BFT - Xponential
With 300 franchises and counting, one of Australia's fastest-growing fitness companies is now poised to come out of a pandemic-induced holding pattern that has seen its US presence limited to just Santa Monica, California and Boca Raton, Florida.
Body Fit Training's (BFT) progressive strength and conditioning program has attracted the interest of US-based Xponential Fitness Inc (NYSE: XPOF), which has purchased the Melbourne-headquartered company's intellectual property for $60 million, plus additional payments based on growth.
As part of the deal BFT will continue to operate as the master franchisor in Australia, New Zealand and Singapore, while Xponential will grow the brand across the USA and Canada.
Founded in 2017 by Cameron Falloon, a high performance trainer who has worked with AFL and soccer teams, and Richard Burnet who was formerly an excutive with Essendon and the GWS Giants, BFT has operated under a franchise model since 2018. The group is also co-owned by Hamish McLachlan.
From what began with just four test pilot studios, the company is expected to have 40,000 members by the end of 2021 and 200 studios in Australia alone, with high-profile franchisees including cricket legend Tim Paine, former AFL star Nick Riewoldt and former NRL players the Aubusson brothers.
The company is currently involved in a legal stoush with F45 Training over US patents and is awaiting a likely judgment on the matter in December, but North American growth limitations to date have more been due to border restrictions.
"The US growth has slowed a little bit because of COVID and our inability to travel. But we have really strong interest there, the model really resonates," Falloon tells Business News Australia.
"In fact, our Santa Monica site has doubled its membership through COVID when California has been almost completely shut down. So that's been a really fantastic growth story for us."
Falloon and Burnet said they were delighted to partner with one of the world’s leading fitness operators to continue their growth globally and to provide additional brand strength for their franchisees and members.
"We are particularly proud of the circa 35,000 strong member base we have created and the franchisees who continue to believe in the brand, and we look forward to taking BFT to the next level," they said.
"We are very pleased to announce the addition of our tenth brand through the partnership with BFT," adds Xponential Fitness Inc chief executive officer Anthony Geisler.
"We see significant opportunity to expand BFT’s existing studio base both in the US and internationally, as we leverage the Xponential Playbook to provide robust franchisee support, implement best practices and leverage synergies across our entire portfolio."
Falloon tells Business News Australia the community-based functional training program, including 50-minute progressive cardio and strength-based classes, avoids the repetitive movements that are common in gyms.
"I founded the business off the back of my 25-plus years of strength and conditioning training, and working in a variety of settings from exercise rehabilitation to working with elite athletes in various team sports," he says.
"What I saw was an opportunity in the general fitness space where there was no one really applying science and the methodology that you would apply when considering a program for an athlete in the mainstream.
"Why wouldn’t we apply best practice for people who are paying a gym membership in the mainstream just like we can with elite athletes? It’s different outcomes and different goals, but ultimately the methodology is the same."
He says often in a gym setting improvement means lifting more weight, running harder or riding harder, but there are so many other ways a person can progress their fitness.
"We stress every energy system, so we train aerobically and anaerobically as an example. We target our slow- and fast-twitch muscle fibres and then we try and move our members in as many ranges of movement as we can in a controlled manner so that we're not just overloading on the same movements all the time," the entrepreneur explains.
Falloon emphasises fairness is at the core of the franchising approach with a fixed cap fee up until a certain member number, after which it goes to a percentage of revenue which is then capped.
"The reason we cap it is if you're a really successful operator, you’ve got a good 350-400 members, we think it’s fair that you should benefit from that," he says.
"We understand that there’s a certain amount of money that we need to run operate our business and to operate it successfully and to provide franchisees with support, and so we don’t think that it’s fair to have uncapped revenue from our franchisees."
To get started, BFT also invests in pre-sale marketing initiatives and provides real estate support with funding, alongside careful analysis to make sure no franchisees are stepping on each other's toes.
"Rather than going to a mapping company and doing the standard mapping of the country, which would have seen us have something in the vicinity of 450-plus franchises in Australia, we gave a set of metrics so that we wanted to make every territory fair," Falloon explains.
"Whether you were in Seymour in regional Victoria, Newfarm in Brisbane or you’re in the CBD location of Sydney, everyone would have equal opportunity to have success, based on having a certain population of people in that target demographic, and then that was overlaid with an affluency rating.
"All of our territories are much, much larger than the majority of our competitors, and what we did with our membership also is we have a passport membership. Our members can go anywhere, so you’re no longer competing against your neighbour in the same brand."
He says this has led to a "collegiate-type" approach with franchisees who understand they have bigger territories.
"The good operators have the opportunity to put a second site in their territory at no cost, so it’s a fantastic value-add for our franchisees, and we’ve got about six franchisees currently doing that," Falloon explains.
"From a site perspective, we’ve sold nearly everything in Melbourne, and obviously that’s where the business was founded and originated from, and hence the growth.
"Sydney and NSW is a big growth opportunity for us, we're seeing really strong site growth in Brisbane with a lot of site openings coming up there, and Singapore is really going crazy from a sales perspective, as is New Zealand."
The pandemic also fast-tracked investment in and development of BFT's online offering so that studios could keep operating through lockdowns, which Falloon says has evolved into an app that will be launched soon.
"Our goal when COVID hit was to make sure that coming out the other side everyone was viable and healthy, from a business sense but also mentally," he says.
"That created a lot of goodwill in the business. It also gave us the opportunity through COVID to do a review of the business, to look at every angle of the business and pull it apart and look at the gaps.
"We actually took a bit of an educated punt and we doubled our staff and our head office resources through the middle part of last year."
He says the group was very fortunate the sales pipeline didn't slow down last year, and since then staff, franchisees and members have become well versed in adapting to lockdowns.
"So we can flick the switch from live, in-studio experiences which is what we love – and that’s our core product – to online at the flick of a switch. our members are used to it, they’re comfortable with it," he says.
"The great thing about our model is whilst our programming we feel sets us apart from our competitors and gives us a specific niche in the market, it's actually the communities that drive our businesses and are what make our businesses so successful.
"So that community approach has allowed our online platform to thrive and be a real benefit to our franchisees because it's just that one hour of the day where the members can catch up with their trainers, but also be online and catch up with the other familiar faces that they see in the studio and keeps some sense of normality."