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Speaker 1: Welcome to the Mentor. I'm Mark Boris Michael Ramasy. Welcome

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Speaker 1: to the Mentor. Mate, thanks for having me to see again.

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Speaker 2: Good to see you this time you come down from Byron?

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Speaker 1: Where did you come off from Melbourne? Byron?

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Speaker 2: This time coming down from Byron? Not a bad place

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Speaker 2: to be this time year.

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Speaker 1: Correct.

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Speaker 2: Yeah, I haven't been up there. Well, I've only don't

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Speaker 2: like I was going. I did go up there, but

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Speaker 2: like unfortunately got a call away for work and then

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Speaker 2: I had to sort of only study for a day

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Speaker 2: or two days sort of thing.

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Speaker 1: No dramas. I'll get back up there.

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Speaker 2: Okay, you are the co founder or one of the

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Speaker 2: co founders of strong Plarates. It's just always some about pilaratees.

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Speaker 2: I sort of know what it is. It's you know,

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Speaker 2: I was first introduced in Australia like maybe twenty years ago,

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Speaker 2: twenty five years ago, pilarts as a concept, but it's

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Speaker 2: been around for how long time? Give me a little

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Speaker 2: bit of the history of pilats. What was the deal

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Speaker 2: with his dude to set it up, etcetera. There's a

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Speaker 2: bit of a story around it.

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Speaker 1: Isn't that. Yeah, it's and it's gone through so many

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Speaker 1: iterations and it's time. But Joseph Pallati's created pilartis Joe, Yeah, yeah,

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Speaker 1: decades and decades ago. It's been around for a long time,

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Speaker 1: and it's it's you know, it started very much core strength,

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Speaker 1: and they kind of think it's really progressed over the

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Speaker 1: last few years. It's gone I would say, went mainstream

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Speaker 1: probably in the last say fifteen fifteen years, ten fifteen years,

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Speaker 1: where the reformer has really developed and kind of gone

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Speaker 1: into the commercial fitness space. And interestingly, it's now the

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Speaker 1: most popular genre globally in the fitness industry since twenty

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Speaker 1: twenty three for bookings.

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Speaker 2: So and I'm sort of not surprised, and we'll talk

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Speaker 2: about it a little bit a bit further on, but

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Speaker 2: like in terms of you mentioned the reformer, which is

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Speaker 2: a machine you can do pilarts on the ground without

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Speaker 2: any equipment or maybe a ball or you know, like

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Speaker 2: a band or something like that. There's lots of different

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Speaker 2: ways of doing pilates, and I think what I think,

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Speaker 2: as I understand, it's actually sort of about core, core strength.

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Speaker 1: Core strength, mobility, stability, pelvic floor all those kind of

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Speaker 1: things that are you know, incredibly good for your body.

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Speaker 1: But I'd say a lot of people ignore them. Yeah,

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Speaker 1: day to day, and that's really that's where people see

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Speaker 1: the most benefit.

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Speaker 2: Yeah, and then the reformer that's a machine. Now, so

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Speaker 2: is that part of what he'd come up with or.

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Speaker 1: Was that his thing or yeah, he has different different

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Speaker 1: contraptions and things like that. But the reformers really developed.

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Speaker 1: And you've got Matt pilates and you know that's basically

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Speaker 1: no equipment. You can get accessory equipment and stuff, but yeah,

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Speaker 1: so the reformers come to fruition and being commercialized. It's

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Speaker 1: very much like spring loaded tension. So as you would

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Speaker 1: lift a dumbbell, you would push against the spring. Ye.

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Speaker 1: Big thing with pilates is sort of that time under

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Speaker 1: tension holding the posers, activating all those little muscles. So yeah,

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Speaker 1: it's it's it's resistance training, but in this sort of

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Speaker 1: kind of safe flow impact format.

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Speaker 2: Yeah that's yeah, because I know a lot of footy

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Speaker 2: players or really players who do plarties as part of

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Speaker 2: their rehab if they've got an injury. And I actually,

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Speaker 2: funnily enough, I actually tried it once when I was

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Speaker 2: rehabbing myself, not from football, from something else, and I

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Speaker 2: didn't use a reform or anything that had one of those.

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Speaker 1: Sort of like a weird contraption.

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Speaker 2: It looks like there's a black bed and then there's

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Speaker 2: some still rails to go above it, and there's a

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Speaker 2: few cave and let that hanging down.

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Speaker 1: And the lady was fantastic.

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Speaker 2: She was she was the wife of and I guess

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Speaker 2: I'm not going to replug you because it's this show

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Speaker 2: about your business, but of one of our coaches, one

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Speaker 2: of us is in coaches in the clab and and

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Speaker 2: she got me to do some stuff, and like, man,

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Speaker 2: I was like shocked at about at how hard it was. Like,

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Speaker 2: you know, I always consider myself fairly strong guy, like

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Speaker 2: I'm just twenty years ago when I did it, fairly

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Speaker 2: strong relative to my weight, et cetera, and pretty mobile.

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Speaker 2: But some of the stuff she got me to do,

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Speaker 2: they look like really simple, weird stuff. And my legs

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Speaker 2: started shaken. I started thinking, what the hell. It's like,

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Speaker 2: you're right, you're under sort of you do things really

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Speaker 2: slowly and really controlled. There's not much explosiveness in it.

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Speaker 2: It's more really test out small muscles and all stability.

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Speaker 1: Yeah, it's that's exactly right, and it's I guess, and

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Speaker 1: this is sort of why we've created Strong and we're

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Speaker 1: a little bit different. It's fantastic and it changes your body.

