IHRSA - May 2005 CBI Cuts

CBI Interview: John Gennaro

He's intent on owning a large piece of the single-sex miniclub market and insists that his clubs are several Cuts above the rest

By Jennifer H. McInerney

CBI: This month marks the second anniversary of the debut of Cuts Fitness for Men. What's the ride been like?

John Gennaro: It's been exciting, absolutely tremendous. We've already sold 170 franchises in 22 states and five countries. In our initial business plan, we projected that we'd sell 100 in the first year-and-a-half, and we've exceeded our projections. I estimate that, by the end of this year, we'll have more than 700 locations sold. If the women-only miniclub market can support 8,000-10,000 units-which is about where it's at now-there's no reason we can't do half as many as that for men.

CBI: Cuts Fitness for Men was recently named one of the 'Hot New Franchises for 2005' by Entrepreneur magazine. How does a brand-new company qualify for an honor such as that?

JG: I certainly can't take credit for that. It has to do with the fact that we have a strong concept, but it also has a lot to do with the fact that we have a group of young, very aggressive people working here. We're young enough and small enough so that we can respond quickly to emerging opportunities; we can be very innovative. Our team has had experience creating education companies in the past, and, we're discovering, education is a critical component of our current product offering. We also have a very accomplished board of advisors.

CBI: What about Cuts Fitness for Men has most surprised you?

JG: The rapid growth of the business, particularly on the international front-that's taken off much more rapidly than I'd anticipated. I'm receiving about 100-150 inquiries a day, and, I'd say, a good ten percent of those are from individuals or companies in other countries.

CBI: What do you attribute that to?

JG: Curves International. It has something like 8,400 franchises in 28 countries-people throughout the world have heard about it, seen it, and come to realize that women-only fitness franchises are a very viable, a very promising, business. They believe that Cuts Fitness for Men represents a similar opportunity, and they're anxious to jump on it now-rather than wait a few years and wind up envying someone else's success.

CBI: Up until now, fitness-franchise companies have tended to focus on the U.S., achieving critical mass before venturing abroad. You seem determined to develop the domestic and international markets simultaneously.

JG: We're convinced that we have a chance to create a successful, high-profile, global brand. We've managed to acquire some real momentum, and targeting both domestic and international markets simultaneously will allow us to take advantage of it-use it-very effectively. Growth, for us, is going to be domestic and international, side by side. I've had inquiries from all over the world. It's amazing! It also speaks, dramatically, to the reach and power of the Internet. Our Website has been an incredibly productive tool for us.

CBI: Once Curves had demonstrated that it had a successful business model, it wasn't long before other women-only fitness franchises were following in its footsteps. Now, other men-only franchises have already appeared. How do you intend to deal with the competition?

JG: Curves was a trailblazer, and, like it, we'll definitely see competition coming along. The advantages we enjoy are that we were first out of the gate and have a very good product that we're constantly improving upon. We're very comfortable with our position, and, because of the quality of our entire package, are confident that we'll remain an industry leader.

CBI: You've just launched a new, women-only, miniclub franchise-Cuts Fitness for Women. What prompted you to enter what, increasingly, seems to be an overcrowded market?

JG: Most of the other miniclubs for women target an older, deconditioned clientele. It seemed to me that no one was providing a quick, convenient, low-cost fitness experience for women who were younger and fitter. Many of these women, 20-45 years of age, might sign up for individual group-cycling or Pilates classes, or join a larger club for awhile, but eventually drop out because they're not comfortable in a coed or large multipurpose environment. No one has ever before offered them a club where, in just 30 minutes, they can get a good cardiovascular and strength workout.

Why did I create Cuts Fitness for Women? I recognized a need-a niche that no one else was tapping.

CBI: Clearly, you're not uncomfortable competing against Curves.

JG: I think there's enough room, enough business, for both of us. As I indicated, I think we're really about two different markets: Curves, older and less fit; Cuts, younger and more fit. If anything, we could work together synergistically. The Curves of the world could, conceivably, take women to a certain level-the point at which they max out-and then pass them along to Cuts for Women for a more intense exercise experience.

CBI: In what ways do Cuts Fitness for Women facilities mirror, or differ from, the men-only clubs?

JG: Like Cuts Fitness for Men, the women-only franchise is predicated on a 16-station training circuit, which I designed, that consists of eight double-positive, hydraulic, strength-training units, and eight pieces of sophisticated, high-end cardiovascular equipment, including elliptical machines and group-cycling bikes. The latter distinguishes us from the competition, which has tended toward low-tech components in terms of cardio, and offers a more challenging workout. Members spend 40 seconds on each station, and do three rounds for a complete circuit. With the women's facilities, we're striving for a South Beach d'cor and flair. Laura Day, one of the head designers on the TV series, Trading Spaces, has designed our interiors. The clubs have mirrors, dark-wood floors, chandeliers, flat-screen TVs, and Bose sound systems. The equipment, the look, the whole experience is different from that of our competitors.

CBI: What sort of response has the new franchise generated thus far?

JG: It's been overwhelming, stupendous! In the first three weeks, we've had over 500 inquiries.

CBI: What sort of growth do you expect to see?

JG: It seems that, in terms of growth, and in terms of its domestic/international appeal, Cuts Fitness for Women is going to track Cuts Fitness for Men. I'm confident that, by the end of this year, we'll have sold more than 250 Cuts Fitness for Women franchises.

CBI: Cuts Fitness for Men! Cuts Fitness for Women! When can we expect to see Cuts Fitness for Kids?

JG: Actually, we've been looking into a kids' Cuts for a while now; it's a discussion that we've had. We've done all the research, and have the product, but we haven't made a final decision. It's not something that I'm planning to do in the very near future.

CBI: The express miniclub is a relatively new phenomenon. What do you think the long-term prospects for this category are? A few years ago, there was a frozen yogurt shop on nearly every corner in the country, but, now, most of them are gone. Do these clubs represent the crest of a passing fad...or a permanent sea change?

JG: Clearly, I believe that they're here to stay. But, having said that, I think that, with few exceptions, the players who are doing well today are the ones who are going to dominate in the future. I don't think we're going to see many new players coming into the market. I've heard that some of the existing women-only facilities are for sale, and I'm not sure whether that's a good sign or a bad sign. I think, if anything, there will be some lateral moves-people who will stick with the sector, support it and keep it sound-but I don't think we'll see any major new players.

Jennifer H. McInerney is the editor of CBI and can be reached at j.mcinerney@fit-etc.com.