Stack is amazing for my guys and essential for onboarding new team members smoothly and upskilling the existing teams.

And my single login, it has made my life a lot easier, especially when we used to be forced to log into so many different tools.

So you have successfully grown your current Australian portfolio to nine businesses, have fantastic teams in place to run them for you … we just have one last question, what do you contribute all of your success to?

Hard work is the obvious response but the reality is, a little bit of luck. We all need a bit of luck to get to where we are. And that can come in the form of timing, business model, trends etc.

We went hard when we were young, when we felt we had nothing to lose and took a lot of risks. And lessons, well, they can be learned along the way and figure it out later. 

You need to invest time into building teams around you, teams you can trust and will work hard to make it all work. They are the face of your brands. 

From a financial perspective you need to have it in control. You need to have a plan if things don’t go well. One thing my father taught me is cash is king. It may be old school but 2020 has taught us the importance of cash flow and having enough cash in reserve to get you through hard times.

After almost three decades in the franchise game Paul is still succeeding at the highest levels. In 2020 Paul and his partner Glen took out the 9Round Franchisee Of The Year in Australia.

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