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Speaker 1: I've got hundreds of stories I can talk about you. Yeah,

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Speaker 1: I do Strong probably three or four times a week. Actually,

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Speaker 1: I'll tell you a real quick story. So NAT five

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Speaker 1: AFL player Brownlow medalists, very famous sort of n WA

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Speaker 1: plays for the Freemantle docause he was one of our

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Speaker 1: ambassadors and he was telling me your story. He was

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Speaker 1: walking along, he was walking across the road and a

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Speaker 1: clinical Plarties teacher saw him walking actually went up to

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Speaker 1: him and said, you need to do pilarates. Your movement

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Speaker 1: patterns aren't correct. Got him into Polarties that year, and

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Speaker 1: that year he won the Brownlow medals. So you're seeing

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Speaker 1: a lot more athletes do it. You're seeing all those

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Speaker 1: amazing benefits of your body. But I guess, and this

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Speaker 1: is a problem that we've tried to solve. If you're

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Speaker 1: going to pay for a membership, let's say in the

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Speaker 1: boutique fitness industry, seventy dollars a week, you probably want

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Speaker 1: a little bit more than just polarts so you get

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Speaker 1: all those awesome benefits of parties. But you want to

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Speaker 1: be lifting heavy, you want to be in ea singly

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Speaker 1: muscle mass, and you want to be looking after your heart,

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Speaker 1: so you want to do an element of cardio and

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Speaker 1: you want to earn calories as well, because you know

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Speaker 1: most people want to drop pody fat. So that was

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Speaker 1: a problem that we tried to solve. We took the reformer,

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Speaker 1: which again incredible for you. We've added a roller or

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Speaker 1: a bike.

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Speaker 2: To the reformer to the reformer, so as a separate

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Speaker 2: machine or all in one paytent two, I see you

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Speaker 2: change the reformer correct.

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Speaker 1: And this is why I sort of don't go into

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Speaker 1: too much of the classical polates space because because it's

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Speaker 1: really not my thing. I fell in love with pilarates

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Speaker 1: when I broke my ankle and and did plays for

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Speaker 1: rehab and loved it and it got me back to

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Speaker 1: where I needed to be, but I always felt there

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Speaker 1: was something missing. I need something more. I need to sweat,

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Speaker 1: I need to feel better, and you know, as a

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Speaker 1: as a as a human, I want to lift weights

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Speaker 1: as well, and I want to be stronger. And so

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Speaker 1: I found this machine in the US. We didn't actually

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Speaker 1: create the machine. We found it a friend of mine

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Speaker 1: showed it to me on social media and it was

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Speaker 1: one studio out of Orange County with this row former

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Speaker 1: machine and row former reformer with a rower pending peyton

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Speaker 1: when this thing's like, this is this is what I've

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Speaker 1: been looking for. And at the time, we just exited

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Speaker 1: F forty five myself, my business partner Mark, we owned

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Speaker 1: six F forty five's. We had the number one studio globally.

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Speaker 1: We got out and we're like, what are we doing?

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Speaker 1: And then we found, you know, we found this machine.

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Speaker 1: I jumped on a plane, Mark jumped on a plane

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Speaker 1: and we went over and tried this this row former machine,

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Speaker 1: and it was the most excruciatingly beautiful workout from an

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Speaker 1: endorphin perspective, from a challenging sort of mental challenge perspective

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Speaker 1: of going from the rower to being completely gassed to

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Speaker 1: then holding these these moves with time under tension and

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Speaker 1: your heart rates staying elevated the whole time, which means

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Speaker 1: you're burning a whole lot, a whole lot more calories

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Speaker 1: than you would in normal reformer. And I was like,

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Speaker 1: I need to do something with this, like I need

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Speaker 1: to I need to bring this to Australia and we

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Speaker 1: ended up negotiating the rights for the machine globally and

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Speaker 1: we built a franchise model around the machine. And then yeah,

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Speaker 1: today we've got eighty odd locations, two hundred on the way.

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Speaker 1: We're in eleven countries now, where we'll be in fourteen

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Speaker 1: by the end of the year. We've got eighty studios

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Speaker 1: sold in the US and that's probably a big part

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Speaker 1: of our expansion. Now biggest fitness market in the world.

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Speaker 1: And it you know, it's working. It's all those things

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Speaker 1: that I thought, Yeah, this is what it could be.

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Speaker 1: It's working now in this incredible membership model that's sort

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Speaker 1: of giving clients everything.

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Speaker 2: So just in terms of go to market, when you

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Speaker 2: decided to go to market, or maybe just let's just

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Speaker 2: peel back a little bit. So you both did your

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Speaker 2: time at forty five, So what do you learn there?

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Speaker 2: Not great outcomes happened after at forty five, but I

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Speaker 2: mean in the beginning it was okay. So what did

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Speaker 2: you learn and take to your new business? What did

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Speaker 2: you take too? Strong from their forty five?

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Speaker 1: You had six? Do you have six? Franchise? You said,

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Speaker 1: we had six. We had the number one grossing studio

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Speaker 1: in the world in Australia in the world. But this

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Speaker 1: was in Port Melbourne, right, Yeah, And I always say

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Speaker 1: it's and there's a lot of there's a lot of

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Speaker 1: great founders that have come out of forty five in

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Speaker 1: the fitness space, and I always say it's the best apprenticeship.

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Speaker 1: You learn the good and the bad. You know you're

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Speaker 1: going to go through some of the bad. Yeah, certainly,

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Speaker 1: and this is probably a reason that you took to

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Speaker 1: your business to make your business better. Yeah, yeah, I

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Speaker 1: mean it's it's certainly a reason that I exited. And

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Speaker 1: I'm still close with a lot of their forty five

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Speaker 1: founders and people, and I'm happy to talk candidly about it.

