The Barefoot Investor gives his advice on buying an F45 franchise.

This advice from ' The Barefoot Investor' (aka Scott Pape) made noise this week about the hugely popular F45 franchise concept. I'm a fan of his, but is he missing the point of franchising as a concept and potentially doing a disservice to his reader, 'Mandy'?

By Glenn Walford

If you haven't heard of the Scott Pape and his persona 'The Barefoot Investor', I'd be surprised!

His latest book, The Barefoot Investor, The Only Money Guide You Will Ever Need, has been at the top of the best seller lists in Australia for nearly 12 months.

He's developed quite the reputation as the fiercely independent adviser to the masses - and I mean 'fierce' at times.

If he has an opinion on an investment from housing, to super, to shares, you will get it if you ask - and people listen.

Clearly, the same goes for a franchise investment as a subscriber asked him in his newsletter this week about whether she should invest in an F45 Fitness franchise.

F45 Image2

He said he wouldn't invest in an F45

In short, rather than invest in an F45, he thinks 'Mandy' (his subscriber asking the Question of him), would be better starting her own bootcamp style business on the side on weekends for 12 months, and if it goes well to open up her own business.

His rationale is that the initial and ongoing investment is high in his view in F45, the barriers to entry low, competition high, and that the concept could not be so hot soon.

It's important to acknowledge that this is his personal opinion of the F45 franchise concept, and as we know, everyone has an opinion on everything. You can read in detail the question from his subscriber and his full response below.

But, this is not just about F45

It could have been any franchise brand or concept being asked about and referred to in the response.

As far as the franchise business model is broadly concerned, what he discounts and does not acknowledge with just a few strokes of the mouse and clicks of the keyboard, is the fact that not everyone feels capable to just start their own 'thing' on the side and 'see how it goes for 12 months'.

One key reason the franchise business model has existed and been so heavily adopted for as long as it has, is to help people get into business without having to create the entire concept from scratch themselves.

Of course there is risk, there always is. Minimising risk is ONE consideration, but is not THE only consideration to get into business for yourself.

Such advice sells the Franchise concept short

One way to look at his advice is that if 'Mandy' is not able to pull together her own morning and weekend bootcamp, she may become disheartened and never pursue her dream in owning her own fitness business. But it doesn't mean she shouldn't.

In this case, the advice has let her down as while it is based on investing fundamentals at a glance, it does not take into account the broader circumstances.

My point is, he's not wrong, but nor is he necessarily right!

His general advice to me can be summed up with that he sees;

  • No value in Intellectual Property,
  • No value in brand,
  • No value in marketing,
  • No value in proven, working systems.

I am certain this is not the case though as he's a clever guy.

Maybe Mandy does stuff up her boot camp on the side, but it does not mean she was not suited to running her own business. She may well absolutely love it, but just can't pull it all together on her own.

That's in many ways why franchising exists - for people just like that!

Take This Away From This Advice Article

For Buyers

The key take away I see on this is not really related to the F45 concept per se, but is more the reminder to make sure you are focused on the fundamentals of a business and YOU and your circumstance, abilities, experience and needs, and not just be romanced by the brand or a 'hot trend'.

That is a totally reasonable position.

I'm not saying that's easy to do in some cases, but actively considering where the concept you are looking to invest in will be placed in the market place in the coming 3-5 years is also crucial to the success of your business.

For Franchisors

The 'review economy' is here to stay and will only get bigger and build up speed in it's use and impact, so be ready. Learn how to deal with it, approach it and how to respond and be active and leverage it.

Let's face it, franchise companies have been able to carefully craft and manage their investment story to the buyer market for decades. Now, opinion and information is just a google search away by your prospects, so get ahead of the game and make sure you are the one doing the positioning of your brand and not someone else doing it for you.

F45 Image

The Barefoot Investors advice in full to the following question;

Should I Buy an F45 Fitness Franchise?

Hi Scott,

I’m a 26-year-old woman working full time in a job I hate. Quite frankly, I am sick of working for the man! Now, I have never had my own business before, and I am a little apprehensive, but I love fitness, and I also love F45 (a new high-intensity interval training fitness franchise). It is rapidly growing on a global scale, with 750 studios around the world already. The cost to open a franchise is $150,000, plus $1,700 a month in fees (plus rent, wages, taxes, etc). I do not have the capital, so I would also need to apply for a business loan. Do you think this is a good idea?

Mandy

Hi Mandy,

A mate of mine does F45 -- short for ‘Functional 45-minute’ training -- and fair dinkum he never shuts up about it.

But let’s get one thing straight: if you buy a franchise you’ll still be working for the man -- but in this case it’ll be the ex-finance dude who dreamed up the F45 franchise model. I imagine he’s currently lifting gold-plated barbells from all the money he’s making … and good on him too! All I’m saying is that in this equation he’s the entrepreneur -- and you’re the worker.

So, would I buy an F45 franchise?

No, I wouldn’t.

And it’s not because I could risk having a cardiac arrest if I actually did F45 -- it’s because I’ve put the franchise through its paces, just like I would with any investment.

So let’s you and I do a money workout:

First, let’s look at the sector. Australia’s gym market is one of the most competitive and saturated in the world, according to IBISWorld. (Why are we so fat, then? Is it the chicken or the egg? Or maybe it’s the chicken and egg sandwiches.) Simply put, there are a lot of businesses fighting it out for our fitness dollars.

Second, one of the key selling propositions of the F45 franchise is that there’s not a lot to it -- two trainers, four walls, and a bit of equipment. Easy to start … and easy for potential competitors to start too. And what about when ‘F6’ comes out? (Seriously, I could totally blitz 6 minutes of training.)

Third, while F45 is going bananas right now -- the business is just five years old. What will it look like 10 years from now? Fitness is a faddish industry (hello Zumba, Tae Bo, and pole dancing fitness). Heck, F45 is itself a gentler version of CrossFit, which is now reportedly starting to run out of puff.

So, here are a couple of questions you need to ask yourself:

How quickly could you earn back your upfront costs (a $150,000 loan plus $1,700 a month)?

Even better, could you avoid borrowing (which always ramps up the risk and makes life more complicated) and instead -- as we Barefooters call it -- ‘swing on the trapeze’. That is, keep your day job, start a morning and weekend fitness bootcamp, and make a go of it for the next 12 months to test it out. If it’s a winner, quit your job and go for it!

Again, full disclosure, I'm a Barefoot Investor fan with ING Mojo accounts and all!

You'll know what I mean if you've read the book:-)

But on this one, I think he's left a bit off the table as far as the assessment and advice goes.

I still do encourage you to get on board the Barefoot train though at BAREFOOT INVESTOR

You can also see the actual post of this question and answer on the Barefoot site HERE

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