AmenZone – Training for Life
Why doing more with less is hurting AmenZone and its growth through franchise strategy.
Brief Personal Interlude
I discovered AmenZone working on a project in Arizona. Over the course of the project the entire team participated in AmenZone classes. After the workout class, we would discuss the inherent flaws in the business and operating model of AmenZone.
The Business Model
AmenZone Fitness is a community of gyms that advocates a no weight, no machines, no mirrors, no frills approach to fitness. While its, “no equipment no excuses” attitude may seem reminiscent of CrossFit, the inspiration is much more personal to the founder.
AmenZone monetizes in the following ways:
According www.AmenZone.com, AmenZone has five locations – three corporate owned Arizona locations and two franchises in Quebec, Canada. Depending on the location, 3- 5 classes are offered daily. While prices are not posted on their website, from personal experience the drop in fee for a class is $20 and a monthly pass is $100.
Personal Trainer Certifications and Franchises
At the end of every class the instructor made an announcement was about the opportunity to become an AmenZone certified trainer and franchise owner. Click the link below to hear the pitch:
Certification and Franchise Opportunity
No particulars of the franchise agreement were ever shared, but due to their limited access to legal services I am assuming the franchise agreement was standard involving an initial investment of ($5,000 – $10,000) and then 5-6% of gross revenues thereafter.
AmenZone sells three categories of merchandise: (1) apparel ($20-$55); (2) DVDs and books ($10- $17) and (3) a signature workout tire ($50).
According to the AmenZone website, their first location is 3,000 square feet implying a maximum occupancy of 60 people. Assuming that in a month every class is sold out to drop in students only, that would imply monthly revenues of $183,000:
|Classes per day||5|
|Days per month||30.5|
|Classes per month||152.5|
|Students per class||60|
|Price per class||$20|
|Monthly revenue per location||$183,000|
However, the fully subscribed assumption is likely untrue given that the three Arizona locations are close to one another and likely cannibalize one eachother.
Initially, I thought the low number of classes per day and proximity of gym locations was to reduce the staff cost by having staff work at more than one location. However, class times are too consistent across locations for that to be true.
While the topline number isn’t that impressive, the real strength in the model is the low costs. Consider the following:
|Facilities||Due to limited number of classes, utilization is approximately 20%
|Utilities||As part of the back to basics experience, no air conditioning is used significantly reducing utility expenses|
|Instructors||Instructors are paid an hourly rate. Most instructors have other full time employment.|
|Marketing||AmenZone primarily relies on earned media including local news stories and word of mouth. Additionally, the gym has affiliation with Arizona State University (“ASU”) athletics. Frequently Division 1 ASU student and alumni athletes attend classes.|
|Equipment||Just kidding! No equipment, no excuses.|
While the corporate owned locations are profitable, they are difficult to scale due to the limited hours that members are interested in taking classes.
Personal Trainer Certifications and Franchises
The certification and franchise scheme is the element of the operational feature that is most misaligned with the business model. The primary issue is that it is not evidently clear what any franchisee would receive from a franchise agreement with AmenZone.
Generally, franchisors provide franchisees with a recognized brand and marketing, access to required startup capital and training.
AmenZone is a new brand that does not actively spend on marketing. AmenZone’s most effective marketing tool is its Arizona based network with local media and athletes that franchisees would not benefit from.
Access to to affordable capital is generally one of the most critical elements to attract franchisees. The no equipment philosophy and low upfront required capital investment eliminates a huge value component and makes the franchising model particularly ill-suited.
Finally, while an AmenZone work out classes are great and effective workouts, they are not difficult to emulate without training.
Merchandising is the most coherent element of the business and operating model. That said, selling workout equipment introduces a certain amount of tension with the no equipment philosophy.
Student comments on AmenZone – Training for Life
Interesting analysis on this company. It’s great that you took a very critical approach to this model. It would be great to get some pictures of the facilities in the article itself.
Great point John. I was going to post some additional pictures in response to your comment… but then I worried it might make my posting look like it was late.
This woman’s blog has some shots of the North Scottsdale location (which is where I went).
It was next store to a place that detailed cars. Maybe they had a deal on the used tires!
Good review Ally. It seems like the company is franchising just for the sake of franchising. They really do not have much of a competitive advantage at all. I looked at the pictures you referenced and figured I could get a better workout in my living room with P90x or Insanity.
Yeah. I think Amen is replicating the CrossFit model a bit too literally. That said, it really is a great workout. If against all odds the franchise model does take off and you see an AmenZone, you should try it out!
What a back to basics approach! It seems like this firm could potentially benefit its business model by utilizing a “pop-up” shop model around the city, providing it a chance to expand brand awareness and potentially gain a new revenue stream. I am curious to know if you ever saw them initiate something like that during your time in Arizona. Thanks in advance!
Amen and his right hand man Lamar do lead special events in malls and town squares. Sometimes they even do group training events outside the gym. The most popular one was the weekend training session on Camelback Mountain (great hike if you are ever in the Phoenix area).