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Speaker 1: But the oversaturation of studios, like were the number one studio,

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Speaker 1: but we had another one sort of one point nine

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Speaker 1: case down the road. So that for us is something

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Speaker 1: we're trying to avoid. So that's something that we learned.

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Speaker 1: Too much supply is not always good, So slow sustainable

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Speaker 1: growth is the way. Otherwise you'll have casualties. It's too many,

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Speaker 1: they are cannibalizing each other, things like that.

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Speaker 2: So in other words, distance between postcodes correct or number

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Speaker 2: of postcodes per franchise yep, So like just on that.

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Speaker 2: What is what's your models? You you have five postcodes?

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Speaker 2: What are you doing? What do you do?

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Speaker 1: Or is by a number of people? Yeah, population, we

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Speaker 1: try and anywhere from thirty to seventy thousand people.

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Speaker 2: So a franchise is likely to get somewhere between thirty two.

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Speaker 1: Seventy seventy thousand populations if that means.

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Speaker 2: Three postcodes or five postcodes or one post code. That's

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Speaker 2: so it's the population that determines the number of postcodes,

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Speaker 2: as opposed to oh, you know you're you're in Bondai

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Speaker 2: and I'm going to give another one to the guy

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Speaker 2: in Bronti.

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Speaker 1: Yep, I mean that would actually work, but it's because

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Speaker 1: Bondai is such a mech But yeah, it's it's a

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Speaker 1: very thought thought thought about an ad hoc process. So

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Speaker 1: you pre map, you can pre map Australia with franchise territories,

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Speaker 1: but when it comes to signing a franchise agreement, it's

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Speaker 1: all about how do we carve this up to make

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Speaker 1: it sustainable? How And we've literally been taking territories off

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Speaker 1: the map to ensure that there's space between all all

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Speaker 1: our different territories. So, yeah, you don't want to oversall

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Speaker 1: because as.

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Speaker 2: A franchise or which is what you do, you you

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Speaker 2: actually have a map, you and your co founder and

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Speaker 2: I guess these days stuff, but you actually map the

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Speaker 2: joint so you know, you start to carve it up.

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Speaker 2: You say, well this is call it, let's call it Sydney,

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Speaker 2: this is Sydney and the Greater Sydney and these you know,

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Speaker 2: we might have one hundred in Sydney and does that

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Speaker 2: then when you do Brisbane and you do everywhere else

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Speaker 2: and stuff overseas and understand your biggest one is even

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Speaker 2: is Singapore.

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Speaker 1: I think at this stage when you're bigger franchises, our

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Speaker 1: highest performing highfording franchise the six sixty of the seventy

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Speaker 1: eight or nine we have today in Australia. Right, So.

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Speaker 2: When you sort of set that out that and you've

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Speaker 2: got your map and you look at what you've currently got,

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Speaker 2: that informs you as to your growth prospects. So when

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Speaker 2: you sort of also work trying to work out how

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Speaker 2: we're going to grow this business, where we're going to

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Speaker 2: grow because that comes to where we're going to grow

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Speaker 2: the business, where I'm going to invest my time and

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Speaker 2: effort in my digital marketing. You know, my taking calls

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Speaker 2: and where am I going to do interviews, et cetera.

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Speaker 2: It starts with the map, doesn't it with the franchise.

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Speaker 1: It does, and the map that you get there. There's

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Speaker 1: probably three four decent businesses that will map everything for you.

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Speaker 1: The sort of data driven but it's where you land

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Speaker 1: is very, very different. So for instance, in America, you know,

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Speaker 1: there's and we work with Cape, KPMG, a few other

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Speaker 1: sort of companies, CBRE and found that we could get

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Speaker 1: seven one hundred and fifty Tier one. It's in America,

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Speaker 1: and what do you consider TI one? TI one is

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Speaker 1: based off things like household income, competition in there.

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Speaker 2: So you build an algorithm around them. Yeah, Michael, so

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Speaker 2: because that's really important. So I just want to sort

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Speaker 2: of dive into that a little bit. So it's not

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Speaker 2: just me to going, well, that looks like a good

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Speaker 2: area because there's seventy five thousand people there. You actually build.

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Speaker 2: You prioritize areas because you can't open them all up

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Speaker 2: at the same time, it's not possible. So you prioritize

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Speaker 2: based on an algorithm that's weights different things. So you

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Speaker 2: put more weight on, for example, their income, maybe you

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Speaker 2: put more weight on.

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Speaker 1: They're families there. Perhaps I don't know density even the

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Speaker 1: fitness market in that area. Competition analysis, Yeah, and probably

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Speaker 1: the more saturated the area is the bigger the opportunity.

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Speaker 1: So saturated in terms of what gyms, but the more

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Speaker 1: competition you've got, correct is that because the more saturated

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Speaker 1: is that informs your people's propensity to want to train.

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Speaker 2: Do you think that's the reason or is it people

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Speaker 2: move to an area because they know it's lots of

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Speaker 2: gyms there.

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Speaker 1: Well supplying demands. So if there's a huge demand for gyms,

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Speaker 1: more gyms all open in that area. So we know

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Speaker 1: that that community is an active community. Byron Bay has

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Speaker 1: eleven thousand residents, but is in our top five locations

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Speaker 1: in Australia really in terms of revenue owning. Yeah. So,

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Speaker 1: and that's because the Byron Bay population are highly highly engaged.

