THE NEXT BEST THING
Thanks to a US franchising contest, two Australian franchisors have found a fast track to a global audience. But they have also learned there needs to be a steady approach to overseas expansion.
Two franchisors talk about the chance to fast track to a global audience.
Franchising is driven by innovation and passion, and these two franchisors have buckets of both. As well as that, their brands have been fasttracked to a global audience.
Both brands have a health connection – Salts of the Earth is a natural therapy that helps relieve respiratory and skin conditions, while KX Pilates is a highperformance version of the workout system.
There is also a connection through the US-based International Franchise Association with its annual worldwide contest that aims to put the spotlight on the next big thing in franchising.
Salts of the Earth founder David Lindsay was last year’s NextGen global runner-up, while the winner of the competition’s latest Australian heat is KX Pilates founder Aaron Smith, who heads to Phoenix in February to pit his brand against international competition.
“It’s really great to stop and get recognition for our team and franchisees, and it’s an awesome opportunity to get our brand out there in the sector,” says Smith. “We’re right on the border of international expansion, so this couldn’t have come at a better time.”
Lindsay saw the NextGen contest as a massive opportunity to boost awareness within Australia. Reaching the finals in
Las Vegas last year shot him into a whole new business stratosphere.
“In the US, the media, the interviews
... it’s enormous. You are showcased as the next up-and-coming business in the market.”
Apart from the branding opportunity, he appreciated the access to big names in the franchising sector including Anytime Fitness founders Dave Mortenson and Chuck Runyon, and Susan Greco from Subway.
“It was just amazing to have the time
to talk to these guys and realise they are just normal people with an incredible team around them, and they face the same problems.”
NOT YET
What Lindsay learned about overseas expansion, however, is that while his brand could move into the US tomorrow, thanks to the contacts he made through NextGen, it might not be the right move as yet.
“The biggest thing I took away from the event is that Salts of the Earth still has so much more development to happen. We’ve just launched our own product range, and we’re about to introduce testing so people can monitor the health of their lungs.”
Lindsay founded the company after his father gained a new lease of life from the treatment in Ireland, which involves sitting in a room and inhaling dry salt air. It was not easy to gain recognition for the therapy in Australia.
“It was a huge challenge,” says Lindsay. “I was bringing in a therapy no-one had heard of. It was a whole education process to get people thinking logically about the therapy.
“We’ve been in business seven and a half years and still have to do a lot of education about what we do, what the therapy is, and that feeds into our marketing with client testimonials.”
He admits he did not know what franchising was at first. “But it kept coming at me as our popularity grew. The more I educated myself about it, the more I fell in love with it. I got into this business to help people become healthier, and what I love about franchising is that you are giving someone – someone who loves your brand and what you’re trying to do – the opportunity to better themselves.”
RECURRING REVENUE
He has developed a model that brings in recurring revenue, like a gym membership, and is based on management plans. He says the model will really kick into gear with the brand’s multi-unit concept.
“We’re recruiting really well. We opened five or six within three months and the capacity is about 200 members, on management plans, and each of these is already up to 120 to 150.
“The next conversation is, ‘Well done, you have all this marketing and great word of mouth, are you interested in opening another?’. It comes down to the people you recruit. I’m happy with a person who wants to open just one unit, so long as they are passionate and driven and want to be part of the brand. But I’m also motivated to drive people to further success with multi-units.
“Meanwhile, we know we will have a stronger offering when we have the system where it needs to be in the next 12 months. This gives me time to reflect on the business, where I want it go to. You
David Lindsay
only really have one chance to do it, and
I’d love to do it when I know I have a really solid, completed system with the added-on products and services we are introducing.”
ANOTHER STEP
The challenge of the US, its state regulations and the size of the population have helped persuade Lindsay to consider setting up joint ventures with established US businesses. But there might be another step first.
“The industry is only starting to establish, and we have a well-developed system so time is really on our side,” he says. “We’ll probably enter Canada before the US, put the training wheels on and then go hard.”
So what makes the business compelling for franchisees?
“Lack of competitors. We’re the only people doing salt therapy so we really own the market. We’ve bought up a lot of intellectual property and domain names. We have the opportunity to move ahead, and there are only a handful of independents out there.”
There is no age barrier to the service: anyone from a newborn upward (the current oldest client is 103 years) can benefit from the treatment.
It is a different focus for Smith, whose typical customers are between 22 and 55 years, predominantly fit, health-conscious women. That translates to mums during the day and young professionals after work.
“We are slowly getting more men through the doors,” he says.
MORE INTENSE
He founded KX Pilates eight years ago. While Pilates purists stick to classical movements, and physiotherapists recommend it as a rehabilitation tool, for Smith it is a fitness-based business and an ever-changing brand.
“There are 12 people in a class. We ramp up the intensity. It’s like a pump class in a gym on a reformer machine where we train the whole body at once,” he says.
A big eater in his teens, Smith changed his life when he was 18 with self-studies in nutrition and exercise that gave him confidence and revolutionised his life. A love of both travel and exercise enabled him to indulge both activities, and he worked in gyms in the UK and the US.
He came across this type of Pilates in London, and headed up the first studio of its kind. When he returned to Australia with the vision to open his own brand, franchising seemed like the perfect vehicle. So far the numbers speak volumes: 85 per cent of franchisees are already clients or trainers “and they love waking up and changing people’s lives every day”, he says
CHANGING GOALPOSTS
Meanwhile, the goalposts keep changing for Smith. “When I opened the first studio in 2010, the goal was 50 franchised studios and 10 company studios. A year ago we had the whole of Australia mapped out, so we set a minimum target of 120. Now, a new COO with international experience has just changed the goal to 500. Now that’s my target. I’m pretty set when someone puts up the challenge to go and hit it.”
Smith is banking on the NextGen exposure to give his business a real boost. “I’d love a win, but I’m really going in with eyes open, and want to network with amazing people and open up the doors for where we could go.”
He says that with an amazing team in head office, it is just a matter of finding the right partner.
While an exit plan is also about stepping back, changing his lifestyle and devoting more time to family, Smith has a broader focus right now.
“I’m really passionate about education, apparel is a huge market, then there is manufacturing. A lot of our equipment comes from good but expensive manufacturers, so potentially we could bring out our own line.
“I was a classic gen Y, but now I really look at this for the long term and I still wake up every day and love it.”