From one store to $30 million in revenue: Fitstop on how to successfully franchise a business

Peter Hull turned a small group workout session into a 81-store franchise business, and here he shares lessons on building systems, managing conflict, and picking the best tech.

Five fast tips

1. Make sure your technology investments either improve your systems, or improve your customer experience, rather than just to add options.

2. When multiple people in business compete in the same areas for customers, create a framework that allows for fair competition, so that the business as a whole benefits.

3. If you’re making changes in your business, listen to both the data and your gut.

4. Create simple systems that can be tested, measured and held accountable to.

5. Respect your competition, but don’t look at them too closely. Focus on yourself.

When a knee injury and reconstruction put an end to Peter Hull’s motocross racing career in 2011, he faced a sudden change of circumstances.

Working as a personal trainer, he decided to open his own functional fitness gym in Brisbane in 2013, in a 100sqm industrial building, so that he could train people in group settings.

That was successful, so Hull built a team, and started a second store, which he eventually sold to his team members so that they could take over them.

Fitstop founder Peter Hull. Source: supplied

He took the money, and turned his idea into a franchise, believing he would be able to create a way for personal trainers to have profitable businesses that benefit the community.

That was 2017.

Fitstop now has 81 franchise stores, and 64 more in the pipeline with signed agreements, including expansion further into New Zealand, and then into the US.

The franchise owners are now a mixture of investors and personal trainers, most of which have used the training program, including former Wallaby player Dayne Haylett-Petty, who owns two in WA.

The business hit new heights following the lockdowns of 2020, developing a franchise model around hybrid training, featuring a combination of gym, outdoor, community, and online fitness.

The total network billable revenue for the business is now $2 million every month, on top of the revenue from its head office, which employs 22 people.

Hull says for this year, the business has reached $30 million in revenue already thanks to the ongoing expansions.

While most small to medium-sized businesses won’t go down the franchise route, Hull’s Fitstop journey offers important lessons on build vs buy on technology, building out a consistent user experience as you grow sustainably, and choosing who you partner with.

Picking the best tech, for you

Build versus buy can be a tough decision for a business that’s starting to get large enough to afford more technology investment.

At Fitstop, Hull made the decision for the company to build most of its technology stack from scratch, to create as consistent an experience as possible between franchises, when the store hit 20-25 stores.

“You can get to 25 stores by having great people, but to get to 50 you need great systems,” Hull said.

“We were able to completely track and own that experience.”

That included understanding exactly how their customers are interacting with their brand, from visiting the website, to downloading the app, booking their first session, to how their habits change over long time periods.

“You can’t get that from an out of the box system. That’s why we built our own,” Hull said.

But all the data in the world can’t help if it’s not feeding into how you run your business, which is why Hull boils the insights down into two key metrics: how to create more members, and how to increase their lifetime value.

Consider time — Fitstop tracks how long it takes for each customer to move through its acquisition process from early lead to paying customer, and can then create a benchmark for its stores to follow.

“We look for consistencies,” Hull explains.

“What’s the standard? What’s the difference between high-performing stores and those that aren’t hitting the mark?

“And then how do we educate that in — what do we need to tweak or change in our systems or education?”

Like most growing SMEs, it didn’t make sense to build everything for Fitstop.

“We don’t need to reinvent the wheel when it comes to financial systems,” said Hull.

That’s why his business uses Stripe for debiting, Fathom for reporting, and Xero for accounting.

Howdy, partners

While it’s obvious that a successful franchise business needs successful franchisees, it’s not straightforward to know who will or won’t be before they’re handed the keys.

And for non-franchise businesses, it’s the same when you’re choosing the companies you partner with or outsource too.

With 81 franchises, Hull has learnt a lot on how to navigate the early stages of feeling a person out.

“For me, disappointment only ever comes from misalignment of expectations,” he says.

It’s in those crucial first meetings that expectations need to be aligned, and Hull believes collaborative partners tend to use more language around ‘we’, and share stories of group successes they were proud of rather than their own.

Then there are the more precise questions around their expectations — do they see themselves as a single, or multi-site franchisee? What are the expected pre-open numbers, rental positions, or growth targets?

From there a 30-day plan is created for the franchises that launch, and the operations team holds everyone accountable to the expectations set.

A championship team, not a team of champions

It’s not only new stores that are being assessed — the entire network has visibility over the KPIs of each business, so that everyone knows how other stores are performing.

Hull says the transparency encourages owners to reach out to each other.

“They can see this location that’s 30 kilometres up the road from me converted at 44%. I only converted at 23%. What could I learn from them?

“It’s about creating a championship team, not a team of champions.”

Peter Hull (R) and more of the Fitstop team. Source: supplied.

But when you’re growing a franchise business, adding new stores while still trying to grow your user base as a whole, you need to have policies and procedures in place to negotiate boundaries and ensure people aren’t stepping on each other’s toes.

Local franchises don’t necessarily have to compete with each other, in Hull’s view, because in high-density areas like CBDs a cluster of individual locations can work together to leverage marketing and buying power.

But there needs to be ground rules.

Hull uses territory mapping software for each store (Mango Maps), and advises that franchises serve that community — though without a specific kilometre radius.

“What we find is locations that are clustered together, following the rules under the territory mapping, is where you start to get huge growth, because more people get that brand awareness,” Hull said.

For non-franchise businesses, it’s worth your time to set out similar ground rules for your sales team that allow them to compete fairly within a framework that lifts the business up as a whole.

It helps when everyone feels like they’re on the same team.

Hull gets local franchisees together once a month in classes to talk about how their locations are going, and how they can support each other for upcoming campaigns.

“Like any conflict, there is always going to be times of frustration, but if you talk about it, you communicate it, then you get through it,” Hull said.