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Speaker 1: Now for a lot of franchises, they want to go

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Speaker 1: into areas with no competition. They want to find the

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Speaker 1: be first to market. For us, given how unique how

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Speaker 1: our product is and our service offering is, we like

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Speaker 1: to go into a saturated market because we feel we

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Speaker 1: have a very very unique solution to plates. And two

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Speaker 1: even you strength and conditioning, training, all that sort of thing.

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Speaker 1: So we like the competition.

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Speaker 2: That that's really interesting. So I like the planning more

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Speaker 2: all that you have In terms of growth, I mean growth.

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Speaker 2: Everyone goes, oh growth, you know, how do I power

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Speaker 2: up my growth? Well, it's about planning and it's about mapping.

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Speaker 2: You must map where you can grow. It's easy to

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Speaker 2: say I want to grow, like where are we're going

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Speaker 2: to grow? Probably this? And I do want to come

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Speaker 2: back to your planning side of things. And I think

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Speaker 2: what you just said about the algorithm, as I said,

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Speaker 2: an algorithm, but like you know, it's just a formula

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Speaker 2: that your you guys are built, that you own. But

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Speaker 2: I do want to come back to the point you

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Speaker 2: just made a moment ago. In terms of you can plan,

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Speaker 2: you can say the population is great, this, the demand

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Speaker 2: and supply is you know where we want it to be?

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Speaker 2: You know, in terms of socioeconomics, in terms of demo demographics.

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Speaker 2: You might tell me a bit later, but it could

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Speaker 2: be you know, skew. You might be more skewed to

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Speaker 2: females over forty, or you might be more skewed to

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Speaker 2: males over forty.

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Speaker 1: I don't know. You can tell me in the moment.

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Speaker 2: But so to say, let's say all the stats are right,

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Speaker 2: but at the end of the day, it comes down

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Speaker 2: your product. If I could just go back to the

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Speaker 2: product for a second. The product is this, let's call

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Speaker 2: it remodulated reform a machine. I can't remember what you

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Speaker 2: called it.

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Speaker 1: You called it row former and bike former? Is it

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Speaker 1: actually row former? Is that them? There's such a thing.

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Speaker 1: It's a proof paydent in the US, still pending in ours,

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Speaker 1: but it's it's a row former. It's it's a trademarked word.

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Speaker 1: And we have the bike form as well, so you

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Speaker 1: pick if you ride or wrote for the day.

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Speaker 2: Okay, I haven't met someone he's strong, so can I

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Speaker 2: just although we did use one of your strong Well,

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Speaker 2: we held a function up in Byron and it was

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Speaker 2: like a how to do a pitch and I did

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Speaker 2: it with another guy and we did together. We did

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Speaker 2: it my farm and we actually send everyone down to

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Speaker 2: the Byron.

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Speaker 1: Strong party. Yeah, and they loved it. They loved it.

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Speaker 1: We booked it out I think for a day or

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Speaker 1: an hour to or whatever it is. They loved it.

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Speaker 2: But I never argin o myself, so I know the

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Speaker 2: reform machine looks like it's you know, it's like a

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Speaker 2: it's got a box, it's got pulleys, two handles, single handles.

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Speaker 2: It's got a long sort of runner that your seat

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Speaker 2: moves up and down. It's parallel to the floor. It's

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Speaker 2: been very high up off the floor's you know, maybe

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Speaker 2: half a meter or a third of a meter up

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Speaker 2: off the floor.

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Speaker 1: What does what does the row form have done?

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Speaker 2: Have you put like a rower handle where the two

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Speaker 2: individual handles are?

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Speaker 1: Is that what's happened? It's like if you visualize, so

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Speaker 1: you're right, you've got a carriage, a platform, a platform,

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Speaker 1: a carriage. We've created a second carriage. It's a smaller

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Speaker 1: one that moves, and that is actually the row seat

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Speaker 1: right you need. So it's four point three meters in

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Speaker 1: lengths are quite long. And then on the end is

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Speaker 1: a rower which has bolted in right, and so the

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Speaker 1: second carriage doubles is a row seat. So you can

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Speaker 1: fluidly move between rowing and players, rolling and parties. And again,

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Speaker 1: like as I said before, like it helps keep that

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Speaker 1: heart rate elevated, and we don't roll a lot like

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Speaker 1: you might row for maximum five minutes. You're coming back

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Speaker 1: to reformer doing you know, spring loaded tension and holding

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Speaker 1: a plane kunder resistance, but that calorie burn is so

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Speaker 1: much more substantial because you've been rowing. So yeah, it's

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Speaker 1: just sort of one big fluid machine. And then similarly

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Speaker 1: for the bike.

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Speaker 2: So as a bike version of this, yes, so you

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Speaker 2: can get on the biking, spin the pedals, spin the worlds,

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Speaker 2: and then get back onto the reformers so to speak. Yeah,

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Speaker 2: so was the bike version in existence or did you

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Speaker 2: guys come up with that idea?

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Speaker 1: No, we've started. And big thing I think with any

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Speaker 1: business is like our innovation button is always on. I mean,

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Speaker 1: how many brands do you see now that haven't innovated

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Speaker 1: are the same as twenty years ago? Yep, so that's

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Speaker 1: forty five. Well, franchising is it's interesting mine, Like think

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Speaker 1: about McDonald's, you know, mcafe and healthy Options and now

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Speaker 1: the tech component we can already you know, all these

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Speaker 1: things need to happen. So for us, like it started

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Speaker 1: with the row former and then we built the tech screen.

