Episode 38: The BurnTheory Franchise Journey - BURNTHEORY Fitness - Hobart Moonah Tasmania

Hannah:
Welcome to The Burn Pod, listeners. It’s so great to be back and chatting to you guys. And while I’m recording this, it’s the end of March and my birthday. So very excited to be here with you. And what we’re going to get in today, and it’s something that I think most of you have heard we’ve announced, but it’s my journey to deciding to actually franchise the business and how we got to this place and what’s involved in it. And I guess my personal experience and my story behind it. So welcome along, hopefully I don’t rattle on too much. And hopefully you guys just kind of like to, or enjoy getting a sneak peek behind the curtain of Burn Theory and its franchising journey.

Hannah:
So for those of you that don’t know, we opened Burn Theory in May, 2016. And at that time it was just a barre studio. And it was sort of coming off the back of there being no barre or minimal barre open in Hobart at the time and a kind of a big gap in the market. So I opened this little studio, Mathers Lane, and freaked out the whole time why I did it. And we started to grow this really wonderful, incredible community.

Hannah:
To be honest, a lot of the time at the start there, I didn’t really know what I should be doing. Because I mean, I’ve never done it before and you don’t know what you don’t know. So I spent a lot of the first, I guess year, just trying of work out how do you run a business? How do you become business minded? What is marketing? How do you market? And all these sort of things. How do you get new people in the door and how do you grow them into wonderful members or long term members? There’s all these questions. So I went on sort of a little bit of a journey and brought on people that have done it before, coaches. And they sort of helped me put in place the systems and processes that we have today with maybe a few amendments as we’ve gone. And we were able to grow this super amazing community.

Hannah:
But I always knew something was missing. And so in 2018, I flew to America because I knew that we needed to add in some sort of fun and accessible cardio option. And not all of us want to push things up, sleds up tracks or do box jumps, that sort of stuff. So there had to be something that I really liked and I knew that was accessible for people that aren’t just 19 or 25. Really beneficial, accessible for anyone at any age.

Hannah:
So I went over to America and for literally four days, it was a crazy whirlwind experience. And I went to all of the fitness boxing places that were open in LA at the time. And it was a bit of an eye opener. At the time, as some of you may know, a lot of what happens in the fitness industry, it sort of starts in America and then it comes across. So boxing over there was really quite new. And so I saw what they did over there. And then I came back to Tassie and built out my own structures. So what you see now is the transformation and the conditioning classes. And we opened boxing in October, 2018 to great success. For those of you that know the story, we continued to grow over the next couple of years through till the end of 2020. And then when we started looking for our second location and we opened Moonah in 2021. And it’s just been the most awesome experience, opening Moonah and growing the community. Definitely a lot to learn going from one location to two locations, but we are getting there.

Hannah:
Now, part of the reason why we opened Moonah was to make sure that this concept of Burn Theory actually works. And it wasn’t just a fluke, I guess, that I opened it in Hobart and it worked. But that it actually can work if we do it again. And we proved that model very fast, where we opened Moonah with all of these incredible people joining us. And so while we were opening Moonah, we were sort of starting the process of having discussions with lawyers and with financial modellers around the franchising.

Hannah:
I’m just going to take a step back for a second for those of you that actually aren’t sure what franchising is. Franchising is well, so for example, you’ll see McDonald’s or you’ll see a F45 or a Zap. There are people that own those particular Zaps or McDonald’s, and that’s their business. But it’s a corporate company that has, or a one person or group of people that have put the idea and they’ve trialled and tested all the systems. And they’ve basically ensured that the model works and then they’ve replicated it by allowing other people to effectively buy a version of their McDonald’s or their Zap or their F45 and open their own F45 and so on and so forth.

Hannah:
But they have all of the systems and the processes and the step by step support and guidance and everything else that the first person, the one that did the original one has gone through and trialled and tested over years and years. And so you buy in and you run your own studio with all the guidance and support and structures around it that are set by the person that opened it at the start. I hope that kind of makes sense. So it’s running your own business, but it’s not having to go through all the pain all the interesting times of trying to work out what works and what doesn’t. Effectively, it’s you’re buying a business in a box, so to speak. And the best franchises out there are the ones that people really relate to and that resonate with.

