In a small Eden Prairie strip mall, a space that used to be home to a tanning salon, Peter Taunton is in the midst of making his next move in the franchise fitness business with a stand-alone kickboxing concept called 9Round.
In the confines of this 1,500-square-foot studio, 9Round’s 240 members arrive once, twice, or three times a week for an intense 30-minute workout that includes punching and kicking heavy bags, doing stationary vertical jumps mixed in with a variety of vigorous floor exercises.
Taunton, founder of Chanhassen-based Snap Fitness, is betting that kickboxing will be the next big fitness craze and the 100 locations that he and his partners currently oversee will grow to 500 or 600 franchised operations in the near future.
“I’m always looking at new concepts and I thought this one had promise,” Taunton said in a recent interview at the one-year-old Eden Prairie 9Round.
“I love its simplicity and affordability,” he said.
These seem to be good times to be in the health and fitness arena as Americans search for the magic of a fit, active lifestyle that combines exercise with nutrition, diet and overall health.
According to the International Health, Racquet and Sportsclub Association (IHRSA), health club membership now exceeds 50 million Americans who spent nearly $22 billion in 2012, the most recent figures available.
Proof of that growth can be found in the Twin Cities’ own back yard.
Life Time Fitness, a big-box fitness chain with a national presence, last week reported that its fourth-quarter profit was up 11 percent from the same period last year. The Chanhassen-based business also said that its outlook for 2014 includes 8 percent to 9.5 percent revenue growth as it expands from 109 locations to 115.
Hastings-based Anytime Fitness, with its always-open concept, also embodies the breadth of the fitness craze, going from one location in 2002 to nearly 3,000 centers projected by the end of 2014.
“This is a sector that is going to continue to grow,” said Liz Dillon, a franchise attorney with the Minneapolis law firm Gray Plant Mooty. “We’ve seen increased demand in the marketplace with a focus on health and wellness for all ages.”
Dillon noted that just last November, the parent company of the women’s fitness boutique Curves acquired the well-known diet plan Jenny Craig to integrate fitness with nutrition and weight loss.
Taunton, whose Snap Fitness operation involves nearly 2,000 fitness center franchises in 15 countries, earlier this month created a parent company called Lift Brands to oversee and validate his expansion plans in the lucrative exercise market.
With Lift, Taunton can provide financing and construction help, as well as marketing, accounting and legal expertise to franchisees who pay from $60,000 to $250,000 to open and operate their own businesses.
“We’ll help you find a location and negotiate a lease. We’ll build out the store for you and help with an account manager,” Taunton said. “We’re a one-stop shop.”
Kickboxing is just one of the expansion areas that Taunton has in mind for Lift Brands, which currently generates revenue of $100 million a year. Lift Brands recently received a $200 million investment from TZP Capital Partners when it bought out the shares of a previous private equity firm, Summit Partners, which reached its five-year investment goal.
Earlier this year, Taunton purchased the personal training business of Steele Fitness, keeping it as a stand-alone, Twin Cities-only boutique.
Taunton also has plans for a new yoga concept called Yoga Fit, an existing boot camp-style training program called Kosama that involves an intense eight-week personalized fitness regimen combined with a meal plan. Taunton also is expanding a kiosk-based program called Fitness on Demand for limited-space areas such as hotels and apartment buildings.
“Consumers like diversity,” Taunton said. “There is so much opportunity in the health and wellness space.”
Meredith Poppler, a vice president for IHRSA, said the types of fitness programs in which Lift is investing are “in high demand.”
“There has been growth among boutique facilities that offer [these] things,” Poppler said, noting that traditional fitness centers are offering similar programs as well because of their popularity.
Taunton said he approached the founders of 9Round about a year ago and offered to invest in the South Carolina-based company. Today he owns 40 percent of 9Round with the right of first refusal to acquire the rest of the company.
“I told them I could take them from 30 stores to 1,000 stores,” Taunton said. “People today are burning it [personal and business lives] on both ends, and a 30-minute workout is a plus.”
Gina Michaels, owner of the Eden Prairie 9Round, said her clients are mainly in their 30s and skew female.
“They range in age from a seven-year-old who comes in here with his mom to a 70-year old,” Michaels said.
Dillon said opportunities in the fitness arena are ample as long as franchise owners know they are running a business as well as a health club.
“Personal training is not seen as a luxury item anymore,” Dillon said, noting that more and more employers are providing financial incentives for workers to stay fit and healthy. “Boomers want to stay active longer than their parents did. People are still warming up to yoga, and high-intensity training is growing.
“Everything was affected during the recession,” Dillon said. “A whole lot of industries stopped growing, but you didn’t notice any shrinkage in this area.”