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Speaker 1: So similar to forty five, you've got screens there, but

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Speaker 1: the instructor clicks through pictures of the exercise of like

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Speaker 1: an avatar doing exercise, so instantly when we brought that in.

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Speaker 1: That brought in more men who were probably a little

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Speaker 1: bit reformers. For chicks, well that's the conception, right, But

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Speaker 1: we've built our male audience over twenty percent now and

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Speaker 1: started at like to sub ten. So yeah, we did that.

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Speaker 1: Then we brought in the bike because you can't roll

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Speaker 1: every day. You need diversity in what you're doing. And

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Speaker 1: then actually this week we've just released a reverse spring

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Speaker 1: system which simulates like a forty kilo dead lift press Paul,

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Speaker 1: because we've really leaning into the science of well, if

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Speaker 1: people need to build muscle, they need to lift heavier.

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Speaker 1: We need to work on progressive overload, so we need

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Speaker 1: to stop, rest, start again, whereas polarates flows is generally

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Speaker 1: I'm just going to keep moving for an hour. Yeah,

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Speaker 1: and you're in your aerobic energine system, which is very

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Speaker 1: tough to build muscle. So long story short, that innovation

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Speaker 1: cycle will never finish. I'm now a lot of our

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Speaker 1: innovation is tech focused, and that's what I'm building out

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Speaker 1: at the moment. But yeah, every year at conference where

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Speaker 1: we met, I deliver one major innovation to a network.

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Speaker 2: So innovation comes down to product attraction, attractiveness, not just

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Speaker 2: for the franchise, but French Z, but also for the consumer,

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Speaker 2: the customer or the clientele of the franchise Z. And

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Speaker 2: I think let's just talk about innovation for a second.

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Speaker 2: Do you innovate based on what you survey from your

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Speaker 2: customer base? Or do you innovate based on what you

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Speaker 2: and maybe your own little team decide is the latest

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Speaker 2: and greatest overseas and what drives innovation direction. Because of me,

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Speaker 2: you can send around and innovate about a million things

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Speaker 2: and maybe only one works. It's a bit like a

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Speaker 2: spray technique, you know, they just one you only ever

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Speaker 2: hit once. How do you because it's got to spend

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Speaker 2: money on all this stuff, how do you efficiently innovate?

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Speaker 2: What's your program?

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Speaker 1: It's primarily based off customer data and research, and I

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Speaker 1: would say almost all the innovations we've created a date

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Speaker 1: are there to improve customer retention and increase average lifetime

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Speaker 1: value of a customer. So we want them trading with

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Speaker 1: us for ten years, which is working. You know, we

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Speaker 1: had ninety plus percent of our members said they felt stronger,

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Speaker 1: eighty five percent felt like they were more flexible, and

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Speaker 1: then it was really cool stat actually seventy percent said

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Speaker 1: they felt less discomfort. So what we're doing is working.

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Speaker 1: So's surveying, were surveying with surveying, but it's very much

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Speaker 1: what what is going to keep our consumer around, keep

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Speaker 1: them guessing, keep them motivated, keep them happy, because you

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Speaker 1: can't just deliver the same thing over and over and

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Speaker 1: over and over. It doesn't work people, it gets stale,

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Speaker 1: they move on. It's a very competitive industry, as you know.

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Speaker 1: So yeah, it's based off customer research, and i'd say

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Speaker 1: a portion of it is actually still a gut feel

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Speaker 1: and sort of myself, my business partner Mark and some

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Speaker 1: of our kind of in our movement team. We've got

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Speaker 1: exercise physiologists, strength and conditioning coach, polarities expert, and we

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Speaker 1: all work together to create programming. We've got a testing

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Speaker 1: team of twenty people that test the programs and workshopping

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Speaker 1: this kind of stuff. But it's a big process. Like

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Speaker 1: the reverse spring system we just launched has been We've

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Speaker 1: been working on this for like two and a half

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Speaker 1: years so and we're a five year old company, so

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Speaker 1: text a little bit quicker in some regards. But when

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Speaker 1: it's like you're delivering an innovation to the network and

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Speaker 1: it's hardware based. It needs to be so much testing

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Speaker 1: and thought and all that kind of stuff. Yeah, and

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Speaker 1: I'm just before I go to the break. In terms of.

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Speaker 2: Releasing an innovation, do you have a have you learned

431
00:23:21,680 --> 00:23:25,119
Speaker 2: that there's a period of in a year, there is

432
00:23:25,160 --> 00:23:27,879
Speaker 2: some time at a particularly year, like for example, this

433
00:23:27,960 --> 00:23:30,359
Speaker 2: year twenty twenty five, that is best to release the

434
00:23:30,359 --> 00:23:32,040
Speaker 2: beginning of the year to keep everybody excited, to make

435
00:23:32,040 --> 00:23:33,920
Speaker 2: sure they're new and because you know they're starting the

436
00:23:34,000 --> 00:23:35,920
Speaker 2: year off, they might be feeling pretty shitty because of

437
00:23:36,680 --> 00:23:38,520
Speaker 2: Christmas just passed. I've got to get back into make

438
00:23:38,560 --> 00:23:40,520
Speaker 2: size regime and that's my new year is resolution or

439
00:23:40,560 --> 00:23:43,479
Speaker 2: whatever the case may be. And I've got to make

440
00:23:43,520 --> 00:23:45,560
Speaker 2: a choice as to where I'm going to go. And

441
00:23:46,880 --> 00:23:49,639
Speaker 2: you know, because people have choices, and if there's something

442
00:23:49,680 --> 00:23:52,560
Speaker 2: new out there, they might because XIS environments can be