Hannah:
And obviously with those of you that do know Burn Theory, we do operate a little bit differently. We’re not just cookie cutter approach and we don’t treat our clients just like people walking through the door. We want to know them as individuals and as real people, real humans. And that’s why we have this really amazing community.

Hannah:
Anyway, so that’s what franchising is. So I started looking at how can Burn Theory be in more locations? Because I mean, to be fair, there was a big gap in the market that there’s nothing necessarily out there that sort of supports people over the age of effectively 35 to come and do group fitness exercise that they feel comfortable, they feel safe, they feel supported and they’re encouraged to push themselves. A lot of the stuff we see is your functional fitness, which is really, really quite strong on bodies. It can be too much. And you kind of need to be 20, crop top wearing, green smoothie drinking kind of people. So there wasn’t something for our slogan, real world women, can come to and feel comfortable.

Hannah:
And so I knew that I wanted to be able to expand what we have, which is pretty special, into other areas that could really benefit from it. But there’s only so many that I could open personally myself. Or to be honest, my now husband would actually let me open. I think he’d probably pull his hair out if I said we’re going to be opening another four or five [inaudible 00:08:06].

Hannah:
So my options were, I do it myself, which was going to limit me, let’s be fair. And it was going to be a lot slower. I could slowly grow over, say the next 10 to 15 years to maybe six or eight locations, but that would be it. In the meantime, these local areas were missing out. The other side of it was that I’m a people person. For those of you that know me in class, you know that I thrive on being around people and great energy and I’m an extrovert. I love people.

Hannah:
And so the idea of being able to create a business and then have almost business partners, these franchise partners, and these women like myself that create these amazing lifestyles. It was something that was really, really important to me. And I just, I love the idea of being able to grow a network of like-minded women in particular, to own their own lifestyles and to have something and to give back, feel like they’re doing something that resonates with them, that makes them feel like they’re doing something of value and giving back to their local communities.

Hannah:
So that’s kind of the reasons behind looking at franchising. And I guess the next steps here were, how do we actually go about it? So, first things first, I started working with a franchise coach from America, and she’s someone that’s helped some small businesses, a lot of small businesses, particularly in the fitness industry over there, franchise their businesses. And she was like, right. First thing you need to do is you need to get onto the legal side of it. Because the biggest thing here is just to make sure that you’ve got all of the right processes and systems and legal structures in place to actually be able to do this.

Hannah:
So I talked to, or I got in contact with Norton Rose, they’re a massive lo legal firm across the world, but they’ve got a really big office in Melbourne and they specialise in franchising. And in particular, the franchise lawyer that I had actually wrote the franchising law in Australia. So I think I was onto something pretty good.

Hannah:
So we initially had this kind of conversation. He asked me some scary, hairy questions. And he told me later that, luckily, he was actually testing me. He didn’t tell me he was testing me, but he was testing me to see whether he was going to bother spending his time. And I passed apparently. That first hurdle. And then the second hurdle he put in front of me was a strategic workshop in Melbourne.

Hannah:
Now this was like right in at the heart of COVID. So this is 2021 January. So Melbourne had been lockdown for effectively seven months. They’d finally just started coming out of it before they sadly went back into lockdown. But I had this tiny little gap. We managed to get over to Melbourne and we sat down and the idea behind this strategic workshop was to go through Burn Theory as a brand, as a concept, and see if the concept on paper actually made sense. And the interesting thing about a franchise component is that it’s not necessarily needing to make sense for me financially, but it also needs to make sense for the people buying in, so the franchise partners. If they’re not going to be financially really well off, if they’re not going to make enough profit, there’s no point, no one will buy your franchise.

