An Australian Franchisee Case Study
Name: Kees & Robyn Payens
Location: Mt Warren Park / Sunnybank Hills / Springwood
Franchise: Jetts Fitness
Why did you go down the franchise route? And why did you choose Jetts franchise?
Kees changed jobs 3 times in 2009 (is Mechanical Engineer with contract company) due to the GFC at that time. Engineering was (still is!) at the mercy of the resources industry both and Australia and overseas.
Kees & Robyn felt there was a better way to become financially independent from the resources sector, so spoke with another early Jetts franchisee (Mick & Jane Hagarty) whom Kees and Robyn have known since 1995. We also visited friends in Toowoomba in July 2009 and happened across the magazine “My Business”; Kees was engrossed in this and quickly read that franchising opportunities were available if researched correctly.
Contact was made in July 2009 with the Jetts franchising manager at the time (Mr Peter McGregor) with whom we quickly established a rapport. We would say at this time that Peter was most convivial and enthusiastic to explain the Jetts business to us. We met with the Head Office team at their first premises at Kawana Island in August 2009 (Ekka holiday!) and received an excellent first hand introduction to the business with Peter, Brendan and other HO team members.
We were impressed with the business model and were excited to get involved. We had no experience in the fitness industry at the time, but were however philosophically attracted to the way the business was set up.
The next step was to source a site which we did ourselves with some assistance from Anthony Merlo. We found an empty tenancy in the Mt Warren Shopping Village which had recently been a Curves gym which had been vandalised by arson (2 charming teenagers!). This 228m2 tenancy was just ready for a new occupant, so we negotiated a lease with the landlord with Anthony’s kind expert assistance.
What did you do before taking up your Jetts Fitness franchise?
As outlined above, Kees is a Mechanical Engineer who works as a contractor, currently within the Downer EDI group whom he initiated a deal for Jetts National corporate deal with Martin Oliver and the Downer corporate group in Sydney.
Robyn had run her own private music teaching business for 15 years and as such had commercial exposure, albeit on a small scale, of dealing with multiple clients, invoicing, people management, continuing professional development, and the like.
Kees and Robyn are also professional musicians, operating their music business Modal Harmony over the past 30 years.
How did you raise the finance?
This issue is obviously one of the most critical in order for the business to proceed. In raising finance for the MWP gym, this caused us by far the most angst. At the time of developing MWP, we had 6 investment properties (IP’s) which were used as security for the gym development. We have used a Finance Broker for all our properties and all 3 gyms whom we would heartily endorse and recommend for any budding franchisees seeking to become part of the network, or for those existing franchisees seeking their next club.
David had prepared two possible finance arrangements, firstly with NAB Commercial, but towards the end of the negotiations, we found that NAB’s terms were far too onerous for us to possibly manage. So we ended up with a “special” deal (aka deal for friends of Finance Broker!) with Capital Finance via DKM finance group. It is interesting to note that Head Office has advised that Capital Finance is currently in vogue for gym financing!
Finance for gyms 2 and 3 were also commenced via David Harry as our Finance Broker, but this time with much less heartache due to the tripartite arrangement Jetts now has in place with Westpac. Our experience with Westpac (Sharon Verrenkamp / David Fleischmann / Elaine Williams – Westpac Loganholme Commercial) has been nothing short of exceptional as far as service was concerned for us. We would heartily endorse the use of this Westpac division to any other franchisees. We understand that there have been other Westpac divisions were this level of service was not as good.
What training and support did you receive initially and ongoing?
As mentioned above, we first met with Jetts HO team in August 2009 and thereafter had several training sessions at Head Office with Peter McGregor, Alan Myers and Ritchie Gibson in which we became more familiar with the Jetts model and how owners of the business could optimise their involvement. We also sent our managers to manager’s training on more than one occasion in order to support our managers and provide them with the tools to operate our gyms in accordance with Jetts policy and procedures.
Ongoing training has also included business owners’ forums which have been an excellent networking environment between franchisees as well as a meeting for airing of grievances with Head Office personnel.
What is a typical day for you as a franchisee?
Robyn has the main role here whilst Kees is still engaged as a contract Mechanical Engineer, 4 days per week. Kees has elected to have all Fridays to dedicate to Jetts business and other family matters.
Typical weekly activities include the following for us as business owners for the three gyms we have:
• Process fortnightly timesheets for payroll;
• Update MYOB with bank reconciliations;
• Ring all 3 managers routinely to check any issues;
• Review all 3 gyms DPS spreadsheets which we have set up via Dropbox in order to track at any time;
• Process any suppliers’ invoices, statements, queries, etc;
• Friday meetings held by each gym with managers / PT’s; Robyn and Kees will attend the MWP and SBH meetings (1.30PM each) and Kees meets SWD manager at 8.30AM for brief meeting;
• First Friday of every month is combined meeting held at Megacentre Coffee Cub (next to Ikea) at 1.30PM. Typically covers the following:
o Team member of month is announced;
o Kees & Robyn outline any general information for all to hear;
o All managers take turns to advise important issues;
o Any FastTrack matters raised and discussed;
o All team encourage to raise good / bad issues as necessary;
o “Shout Outs” for any outstanding achievements / results.
• Networking events via Chamber of Commencement we are registered with in Beenleigh;
• Social; club culture” events to suit each gym’s organisation (approximately once per month).
What challenges have you faced?
