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ORANGE EFFECT HOW FRANCHISING IS FUELLING ORANGETHEORY FITNESS’ EXPLOSIVE GROWTH
David Hardy, Partner, Orangetheory Fitness
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CONTENTS MAY/JUNE 2018
16 COVER STORY
32
The Heart of a Successful Franchise Orangetheory Fitness has its finger on the pulse of fitness’s future
43
16
FEATURES
21
Picture of Good Health Four food franchises that are serving up flavourful and nutritious meal options
27
Eye of the Beholder Beauty franchises offer services to suit a range of markets and clientele
4 Canadian Franchise Association
Ultimate Guide to Buying a Franchise in Canada Fit as a Fiddle Franchise Canada takes you on a cross-country tour of health & wellness franchises
53
Aging Gracefully Five feel-good senior care franchises
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Cornering the Market Four real estate franchises with expanding opportunities on offer
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DEPARTMENTS
82
HOME-GROWN & LOCALLY-OWNED 100% Canadian Franchise Systems
84
64 67
MILLENNIALS IN FRANCHISING Thriving Young Canadian Franchises Ctrl V and Hopscotch are 2018 NextGen in Franchising Global Competition winners
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THE FIRST YEAR Equipped for Success Graeme Parcher’s exciting first year as a TheRentalGuys.ca franchisee
73
A DAY IN THE LIFE Living a Happier and Healthier Life Simply For Life franchisee helps inspire Canadians through nutrition-based lifestyle
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LEADERSHIP PROFILE Rise to the Top Sebastian Fuschini dishes on his role in expanding Pizza Pizza’s presence through franchising
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SHOW ME THE MONEY 4 Franchises for Under $50K FRANCHISE FUN Enjoying Life George Raios’ recipe for success involves family, collaboration, and hard work
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FRANCHISE TUTORIAL Tutorials 11 & 12 This issue: • Intro to Inventory • Intro to Approved Suppliers
COLUMNS
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CFA CODE OF ETHICS
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INDUSTRY NEWS
86
ASK THE EXPERTS
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MARKETPL ACE
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ADVERTISERS’ INDEX
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GIVING BACK
EMERGING SYSTEM A Driving Franchising Force WeBuyUrRide expands throughout Canada with a customer-centric business model Visit www.FranchiseCanada.Online/LearnMore to find further information about the franchises featured in this May/June issue.
Franchise Canada
May | June 2018 5
COVER STORY
16 Canadian Franchise Association
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THE HEART OF A SUCCESSFUL FRANCHISE Orangetheory Fitness has its finger on the pulse of fitness’s future BY JESSICA BURGESS
Franchise Franchise Canada March | April Canada May | June 2018 17
In the spring of 2010, founders Ellen Latham, Dave Long, and Jerome Kern opened the first Orangetheory Fitness (OTF) studio in Fort Lauderdale, Florida. A year and a half later, Canadian David Hardy became a partner in the company and, in the fall of 2012, Orangetheory was already opening the doors of its first Canadian studio in St. Albert, Alberta. Within a few months of opening the Alberta location, three more studios opened in Canada. By 2014, the number of studios in Canada increased to 12, then to 18 in 2015. This explosive growth continued, and by 2016, Orangetheory Fitness had 43 studios open in Canada, and 60 by 2017. Hardy notes that the company’s unprecedented growth is par for the OTF course, as it has quickly become one of the world’s top fitness franchises. With 1,000 studios set to be in operation by the middle of 2018, primarily in the U.S. and Canada, the company is ready to do everything but slow down. OTF is now operating in 18 countries worldwide, with expectations for 25 countries by 2020. Approachability and training The foundation of the Orangetheory workout plan is 60-minute high-intensity interval training (HIIT), where workouts are broken down into intervals of cardiovascular and strength training. A personal trainer, or coach, leads each session, and participants can use a combination of treadmills, rowing machines, TRX suspension training, and free weights during their workouts. “When we started out, our elevator pitch was that we were affordable group personal training. It’s not a typical gym with that typical high personal training price,” says Hardy, noting that OTF makes high-calibre training accessible. So much of the company’s success comes from bringing the model of personal training into a group setting. “The groups encourage people. I’m a competitive person, and that group atmosphere is a great motivator,” says Hardy. Something else that sets the company’s workout program apart is the real-time feedback provided by each studio’s heart-rate monitoring system. “We employ a lot of technology, and everyone who comes in is encouraged to wear a heart-rate monitor,” adds Hardy. Each participant can see real-time, tailored feedback on the quality and progress of their workout, which provides further motivation. “It’s fun, it’s easy: you go in for one hour, you don’t have to think about it, there’s music playing in the
18 Canadian Franchise Association