Hannah:
So it was interesting. I mean, obviously it was very dry at that point, legal speak and financial speak and blah, blah, blah. But it was really nice to see that, right, well, we’re looking out for both parties here. It’s not just, all right, let’s make as much money as we possibly can. It doesn’t matter about anyone else. So it felt really right for me from the start, because it was going all right, well, we need to make both parties get the most out of this that we can.

Hannah:
And obviously there’s a hell of a lot of intangible benefits to Burn Theory which I mentioned before, like your lifestyle, your freedom to pick and choose what you want to do during the day. Being able to bring what we do, which is awesome to local communities and give back. So all the great stuff there, but we needed to make sure that it was actually viable on paper.

Hannah:
So on paper, it looked really good. We got that tick. So that’s the next hurdle we had to overcome. And then the next hurdle was bringing on this financial modelling company. So they got stuck deep into all of our financials and started building out a model to make sure that it was, once again, viable for both parties. And that would also sort of dictate how we set out our legal terms and the structure of the franchise agreement. So that took a few months and it was good because at the time we were doing Moonah, so I could actually utilise opening Moonah to work out what costs were of opening a new studio at the time. Because let’s be fair we couldn’t really go off Hobart because we did half of it in 2016 and then the other half in 2018 and costs have changed significantly since 2016.

Hannah:
So yeah, so we ticked that third box off when we got the financial model back in, when was it? August, 2021. So that was a pretty exciting time. And so then from there we started having the conversations with the lawyers to start putting together, right, well, how do we actually structure this company and structure our legal agreements to be able to offer it to people?

Hannah:
And it has been quite hard to try and bottle up what is Burn Theory. Put it in a bottle or put it in a box and be able to hand something over, obviously with support and training and stuff. But it’s taken quite a lot of work and we’re still, to be honest, working through it and learning as we go.

Hannah:
So it was a lawyer component. And then, all the operations manual side of it. Getting the staffing right. Getting the branding, right. What’s the marketing look like? So this has just been this huge process that we’ve been working through over the last, I guess you could say it’s almost been 12 to 18 months to bring us just before I got married in February, we announced to our members that we are looking for franchise partners in 2022. So pretty damn exciting, really. And I’m not going to lie, I’m pretty knackered. I’m a bit worn out, but I got to admit I can’t help myself, and I do like a challenge. So it’s so fun to learn something new and to see where this will take us this year. So, I’m starting to put the word out there now that we are seeking people that are interested in learning some more about being a franchise partner, owning their own Burn Theory and their own in their local area or in a local area that they’re connected to and they want to support and benefit from.

Hannah:
So we’ll see where this goes. I mean, the intention is that we have our first couple that join us this year. And for those first two to five, they’re really the ones that are going to get a lot more, I guess, one on one guidance from me because they’re obviously the first few and we’re all learning together. So I’m really excited to see where this goes.

Hannah:
And I don’t know if that excites you or if you just, it’s just nice to peel back the curtain and see what’s going on in Hannah’s little world or in the world of Burn Theory behind the scenes. But yeah, this is all the stuff that we’ve been working on. So I’ll leave that with you guys. I’m going to keep popping some random podcasts in as we go to keep you updated on this journey. Because we’ve done the first big chunk. We’ve worked out that we can franchise we’ve put together all the models, and we’re kind of at that pointy end of getting all of the documentation and everything ready to go. And now is the next big step, which is finding our first couple of franchise partners that are excited to take on this emerging brand and then from there where it goes.

Hannah:
So really excited to keep you up to date guys with things. And I always love to peel back the curtain. You know what I’m like, I’m an open book. So hit me up with any questions. And also if this has piqued your interest, if you’d like to know more, just jump onto our website and up the top, so burntheory.com.au there’s a link that says own a studio. So just click on that. And there’s some information in that webpage. There’s also a PDF that you can download to check out our prospectus. There’s some frequently asked questions and there’s an option there if you’d like to book a call and have a chat with me in a little bit more detail. All right, guys, well, that’s it from me. I’m going to love you and leave you. And I will catch you on the next podcast.

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