Latest move by Berkshire CutFit (franchising models survey)

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grace4nan

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A “gym market research study” was conducted by Atheneum.


"About a week ago both me and Dani received this “gym owner survey” in our emails.⁠

⁠It asked a bunch of “basic gym owner questions” then turned into asking VERY CrossFit gym owner specific questions ... basically about different franchising models. ⁠

And - mainly - what we’d be interested in paying to keep our “affiliation” with CrossFit.⁠"

---------------------------------------------------------------

My original sub on how Berkshire Partners (CrossFit owners) may increase their profits.

https://www.reddit.com/r/crossfit/comments/16wyp9m/crossfit_llc_price_hike_what_if

Also, an interesting idea:

Craig Howard @craighdiablo Hey Berkshire Partners, here’s an idea to get your money back for your purchase of @CrossFit: sell it to affiliates and other CF enthusiasts. We’ll focus on curing chronic disease and forging elite fitness with no exit strategy.

7:09 PM · Nov 9, 2023
 
@grace4nan I took the survey after seeing the outrage online.

It isn't anywhere near the boogeyman people are making it out to be. But, the truth isn't going to clickbait:

The survey explored a cost increase and canvassed for feedback on a tiered pricing structure.

Amusingly enough, a few of the tiered 'options' were insane deals. Pay your current Affiliate fee and get like 50% of it back to spend on coaching development.

None of the proposed 'options' were anywhere near a Franchise fee. with the most expensive set always hovering around $10,000 per year and most around the 3-8k.

My advice to CrossFitHQ would be the same I would offer to a struggling Affiliate Owner:
  • If you believe in your product and believe you are currently over-delivering raise your rate by 15-25% without making any structural changes. If people abandon you, you fucked up OR you weren't a good fit.
  • Keep it simple, do not introduce tiered Affiliate memberships. Keep services like business mentoring ala carte. And do a better job at marketing and making the services easily accessible.
Interestingly enough, some of the owners I have seen fear mongering the loudest about the impending doom of Franchising would make significantly more money if they had more help. Look at some of the posts from people on this subreddit about the comings and goings of their local Affiliate.

TL:DR - The Survey was about raising Affiliate Fees and introducing a tiered Affiliate Membership. And most owners need more help.
 
@grace4nan There is a fine line between posting for discussion and posting for attention:

Posting for discussion:

Affiliate owners sent survey link and are financially compensated for their time filling it out. After electing "CrossFit Affiliate Owner" from a drop-down menu, the survey queries respondents about the Affiliate pricing model and is interested in what additional services gym owners would like.
Click to expand...

Posting for outrage/attention:

Latest move by Berkshire CutFit (franchising models survey)

Link two of the most notoriously polemic (for different reasons) Instagram accounts you could find.
Click to expand...
 
@grace4nan Hey dude

The purpose of franchising is to create an asset which HQ can sell / control, rather than a gym that operates as it sees fit.

In short, HQ works for you now. They want to change it so you work for them, then sell this thing to someone who cares even less
 
@caleb_m This is intended ONLY and I mean ONLY to increase the value of Berkshire’s asset. Berkshire owns a brand name that is subject to the whim of affiliates, over which they have no control.

They wish to change that structure for their benefit, not for yours.
 
@thunderstruck That could be, but a franchise model requires assimilation under the brand umbrella. There may be small regional difference akin to differing fast food menus, but on a grander scale there should be a more standard set of operations.
 
@caleb_m There should be? I don’t think you understand. I’ll help.

The magic of CF is that it fits anywhere. An affiliate can be a dumpy little garage on the edge of town or a big fancy box in the city. Doesnt matter. This is the reason there are so many more CrossFit boxes than there are orange theory locations. By allowing small town Sammy to start a shoe string affiliate, lots of people gain access to CF. It might never look like mayhem, but why does that matter to the end user?

Enforcing standardization sounds SOOOOO GREAT until you realize that it will force lots of those little boxes to close, which will reduce access to CF.
 
@thunderstruck Because the average end user has evolved beyond the glamour of a fight club-esque gym. From my experience, those little gyms either force themselves out by not being profitable or take the leap to move to a bigger, nicer space.

I understand the ramifications, but that doesn’t change my comment about what it means to be a franchise…
 
@caleb_m
Average user has evolved
Click to expand...

False. Demonstrably false - the majority of CF gyms are in small cities and towns. 14 boxes around - but mostly outside of - Des Moines

More boxes in small town Iowa than in Manhattan. Small town low amenity box is the backbone of CF.
 
@thunderstruck Hometown of 20,000 people. Four CF gyms. None of them in garages. All of them look better than most every gym I was in pre-2015.

Black Swan-ing this point doesn’t change the reality. Look at the audience at the Games, read people’s posts in this sub, look at what CFHQ is highlighting in their hearts and minds pieces. The population has changed.
 
@thunderstruck I honestly think CFHQ is willing to cut small town Sammy loose and focus on the affiliates that can support a shift in the business model. IE, less affiliates that produce more revenue per affiliate vs many affiliates that produce less revenue per.

Right, wrong or indifferent, affiliates have been doing this to individual members for a while now. The gym I used to attend cut out 3x a week memberships and forced everyone into an unlimited one at about 1.5x the monthly cost. They lost members but still increased their top line.
 
@thunderstruck You’re missing the point. Business models have shifted away from punch cards and part time membership for a reason. It’s more profitable for gyms to have 100 full time members than it is to have a combination of 200 full and part time members.

That’s exactly what would happen if they increased affiliate fees & certification requirements or shifted to a franchising model. They might lose a lot of small affiliates that don’t really make any money in the first place, but their revenue per affiliate would be much higher from the ones that remain.
 
@forgivenkali Certainly and given my user name I’m all for clean shitters

But many gyms can’t afford that. Forcing consolidation would raise prices. Toilets would work, prices would rise, fewer people could afford CF. If your goal is to maximize enterprise value, Berkshire is doing that

Orange theory has great toilets and Waaaaay fewer locations for people.

If your goal is to maximize the number of people who can benefit from CrossFit, the current model is superior
 
@thunderstruck CrossFit doesn’t have to be done in an affiliate though. So if you’re talking the number of people who could benefit from the methodology, this likely doesn’t shake that number too much.
 
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