Multi-Unit Franchisee Magazine Issue IV, 2012 | Page 27

D OM I N A T O R S
southeast Atlanta, he decided to heed the
advice he gave his clients. He opened his
first Snap Fitness unit in March 2007, half
a mile from his house.
“I was looking for something that would
provide, essentially, passive residual income
to my consulting business and Snap Fitness was a perfect fit,” he says. “It got to
the point where the tail was wagging the
dog and the consulting business became
residual income, instead of the Snap Fitness business.”
Not a bad problem to have. His first
Snap Fitness location remains the top gym
in the system. He opened a second unit
in 2008 and a third in January 2012. In
between, in 2010, he earned the brand’s
Franchisee of the Year award.
As financing and credit slowed and
industry growth fell flat, opportunities
to snatch up more Snap Fitness facilities
grew. Mooneyham turned to The North
Avenue Group, an Atlanta-based lower
middle market private equity firm, for

“The evolution of
the fitness industry
comes at a time
when more than a
third of our nation
is obese.”
capital. This past July, North Avenue acquired his company, JRG Fitness, providing him with the funding to purchase 35
Snap Fitness facilities spanning nine states
east of the Mississippi. The acquisition
dovetailed perfectly with North Avenue’s
business plan to build onto the multi-unit
management segment of the company’s
franchise target focus.
“The industry has evolved, it has become
much more professional,” says Mooneyham.
“There is no longer the sweaty, grimy gym
the local body builder owns. Now it is an
industry that has a lot of the same busi-

ness concepts as any other retail industry.”
The partnership with North Avenue
has put Mooneyham’s growth plans on the
fast track: he hopes to grow his portfolio
to 200 gyms, including new construction,
in the next five years.
The timing couldn’t be better. The
evolution of the fitness industry comes
at a time when more than a third of our
nation is obese, says Mooneyham. Most
people who are fit, he says, are already gym
rats. The challenge is to get the folks who
need to work out to use the gym, he says.
His marketing plan is to focus on personal
training and results.
“The gym is no longer just a place
to go. It is a place to go to lose weight,
get your cholesterol down, get off your
diabetes medication, and do all the things
you need to get results,” he says. “As the
economy picks up, we believe the growth
in the industry will also pick up.” In the
meantime, he hopes to snap up more Snap
Fitness locations.

BOTTOM LINE
Annual revenue: $8.5 million.

business is still very cyclical. So forecasting has not changed all that much.

2013 goals: $10 million in revenue.
Growth meter: How do you measure your growth? We look
primarily at EBITDA.

Where do you find capital for expansion? That’s the hardest part.
We have looked at senior level lending to PE lending to high net worth individuals
to friends and family. There is still money out there. You just have to work hard
to get it.

Vision meter: Where do you want to be in 5 years? 10
years? We want to grow to over 200 clubs.

Is capital getting easier to access? Why/why not? No, it’s still
very difficult.

How has the most recent economic cycle affected you, your
employees, your customers? The economy kept things flat over the last
three years or so. But we did not suffer any real losses. We focused on improving
our personal trainer sales and providing good customer service. As a result our attrition rate remained steady. On the employee side, we were able to attract some
very high-level folks that were out of work. That also helped on the customer
service side.

What kind of exit strategy do you have in place? We have two
strategies for this new entity. Time will tell which is the better option.

Are you experiencing economic growth/recovery in your market? The economy has been growing for over three years now. Sometimes folks
forget that. Our business will continue to thrive as the recovery pace quickens.
What did you change or do differently in this economy that
you plan to continue doing? We just doubled down on good customer
service and training. Plenty of people are still going to the gym. So we just need
to be the place that they go.
How do you forecast for your business in this economy? The

What are you doing to take care of your employees? We will
be offering healthcare within three months. We also try to hire and promote from
within. We want our folks to have a chance to advance in the organization.
How are you handling rising employee costs (payroll, healthcare, etc.)? We are using a PEO. The costs are there, we just have to get the
value we need out of the employees.
How do you reward/recognize top-performing employees? We
use all the normal things like bonuses and rewards. But I learned a hard lesson
some time ago. Employees want to be recognized and they want to know they
are valuable members of the team. I used to tell folks that if I was not talking
to them, then they were doing a great job. Now I know that I need to let people
know that they are doing a great job. Recognition from the top is vitally important.

Multi-Unit Franchisee Is s u e IV, 2012



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