Challenges faced include the following:
• Raising finance for MWP (most stressful activity by far!!);
• Dismissing employees from MWP; one in particular caused a large amount of angst for Kees, Robyn and Paul Brennan;
• Dealing with people management issues;
• Head Office issues on occasion (marketing materials, etc);
• Keeping PT’s and finding good ones!
• Installation of $20k additional noise control flooring at SBH;
• Brisbane City Council bizarre legislation requiring yearly fee for window decals?!?!?
• Local area marketing – at first when commencing gym operations at MWP;
• Recruiting process, now made easier with Paul Brennan as BPM and Karl Gorton (SBH manager / area manager).
Has becoming aJetts franchisee changed your life, if so how?
Getting into the fitness business was a first for us, so we had to become familiar with the fitness industry and in particular how the Jetts system was to be implemented.
We have really understood and implemented a team based approach to business by engaging our businesses with the local community, local businesses, local / state / federal political members. We have also enjoyed seeing our managers and personal trainers grow as individuals and business partners as we mentor them to good things!
By far, however, is the feeling we get when we hear testimonials from members who commenced as type 2 diabetics, and with training, have lost this condition! This is so moving for us since Robyn’s elder brother died from type 2 diabetes complications in April 2009 after a long battle with celulitis, cataracts, failing immune system, toe amputations, leg amputation, loss of income, and inability to cope with mounting health problems.
An additional benefit to us is that we have improved our own fitness levels significantly with Kees going to Jetts gyms (not only our own) 4 times per week, and Robyn 3 times per week. We have now improved our own cardio vascular health and strength levels as a result. We attend the weekly Parkrun events held every Saturday, plus various fun runs / fund raising runs as well.
What advice would you give to someone thinking of buying their first franchise?
The following points were what we would send to potential franchisees:
• As noted above, we have the 3 gyms under our registered company KRM Enterprises Pty Ltd and have elected NOT to partner with anyone. We did investigate partnering (either “silent” or “active”), but dismissed this since this is a sure fire way to lose friends / family if you end up with differing viewpoints as time goes on. This has happened within Jetts already when one partner, for example, decides against capital expenditure, or wants to sell their stake – gets messy!
• We have done gyms 2 & 3 with Westpac in a Jetts/Westpac/KRM tripartite arrangement; this is the only way we have got finance for these gyms to be a reality. Financing is the most important aspect. I would recommend use of a finance broker for this to occur and the chap we have used for 6 investment properties and all 3 gyms is Mr David Harry 0416 199 254 ([email protected]) who would be pleased to help.
• Purchase of existing gym is a good idea, but will be probably higher capital than a new build. Having said that, new gyms in SE QLD aren’t likely with current market saturation. The www.jetts.com.au website will indicate new gym opportunities, and they’re mostly regional (currently 7 up for sale, although Mt Gravatt is under contract).
• Staff is the most important operational parameter as I’m sure you know, so careful recruitment needed here, but you may inherit staff from a gym sale, so a careful scrutiny required so that you get a good team.
• Becoming aligned with Paul Brennan or James Lamb as Business Performance Managers (BPM’s) from Head Office is an important aspect. We have found Paul, in particular, to be a very valuable ally in this regard.
• Be vigilant with all record keeping and keep these up to date weekly. This includes dealing with a gym seller (as we did with Martin for Springwood), as well as operational records once you have your own gym, such as BAS, PAYG, MYOB and whatever acronym applies!. We do all our own business documents and have them recorded in spreadsheets for our Accountant for processing.
• Have a good accountant who is favourable to small business.
• Check on line for any details regarding franchising; we also subscribe to “My Business” which is a really useful publication. You are your own best educator, but need motivation to do so. This is part of “Due Diligence”!
• We prepared a Business Plan back when we started the investigation in 2009; it is now in its 12th revision! You will need this anyway for Westpac, since they (or whoever finances – perhaps even Capital Finance) need to know that you understand how the business is to operate.
• Be a team player within the Jetts franchising framework. It is expected that you will follow the directions of the franchisor and cooperate with their general intentions. Matters can be discussed, of course, but maverick tendencies will be met with resistance from Head Office!
• Finally, be engaged with the business; don’t just see the Jetts system as “passive income”. Those days are past and it is important to connect with the Head Office team, gym team, gym members, and local community to get the best out of the business. We would expect a minimum of (say) 10 hours per week of commitment to be effectively engaged in the business.
What are your plans for the future?
Kees intends to wind down completely from the resources industry and focus on the 3 Jetts gyms of MWP, SBH and SWD.
In addition, we have 3 grandchildren (4th en route) we wish to be involved with as they grow (ages 3, 2 & 6 months).
Would you do it again?
a) Initial Involvement
Reflecting back to 2009 to current – yes we would! We wouldn’t change too much, but probably be more vigilant with gym team (managers / PT’s) recruitment.
b) Subsequent Gym Development
We get asked this question a lot actually! Specifically, will we look at getting a 4th Jetts gym? At this stage, we think this will not happen.
Obtaining the Springwood gym was more an opportunity that presented itself by Martin Oliver after Kees had met with Nik Petricivic who services Synergy equipment. Nik had asked Kees whether he was interested in the Springwood club which resulted in a call the next day by Martin. It then only took 13 weeks to organise the deal with Martin’s 247 group to transact the purchase.
Request information on franchise ownership of