443
00:23:52,600 --> 00:23:56,040
Speaker 2: quite fetish, you know, because one minute we're telling them

444
00:23:56,040 --> 00:23:57,920
Speaker 2: get in top. We need to do more resistant work,

445
00:23:57,960 --> 00:23:59,720
Speaker 2: not on me getting to we need to do more

446
00:24:00,320 --> 00:24:03,360
Speaker 2: arabic work for our heart and lungs. Another time we're

447
00:24:03,359 --> 00:24:06,920
Speaker 2: getting we should be swimming, you know. No resistance in

448
00:24:07,000 --> 00:24:09,080
Speaker 2: other words, have no resistance, no friction, in terms of

449
00:24:09,080 --> 00:24:11,720
Speaker 2: our body. There's always a new fad coming through, not

450
00:24:11,760 --> 00:24:14,760
Speaker 2: a fad, but a new experience. So when is the

451
00:24:14,760 --> 00:24:17,000
Speaker 2: best time do you think in your business to release

452
00:24:17,040 --> 00:24:17,800
Speaker 2: your renovations.

453
00:24:18,359 --> 00:24:21,360
Speaker 1: It's probably more when to avoid in the fitness space. Yeah,

454
00:24:21,400 --> 00:24:24,640
Speaker 1: we'll not do it really. Yeah, December is the best time?

455
00:24:24,800 --> 00:24:27,120
Speaker 1: Is the worst time? Yeah? Is that because everybody is distracted?

456
00:24:27,800 --> 00:24:32,720
Speaker 1: I mean Christmas, Christmas parties. It's just Australia everywhere. That's

457
00:24:32,760 --> 00:24:37,560
Speaker 1: that's Australia is worse than everywhere else.

458
00:24:37,560 --> 00:24:41,920
Speaker 2: I'll post Melbourne Cup day, astray closes down and Australia.

459
00:24:41,560 --> 00:24:44,920
Speaker 1: Get anything done. I was was. I worked all through

460
00:24:45,000 --> 00:24:47,879
Speaker 1: Christmas and I was painful trying to get anything done.

461
00:24:48,359 --> 00:24:50,879
Speaker 1: But anyway, it's Australia.

462
00:24:51,520 --> 00:24:54,360
Speaker 2: Don't do it around December is at the bottom line.

463
00:24:54,280 --> 00:24:57,399
Speaker 1: That's right, and and the rest of the world follows

464
00:24:57,480 --> 00:25:02,080
Speaker 1: to a smaller extent. But the best time is generally

465
00:25:02,480 --> 00:25:05,480
Speaker 1: we find February is probably the best. Now we've gone

466
00:25:05,520 --> 00:25:09,720
Speaker 1: a little bit earlier because we've started drip feeding marketing

467
00:25:09,720 --> 00:25:13,479
Speaker 1: of our new system, and we're trying to when everyone

468
00:25:13,480 --> 00:25:15,520
Speaker 1: else is still asleep at the wheel. We're trying to

469
00:25:15,840 --> 00:25:21,480
Speaker 1: really get people, get exactly. So we started this marketing

470
00:25:21,640 --> 00:25:26,840
Speaker 1: pretty much second of Jan and we just launched what

471
00:25:26,960 --> 00:25:30,720
Speaker 1: twenty third of Jan, so or sorry, twentieth of Jan.

472
00:25:32,320 --> 00:25:37,640
Speaker 1: So it's yeah, it's really interesting how it works. America's

473
00:25:38,080 --> 00:25:41,080
Speaker 1: on from first of Jan. It's mad. It's quite crazy.

474
00:25:41,160 --> 00:25:47,080
Speaker 1: How yeah, how much Overseas differs from Australia. But we're

475
00:25:47,119 --> 00:25:50,720
Speaker 1: a little bit sleepy early Jan. Yeah, we're blessed. It's bad.

476
00:25:50,760 --> 00:25:52,480
Speaker 2: We can do it sort of what we like. Well,

477
00:25:52,880 --> 00:25:54,440
Speaker 2: I'm going to go the break and to come straight back.

478
00:25:54,600 --> 00:25:56,000
Speaker 2: I do want to talk to you about the marketing,

479
00:25:56,359 --> 00:26:00,399
Speaker 2: you know, like timing and marketing. Do you mark around

480
00:26:00,440 --> 00:26:06,480
Speaker 2: retention periods? Do you have do you know analytically when

481
00:26:06,720 --> 00:26:09,840
Speaker 2: your biggest risk of retention is? In other words, is

482
00:26:09,880 --> 00:26:13,959
Speaker 2: there a period of the year when people are I'm

483
00:26:14,080 --> 00:26:16,720
Speaker 2: over exercise? Is it beginning winter? Because you know, like

484
00:26:16,800 --> 00:26:19,840
Speaker 2: media organizations have high value periods.

485
00:26:21,320 --> 00:26:22,320
Speaker 1: I remember when I was doing.

486
00:26:22,119 --> 00:26:25,240
Speaker 2: The TV show that we would always build a show

487
00:26:26,760 --> 00:26:30,560
Speaker 2: either before the winter started because peop watched much more

488
00:26:30,600 --> 00:26:33,479
Speaker 2: TV when it got darker, and then you would make

489
00:26:33,480 --> 00:26:36,160
Speaker 2: sure that that show was over before daylight saving came

490
00:26:36,160 --> 00:26:38,840
Speaker 2: in because since daylight saving caving, people just stopped watching

491
00:26:38,880 --> 00:26:43,280
Speaker 2: television and then definitely didn't do anything in December and

492
00:26:43,359 --> 00:26:44,160
Speaker 2: you wouldn't pick up.

