Peter Taunton looked at a crowded marketplace and found a niche hiding in plain sight. The Willmar native had owned and managed fitness centers for nearly two decades before selling his stake in America's Fitness Centers, a Cokato-based chain he founded, in 2001. After his noncompete agreement expired in 2004, Taunton founded Snap Fitness, a Chanhassen-based network of "self-service" fitness centers designed to offer a convenient, affordable alternative to big-box health clubs.
"What separates us from everyone else is that we don't compromise the quality and integrity of the workout experience," Taunton says. "When someone walks into a Snap Fitness store, they don't feel like they're taking a step back—it's the same equipment you'll find at the national chains. Plus, if [members] belong to one club, they belong to 1,000 stores all across the country."
Ninety percent of Snap Fitness's members live within two miles of a club. Franchisee-owned clubs, which typically range from 2,500 to 3,000 square feet, are open 24 hours a day, seven days a week, but often are staffed only 15 to 20 hours a week. (Some franchisees staff them longer.) All interior and exterior lights are activated by motion detectors. Members gain entry with access cards, which digitally document who enters the facility and when.
The door access system is also tied into the company's automated billing system, which electronically collects the monthly membership fee of $34.95 ($49.95 for families). While the monthly rates may sound high, "If I'm paying $20 a month for a membership at a big-box store and I never use it, it's not a good value, and I'm eventually going to quit," Taunton says. "If I'm paying $34.95 a month for a membership and I use it two or three times a week, that's a good value, and I'm going to continue to use it. The convenience factor plays a big part in the success of our stores."
One of Taunton's chief goals in developing Snap Fitness was creating a customer-friendly experience. "I can't imagine designing a company any different than starting from the end user and working your way back," Taunton explains. "We have a product that's great for the consumer. If it's good for the consumer, it's good for the franchisee. If it's good for the franchisee, it's good for Snap Fitness corporate."
Taunton's concept was designed to be franchisee friendly. Snap Fitness helps franchisees identify and secure a site, negotiate the lease, and navigate the build-out process through step-by-step protocols. Three days before the new store opens, a sales manager shows up to train the franchisee in selling memberships and operating the store. A remote surveillance monitoring system lets store owners monitor activity in real time from their home desktop or laptop computer. "We don't leave anything to chance," Taunton says.
Snap Fitness's revenue has grown from $150,000 in 2004 to $960,000 in 2005 to $5.4 million in 2006. Membership currently numbers about 160,000. The company, which has sold more than 1,060 stores, is on track to surpass $16 million in revenues in 2007. To help it better manage its growth, Snap Fitness is building a 50,000-square-foot headquarters building in Chanhassen.
Something else worth noting: Snap Fitness is one of the few fitness chains around that doesn't require customers to lock in long-term contracts. "Customers can stop or freeze their membership at any time," Taunton says. "We don't believe in shackling our members to long-term contracts. We earn their business as we earn their trust."
