Company name: Innovative Fitness
Principals: Jeff Sharpe and Matthew Young
Location: 2080 West 10th Avenue, Vancouver
Business Venture: Eight-location gym franchise that provides one-on-one personal training
History: Jeff Sharpe and Matthew Young founded Innovative Fitness in 1995, shortly after graduating from the University of British Columbia with degrees in human kinetics.
The business partners offered personal training services anywhere they could – in the comfort of clients’ homes, in parks and in rented gym spaces.
After experiencing two years of sustained demand, Innovative opened its first gym at 10th Avenue and Arbutus Street in Vancouver’s Kitsilano neighbourhood, where its flagship remains today.
Innovative now has six gyms – two wholly owned and four franchises – in the Lower Mainland, and service agreements in which it provides training services within the Four Seasons Hotel in Vancouver and the Nita Lake Lodge in Whistler.
While larger gyms tend to offer memberships to anyone looking to shape up, Innovative’s services are more exclusive.
The company’s 3,000 clients, many of whom are from the Lower Mainland’s tony neighbourhoods of West Vancouver, White Rock and Point Grey, receive one-on-one, by-appointment-only training in small, intimate 3,500-square-foot gyms that never have more than eight to 10 customers working out at once.
“It’s unlike every other gym because it’s exclusively personal training,” said Sharpe.
“It’s a fairly high-end service because you need to have discretionary income to hire a personal trainer for all of your training.”
Challenge: In 2004, Sharpe and Young decided to restructure Innovative from a corporation to a franchise.
At that point, the company had grown to six corporate locations, including two gyms in Washington State and one in Northern California.
“We don’t sell a widget per se; our business is purely human to human,” said Sharpe. “And so we determined after 10 years that having someone with a vested interest on the ground is very, very important to this type of business.”
The company had previously tried various incentive programs with its gym managers.
“But when your locations are geographically not in your backyard, it stretches your ability to manage them on a day-to-day basis – especially when the manager on the ground doesn’t have some skin in the game,” said Sharpe.
The business partners licensed out their Calgary location and outright sold their U.S. operations, regrouping in familiar territory at home, where they could offer proper support to franchisees.
“We wanted to make sure we did it properly by having the first franchise in our backyard,” said Sharpe.
After divesting their peripheral assets, the partners refreshed Innovative’s brand, renovated its two remaining wholly owned gyms in Kitsilano and West Vancouver and ramped up advertising and marketing – all in order to build momentum for the new franchise model.
The corporation-turned-franchise found franchisees for gyms in White Rock, Port Moody, Langley and Abbotsford.
In contrast to the independent consultants who provide personal training at most gyms, the majority of Innovative’s 70-odd training coaches are employed fulltime with the company or its franchises.
By converting to the franchise model, Innovative provides its employed coaches with the opportunity to own their own Innovative-branded gym.
“We had to support the needs of our teammates who wanted to grow and go,” said Sharpe.
Sharpe and Young have franchise commitments for gyms in Kelowna and Victoria and they are negotiating to potentially expand the Innovative brand into multiple locations in Ontario.
Analysis: “ People that buy a franchise don’t want to go through the trial-and-error process themselves,” said Wayne Maillet, owner of Franchise Specialists, a Vancouver-based consultancy.
“Somebody who just has an idea, that’s not franchise-able. You actually have to open a location, you have to prove that it works and, ideally, that it can be duplicated.”
He echoed Sharpe’s comment that someone who has a vested interest in the bottom line of a business can bring more to that business than an average employee.
“The owner-operator, they value the customer, they’re going to get to know that customer,” said Maillet. “For the employee working nine-to-five, its just a job.”
There still are, however, many responsibilities in owning a franchise.
Franchisees want to have a voice, to have input, in the strategic direction of the company, said Maillet.
As well, franchisers still have to maintain the brand by ensuring that a customer’s experience is consistent across the entire franchise.
“If one location is doing poorly, that effects the whole chain,” said Maillet.
Sharpe said that all Innovative’s franchises are successful.
“Some more than others, depending on the location and the management,” he said.
Next Challenge: In order, to deliver their personal training services to a wider demographic, Sharpe and Young, under a new company they formed called Digital Shelf Space (TSX-V:DSS), have developed an online technology platform for selling personal training videos as streaming video, DVDs or downloadable files.
Digital’s first project is a series of six mixed-martial-arts-inspired DVD workouts starring MMA heavyweight Georges St-Pierre.
The partners are also trying to license the platform as a white-label product that producers can use to sell direct-to-home content, such as science fiction, horror, religion and workout titles.
Digital completed a reverse takeover in January to list publicly on the TSX Venture Exchange.
In connection with the transaction, Digital completed a $1 million private placement.