Can Snap Fitness founder build the Yum! Brands of fitness?

The UpTake: The recession threatened the fast growth of this fitness entrepreneur’s chain of health clubs,but he acted quick and smart to manage the challenges and position the company for future growth. And that’s led to acquisitions and investment in the years to follow.   

Peter Taunton was several years into his plan to rethink the big box health club when the recession hit, threatening both his Snap Fitness franchisees and the vendors that had helped him build the fast-growing chain.

But he learned three important lessons that he’d carry with him in the years to follow, and they’re the reason Snap Fitness just closed a new $200 million private equity investment from TZP Capital Partners and why the Minneapolis man is buying up startup fitness brands around the nation.

Go all in

Snap Fitness was growing quick when 2008 came and banks stopped lending to his franchisees. So Taunton got creative, and put himself on the line. Snap and some of its equipment manufacturers agreed to subordinate loans to help get the franchisees into business, accepting the burden if the club goes under. It turned out worth the risk, Taunton says. He has stronger than ever banking relationships and maintains a 4 percent failure rate throughout the life of the company. The company has quadrupled the number of locations in the last five years, to 2,000 around the world.

Control what you can control

Taunton realized his company was only as strong as its weakest vendor. Future growth would be dependent on the franchise’s ability to continue growing quick. So he built teams to handle site selection, lease negotiation, financing, design and construction and training. He spent $2.5 million to write his own back office software with payment processing and customer management tools. The company created its own captive insurance plan for franchisees. His goal was to make owning a Snap Fitness franchise as easy as conceivably possible.

Diversify

With the full-service process in place, Taunton saw an opportunity to take advantage of it and to protect his business from future tough economic times. His model—Yum! Brands, owner of KFC, Taco Bell and Pizza Hut. He began to seek out high-potential fitness chains with 20 to 30 locations to acquire and grow using his franchise model. He created a holding company, called Lift Brands, to make the purchases. In late 2011, it bought Kosama, a chain of boot camp studios now in 10 states. Early in 2013, it purchased 9Round, a kickboxing chain with more than 21,000 members in at least 30 states. And last September, STEELE Fitness joined the chain. It’s a high-end personal training company also based in Minnesota. Taunton has already announced plans to introduce a new 24-hour club concept called Steele365 this year.

Taunton expects to add up to 400 locations this year between the four brands and he’ll announce a couple other new acquisitions or fitness concepts to help grow.

“What I love about what we’re doing and the vision is that when someone makes the decision they want to go into business for themselves in the healthy lifestyle space, we have a suite of products and financing across them all,” he says.

The big lesson for Taunton post-recession was to make his business more stable while still taking chances.

In his personal life, that stability is found in the workout he’s performed six days a week since age 13: 20 minutes of cardio, 30 minutes of weight training. And the risk-taking perhaps is most evident in his purchase of the Buffalo Luxury Camp, a resort in Africa’s Serengeti, made at the height of the recession.

The UpTake: The recession threatened the fast growth of this fitness entrepreneur’s chain of health clubs,but he acted quick and smart to manage the challenges and position the company for future growth. And that’s led to acquisitions and investment in the years to follow.

Peter Taunton was several years into his plan to rethink the big box health club when the recession hit, threatening both his Snap Fitness franchisees and the vendors that had helped him build the fast-growing chain.

But he learned three important lessons that he’d carry with him in the years to follow, and they’re the reason Snap Fitness just closed a new $200 million private equity investment from TZP Capital Partners and why the Minneapolis man is buying up startup fitness brands around the nation.

Go all in

Snap Fitness was growing quick when 2008 came and banks stopped lending to his franchisees. So Taunton got creative, and put himself on the line. Snap and some of its equipment manufacturers agreed to subordinate loans to help get the franchisees into business, accepting the burden if the club goes under. It turned out worth the risk, Taunton says. He has stronger than ever banking relationships and maintains a 4 percent failure rate throughout the life of the company. The company has quadrupled the number of locations in the last five years, to 2,000 around the world.

Control what you can control

Taunton realized his company was only as strong as its weakest vendor. Future growth would be dependent on the franchise’s ability to continue growing quick. So he built teams to handle site selection, lease negotiation, financing, design and construction and training. He spent $2.5 million to write his own back office software with payment processing and customer management tools. The company created its own captive insurance plan for franchisees. His goal was to make owning a Snap Fitness franchise as easy as conceivably possible.