background – we have great music – and you’re more successful because you’re in a group,” says Hardy. Backed by the science of excess post-exercise oxygen consumption (EPOC) – also referred to as the “afterburn effect” – Orangetheory’s workouts help participants get their heart rates up in such a way that stimulates metabolism and increases energy for the 24 to 48 hours following the workout. “We call this the Orange Effect,” Hardy says. “The workout works.” A singular concept This “Orange Effect” certainly drew Matt and Reem Smolley, owners of four studios, to the company. They both come from fitness backgrounds, and were members of the Edmonton Orangetheory studio. “We instantly fell in love with the concept, could see and feel the momentum building, and valued the scientific basis for the product,” they share. “When the opportunity arose to purchase the rights to Calgary South, we jumped on it!” While it’s not necessary for franchisees to have fitness backgrounds, it can definitely help. The most important thing, though, Hardy notes, is finding people who are “connected in the community, and have the skills and ability to run a full-time business.” Hifa Maleki, VP Franchise Development and Operations in Canada, adds: “Our franchisees are passionate, driven, self-motivated individuals. They know how to work independently.” The Smolleys fit this profile perfectly. “Our goal was to build a community reputation by being accessible owners, and to be involved in daily operations,” they share. “We knew the product could speak for itself, so our mission was to create a space where people could come not only to work out, but to be part of something exciting, positive, and fulfilling in the community.” The Orangetheory Fitness model has also attracted celebrity athlete franchisees, including former National Hockey League player Trevor Linden in Vancouver, and Olympic Gold Medal curler Brad Gushue in Newfoundland. Part of franchisee success is owed to the Orangetheory corporate team’s dedication to building up its studio owners. “Orangetheory Fitness has an extensive onboarding process, which truly sets up franchisees for
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success. Before they even receive any franchisee training, they have access to our materials, along with our Online University, Orange U. We also have experts of Training, Fitness, and Sales – essentially our franchisees have access to any type of expertise they may need,” explains Maleki. Members first As with the Smolleys, Hardy notes, “Franchisees are usually members first. They typically come to us from our member base, rather than franchise shows. Our franchisees are embedded in the community, which makes them much more successful.” “We would not be where we are if we didn’t have our franchisee group,” shares Maleki. “The franchise model has allowed us to grow rapidly by bringing in great partners. We’re lucky that most of our franchisees were Orangetheory members first; they knew and loved the brand, so we kind of fed the machine.” Indeed, Orangetheory Fitness has been ranked in the top 500 on Inc. Magazine’s “Fastest Growing Private Companies” list three times in a row, most recently in 2017, and is part of a very select few companies that have been included three times on Entrepreneur’s Franchise 500 list of the top franchises in the world. “Franchising makes all of this possible. As a franchisor, it’s our job to figure out how we did it, codify it, and share it with the rest of our network to share the success,” explains Hardy. “The franchisees who join really know their communities. We at the national head office are the experts on the Orangetheory brand, but our franchisees are truly the experts on their local markets,” adds Maleki. The Smolleys can attest to this franchisor–franchisee synergy. “There are websites, forums, online continuing education, IT solutions, etc., but the most important and valuable aspect has been the people that the franchisor has put in place, and how they interact with the franchisees. Dave [Hardy] and Hifa [Maleki] have done an amazing job creating an OTF Canada team that is valued, appreciated, and praised by us as franchisees.” Marketing for the future The corporate team also has its finger on the pulse of how the world of marketing is changing. Not only is the company’s innovative approach to developing its franchisees key to its success, but so is its ability to provide agile marketing and publicity materials. “With all the channels for advertising, especially online, it’s almost impossible for any one business to be on top of every one of them,” explains Hardy. This is yet another reason the franchise model contributes to Orangetheory’s success – the brand is able to share assets, marketing strategies, and techniques across the huge company.
“Marketing has been the best asset in our growth,” the Smolleys note. “Our brand is current and exciting, and as such, we place a huge value on representing that when we market.” Without the dedication of franchisees, the company couldn’t reach the communities and individuals it does. “From the start, you have to believe in the product. [Feeling] like you are onto the best kept secret in fitness – a proven, scientific concept that guarantees to change how people feel – [you’ll] want to share that with the world. If you can be that and feel that, it will ooze into every single component of your business,” the Smolleys add. Results lead to growth David Hardy is not only a franchisor, he also operates the master franchise for Canada. This position makes him uniquely poised to see where Orangetheory Fitness is going next, and the way that franchising so obviously factors into this. “So much of our growth is from our members,” Hardy notes, “and certainly we’re going to see 2018 bring even more studios to Canada and the rest of the world. By the end of the year, we’ll be up to between 1,100 and 1,200 studios worldwide.” This success and growth is something OTF could never achieve without the wholehearted belief of franchisees like the Smolleys. Reem shares: “Matt and I have always loved being in fitness and having a positive impact on people’s lives. Getting to see the changes, journeys, and near-miracles that happen right in our studios makes us feel fulfilled, proud, and humbled that we get to work so hard for something that means so much!” As a recent press release states, “Some have compared the growth of Orangetheory to ‘steering a brand strapped to a rocket ship.’” In January 2018 alone, OTF opened five new studios across Canada, and this summer, Orangetheory will be launching a new app that provides members unprecedented feedback and access to the brand. The company will also be rolling out new state-of-the-art equipment to its studios this spring, and, of course, more franchisees and more studios! Hardy sums it all up: “There’s really nothing out there like it.” ORANGETHEORY FITNESS STATS Franchise units in Canada: 66, US: 780, Other: 33 Franchise fee: $59.5K Training: Provided Available territories: Canada, US, International Franchising since: 2011 CFA member since: 2012
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