493
00:26:44,080 --> 00:26:44,879
Speaker 1: Again until February.

494
00:26:44,920 --> 00:26:48,560
Speaker 2: But you know, ideally the TV was always around April,

495
00:26:48,640 --> 00:26:52,679
Speaker 2: May June. That's the peak period May June July, you know,

496
00:26:52,720 --> 00:26:56,040
Speaker 2: when people at home. I'm very curious as to your

497
00:26:56,080 --> 00:26:58,080
Speaker 2: industry whether or not there's a sort of some sort

498
00:26:58,080 --> 00:27:00,760
Speaker 2: of pattern, you know, because it's interesting. You know, we

499
00:27:00,840 --> 00:27:03,000
Speaker 2: talk about analyzing things. I mean, really, what we're trying

500
00:27:03,000 --> 00:27:06,159
Speaker 2: to do is identify patterns and how can we not

501
00:27:06,280 --> 00:27:08,240
Speaker 2: be disadvantaged by a pattern? And how can we take

502
00:27:08,240 --> 00:27:11,440
Speaker 2: advantage of a pattern? And these are basic business fundamentals

503
00:27:11,520 --> 00:27:13,359
Speaker 2: and I'll be interested to know about that and how

504
00:27:13,400 --> 00:27:16,119
Speaker 2: do you market into those patterns once you've established patterns.

505
00:27:16,119 --> 00:27:25,159
Speaker 1: But let's go to the brain. Come straight back. So

506
00:27:25,160 --> 00:27:25,880
Speaker 1: I'm back from the break.

507
00:27:25,920 --> 00:27:30,600
Speaker 2: I'm here with a co founder of Strong Plarties, Michael Ramsey,

508
00:27:30,760 --> 00:27:32,840
Speaker 2: and we've been talking about a whole lot of stuff,

509
00:27:32,840 --> 00:27:36,280
Speaker 2: and you know, we've established how important innovation is when

510
00:27:36,320 --> 00:27:41,920
Speaker 2: it comes to recruiting and retaining. You know, you might

511
00:27:42,080 --> 00:27:44,040
Speaker 2: like just to be known as that person, but at

512
00:27:44,040 --> 00:27:46,520
Speaker 2: the end of the day, it's about recruiting new customers,

513
00:27:46,760 --> 00:27:50,960
Speaker 2: recruiting new franchisees to distribute the product, and also helping

514
00:27:51,000 --> 00:27:54,399
Speaker 2: them retain their customer base. And they're like critical parts

515
00:27:54,400 --> 00:28:00,000
Speaker 2: of the business model. And we have also talked about

516
00:28:00,359 --> 00:28:02,000
Speaker 2: I do want to talk a little bit about why

517
00:28:02,040 --> 00:28:05,760
Speaker 2: you choose particular territories outside of Australia. You know, we

518
00:28:05,880 --> 00:28:08,159
Speaker 2: talked about the mapping process, but I want to know

519
00:28:08,440 --> 00:28:09,920
Speaker 2: why would you go to the US, why would you

520
00:28:09,960 --> 00:28:11,000
Speaker 2: go to Singapore, et cetera.

521
00:28:11,760 --> 00:28:12,880
Speaker 1: And I'll park that for the second.

522
00:28:12,920 --> 00:28:14,080
Speaker 2: But the thing I want to talk to you right

523
00:28:14,119 --> 00:28:19,119
Speaker 2: now about is marketing and marketing. When does when do

524
00:28:19,119 --> 00:28:21,480
Speaker 2: you get the best bang for your buck? And how

525
00:28:21,480 --> 00:28:22,280
Speaker 2: do you market.

526
00:28:24,080 --> 00:28:26,320
Speaker 1: Historically? And I will just say I'll just talk about

527
00:28:26,320 --> 00:28:29,800
Speaker 1: Australia just for this. I think it's the easiest way. Historically,

528
00:28:29,880 --> 00:28:35,440
Speaker 1: I would say November, it's November, is what the best

529
00:28:35,480 --> 00:28:39,480
Speaker 1: or worst? Best best? And then also like your February

530
00:28:39,480 --> 00:28:42,440
Speaker 1: March would be on par as well Novembers.

531
00:28:42,920 --> 00:28:45,240
Speaker 2: You know, we're talking too franchises A. Michael will be

532
00:28:45,320 --> 00:28:47,200
Speaker 2: talking to consumer.

533
00:28:46,840 --> 00:28:50,480
Speaker 1: B two C. So just consumer. When we see our

534
00:28:50,520 --> 00:28:55,120
Speaker 1: sort of peaks and revenue, let's say franchise revenue that

535
00:28:55,160 --> 00:28:58,240
Speaker 1: comes in through the studios, I would say November is

536
00:28:58,240 --> 00:29:03,080
Speaker 1: certainly the best that we have and then peaks of

537
00:29:03,160 --> 00:29:05,880
Speaker 1: sort of membership sign up in engagement is sort of

538
00:29:05,960 --> 00:29:10,360
Speaker 1: late jan through till late March, the guilt period exactly exactly,

539
00:29:10,520 --> 00:29:13,800
Speaker 1: and I mean it's really important. It's not that like

540
00:29:13,840 --> 00:29:16,840
Speaker 1: it falls off a cliff in April or August. I

541
00:29:16,880 --> 00:29:19,400
Speaker 1: mean half of Australia will go to Bali or Europe

542
00:29:19,440 --> 00:29:22,560
Speaker 1: as well. So those considerations as school holidays, which also

543
00:29:22,600 --> 00:29:25,720
Speaker 1: affects utilization in the studios.