Diversify

With the full-service process in place, Taunton saw an opportunity to take advantage of it and to protect his business from future tough economic times. His model—Yum! Brands, owner of KFC, Taco Bell and Pizza Hut. He began to seek out high-potential fitness chains with 20 to 30 locations to acquire and grow using his franchise model. He created a holding company, called Lift Brands, to make the purchases. In late 2011, it bought Kosama, a chain of boot camp studios now in 10 states. Early in 2013, it purchased 9Round, a kickboxing chain with more than 21,000 members in at least 30 states. And last September, STEELE Fitness joined the chain. It’s a high-end personal training company also based in Minnesota. Taunton has already announced plans to introduce a new 24-hour club concept called Steele365 this year.

Taunton expects to add up to 400 locations this year between the four brands and he’ll announce a couple other new acquisitions or fitness concepts to help grow.

“What I love about what we’re doing and the vision is that when someone makes the decision they want to go into business for themselves in the healthy lifestyle space, we have a suite of products and financing across them all,” he says.

The big lesson for Taunton post-recession was to make his business more stable while still taking chances.

In his personal life, that stability is found in the workout he’s performed six days a week since age 13: 20 minutes of cardio, 30 minutes of weight training. And the risk-taking perhaps is most evident in his purchase of the Buffalo Luxury Camp, a resort in Africa’s Serengeti, made at the height of the recession.

Can Snap Fitness founder build the Yum! Brands of fitness?The UpTake: The recession threatened the fast growth of this fitness entrepreneur’s chain of health clubs,but he acted quick and smart to manage the challenges and position the company for future growth. And that’s led to acquisitions and investment in the years to follow.

Peter Taunton was several years into his plan to rethink the big box health club when the recession hit, threatening both his Snap Fitness franchisees and the vendors that had helped him build the fast-growing chain.

But he learned three important lessons that he’d carry with him in the years to follow, and they’re the reason Snap Fitness just closed a new $200 million private equity investment from TZP Capital Partners and why the Minneapolis man is buying up startup fitness brands around the nation.

Go all in

Snap Fitness was growing quick when 2008 came and banks stopped lending to his franchisees. So Taunton got creative, and put himself on the line. Snap and some of its equipment manufacturers agreed to subordinate loans to help get the franchisees into business, accepting the burden if the club goes under. It turned out worth the risk, Taunton says. He has stronger than ever banking relationships and maintains a 4 percent failure rate throughout the life of the company. The company has quadrupled the number of locations in the last five years, to 2,000 around the world.

Control what you can control

Taunton realized his company was only as strong as its weakest vendor. Future growth would be dependent on the franchise’s ability to continue growing quick. So he built teams to handle site selection, lease negotiation, financing, design and construction and training. He spent $2.5 million to write his own back office software with payment processing and customer management tools. The company created its own captive insurance plan for franchisees. His goal was to make owning a Snap Fitness franchise as easy as conceivably possible.

Diversify

With the full-service process in place, Taunton saw an opportunity to take advantage of it and to protect his business from future tough economic times. His model—Yum! Brands, owner of KFC, Taco Bell and Pizza Hut. He began to seek out high-potential fitness chains with 20 to 30 locations to acquire and grow using his franchise model. He created a holding company, called Lift Brands, to make the purchases. In late 2011, it bought Kosama, a chain of boot camp studios now in 10 states. Early in 2013, it purchased 9Round, a kickboxing chain with more than 21,000 members in at least 30 states. And last September, STEELE Fitness joined the chain. It’s a high-end personal training company also based in Minnesota. Taunton has already announced plans to introduce a new 24-hour club concept called Steele365 this year.

Taunton expects to add up to 400 locations this year between the four brands and he’ll announce a couple other new acquisitions or fitness concepts to help grow.

“What I love about what we’re doing and the vision is that when someone makes the decision they want to go into business for themselves in the healthy lifestyle space, we have a suite of products and financing across them all,” he says.

The big lesson for Taunton post-recession was to make his business more stable while still taking chances.

In his personal life, that stability is found in the workout he’s performed six days a week since age 13: 20 minutes of cardio, 30 minutes of weight training. And the risk-taking perhaps is most evident in his purchase of the Buffalo Luxury Camp, a resort in Africa’s Serengeti, made at the height of the recession.