Starting Strength Gyms – The Plan for 2021

by Ray Gillenwater, SSC | January 19, 2021

beginning of a squat

The franchise gym business was a risky venture. With a price-point that’s 50% higher than our industry peers, individualized coaching and programming for every trainee, a business model that had not been proven at scale, a rigid training schedule for members to adhere to, month-to-month memberships with no term commitments, very little exercise variety, and no dramatic lighting, fitness models, or loud music, the hope was, without precedent, that entrepreneurs would be interested in investing their time and money to open training facilities. Despite the obvious risks involved, the franchise company and our Founders’ Club franchise owners collectively invested millions of dollars and tens of thousands of hours to bring this concept to life – and it worked.

This time last year, the biggest issues we had were the behavior of landlords, whose incentives were in opposition to our goals (apparently due to tax law), and the onerous rules of local municipalities, who like most government entities, are subject the inescapable Iron Law of Bureacracy. In last year’s article, The Plan for 2020, I outlined our development schedule which included the construction of at least seven new gyms. In that article, I asked several rhetorical questions about the risks that we faced as a new entrant to the industry, including, “Do we have the patience to deal with the Federal Trade Commission, state regulators, landlords, and city governments?” Two months after that article’s publication, the government outlawed free commerce, dismantling the fitness industry and handicapping the most productive society in the history of the world.

We survived, but many of our competitors did not. Although it’s been 12 months since we opened our last gym, we managed to sign ten new franchises during that same time period. The extreme uncertainty seems to have ended. After nearly a year of a “let’s wait and see” attitude, landlords are signing leases again. Starting Strength Boston and Los Angeles both have executed lease agreements and are announcing their pre-sales soon. Chicago, Dallas #2 (Plano), and Boise are in the midst of lease negotiations. Vancouver (WA), Houston #2 (Katy), San Antonio, Cincinnati, Oklahoma City, and Memphis are all searching for real estate. Our newest franchise, Starting Strength Orlando, will have signed with us right around the time of this article’s publication. We now have 21 franchises at various stages of development.

coaching the squat

2020 was a successful year for Starting Strength Gyms in spite of the collapse of the retail fitness industry. This was due to three primary reasons. Firstly, luck. “Social distancing?” Our gyms have a minimum of 11’ of space between trainees, measured from the center of the platform to the center of the adjacent platform. Operate at 50% capacity? Our maximum occupancy is determined by local municipalities. It defines our parking requirements, how many bathrooms we need, and a variety of other important variables that unfortunately force us to pass on many attractive real estate options. In this situation, however, the rules worked in our favor: most gyms have an assigned maximum capacity of at least 28, which means that our standard at-capacity-model is in compliance, by accident, with the “50%” mandate: 12 trainees and two coaches. If our model relied on the industry-standard “quantity over quality” approach to fitness, we might be in the same dire position as many of our industry peers.

The second factor is the psychology of the franchise owners. Before signing a Franchise Agreement, Rip and I make the final call on a prospect based on their culture fit, our perception of their competencies, and how badly they want to successfully bring Starting Strength to their local market(s). The final question I ask myself before sending over a contract is, “Do they want this as badly as we do?” In contrast to many of our peers in the franchising business, not one gym owner has called me asking for a way out. Rather, the conversations were about how to stay open and grow, in spite of the situation. This is unsurprising but worth stating: the franchise owners are some of the most ambitious and resilient people I’ve ever worked with. If you’re interested in their numbers, here is the latest Performance Update.

The third factor is commitment from our members. Our model doesn’t require members to pay for something that they are not using. We knew that achieving a loyal membership base with no strings attached would be an indication that we are providing a valuable service – and our performance results make it clear that this is true. During the two-month government closure last spring, our members sent us an even stronger message: the majority volunteered to keep paying their memberships, proving that regardless of the government’s disastrous classification, they view us as essential. If you’re one of these people and are reading this, I hope that we have demonstrated that we are as committed to your success as you are to ours.

In 2020 we were exposed to significantly more risk than was anticipated. But it also provided us with something of value: clarity. As uncomfortable as it was (and still is), the experience reinforced many concepts that we already believed to be true: Starting Strength is not recreational fitness – it is foundational health. When stress is applied to an organism, whether to an individual or to an organization, it will adapt and recover, or it will die. Strength is the ability to produce force against an external resistance – and in 2020 it proved useful as a means to produce resistance against external forces. Groups of people, of any size, function best when individuals have the incentives and freedom to achieve their own potential. And perhaps most importantly, 2020 served as a reminder of Rip’s core thesis from the blue book: “Exercise is not a thing we do to fix a problem – it is a thing we must do anyway, a thing without which there will always be problems.” This was a stressful year for Starting Strength Gyms. We have adapted, recovered, and we are now stronger than ever.

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