544
00:29:25,800 --> 00:29:28,440
Speaker 2: But is it low utilization during school holidays.

545
00:29:28,160 --> 00:29:31,000
Speaker 1: Yeah, it's generally lower because kids are at home parents parents,

546
00:29:31,320 --> 00:29:33,360
Speaker 1: you know, or they've got parents taking them away time

547
00:29:33,400 --> 00:29:36,480
Speaker 1: for all that sort of thing. So for us, like

548
00:29:37,600 --> 00:29:41,000
Speaker 1: it's not even about capitalizing on those those big periods,

549
00:29:41,240 --> 00:29:44,240
Speaker 1: it's about having a really consistent marketing calendar and a

550
00:29:44,280 --> 00:29:48,600
Speaker 1: really great strategy. So we know that like now we're

551
00:29:48,600 --> 00:29:51,480
Speaker 1: eighteen months ahead of planning with our calendar. We know

552
00:29:51,600 --> 00:29:56,280
Speaker 1: that there's these huge uplifts in in in revenue with

553
00:29:57,000 --> 00:30:01,320
Speaker 1: times like Black Friday sales in November the financial year sales.

554
00:30:01,800 --> 00:30:04,000
Speaker 2: So Michael, when you say you talk about people who

555
00:30:04,040 --> 00:30:06,400
Speaker 2: sign up or people who people who buy packs.

556
00:30:06,600 --> 00:30:09,600
Speaker 1: Right, and because Polarates is we're a hybrid model, so

557
00:30:09,600 --> 00:30:12,520
Speaker 1: where you can either sign up to a direct membership

558
00:30:12,720 --> 00:30:15,480
Speaker 1: maybe it's seventy seventy five dollars a week unlimited training,

559
00:30:16,080 --> 00:30:18,080
Speaker 1: or you can buy a five pack, ten pack, twenty pack,

560
00:30:18,560 --> 00:30:22,840
Speaker 1: five sessions. Yep, right, correct, So it's you know, we

561
00:30:23,000 --> 00:30:26,600
Speaker 1: know in these sales periods people are purchasing. So around

562
00:30:26,600 --> 00:30:29,760
Speaker 1: Black Friday, like the studio is sometimes double in revenue

563
00:30:29,760 --> 00:30:33,800
Speaker 1: because all the consumers are looking for deals. So yes,

564
00:30:33,880 --> 00:30:36,880
Speaker 1: you want to capitalize on that. End of financial year

565
00:30:36,960 --> 00:30:39,680
Speaker 1: is kind of pretty similar as well. It's getting bigger

566
00:30:39,720 --> 00:30:42,720
Speaker 1: in the fitness industry. But for us, it's like having

567
00:30:42,760 --> 00:30:46,400
Speaker 1: these consistent periods of are we dropping a new marketing

568
00:30:46,440 --> 00:30:49,920
Speaker 1: campaign here, are we dropping a new innovation here, We've

569
00:30:49,920 --> 00:30:53,440
Speaker 1: got this incredible campaign we call it Strong Week where

570
00:30:53,560 --> 00:30:56,760
Speaker 1: it's all about our members. That's in August, which is

571
00:30:56,880 --> 00:30:59,520
Speaker 1: generally a low period, and that was strategic so we

572
00:30:59,560 --> 00:31:03,240
Speaker 1: can gauge them. We do like custom programming, as so

573
00:31:03,280 --> 00:31:05,400
Speaker 1: many prizes we give away and there's all these you know,

574
00:31:05,480 --> 00:31:09,800
Speaker 1: social media prizes and and you know whatever, it's it's

575
00:31:09,840 --> 00:31:13,040
Speaker 1: it's pretty it's pretty intense week, but we always do

576
00:31:13,160 --> 00:31:16,080
Speaker 1: so well out of it. So it's just about I

577
00:31:16,120 --> 00:31:17,640
Speaker 1: think mapping out that twelve month.

578
00:31:17,760 --> 00:31:21,000
Speaker 2: Do you try to smooth it or the smooth are

579
00:31:21,040 --> 00:31:24,640
Speaker 2: you in terms of your marketing campaign periods? Is that

580
00:31:24,680 --> 00:31:27,280
Speaker 2: about smoothing revenues or is it about just taking or

581
00:31:27,320 --> 00:31:29,440
Speaker 2: is it about I don't care, I'm just going to

582
00:31:29,440 --> 00:31:30,920
Speaker 2: take advantage of the big spike.

583
00:31:33,160 --> 00:31:35,360
Speaker 1: I mean for us, it's all about it's always about growing,

584
00:31:36,600 --> 00:31:39,120
Speaker 1: and it's not always revenue we have. We did have

585
00:31:39,200 --> 00:31:42,160
Speaker 1: a year on year we always increase and we increase

586
00:31:42,240 --> 00:31:47,160
Speaker 1: twenty percent average revenue last year. But yeah, it's it's

587
00:31:47,440 --> 00:31:49,680
Speaker 1: sometimes we're looking at metrics like how do we get

588
00:31:49,680 --> 00:31:53,240
Speaker 1: people training more and how do we how do we

589
00:31:53,280 --> 00:31:56,640
Speaker 1: get members staying longer at the main Longer you mean

590
00:31:57,240 --> 00:31:59,800
Speaker 1: so not not terminating their membership.

591
00:31:59,400 --> 00:32:01,840
Speaker 2: After a five pack five pack or a year or

592
00:32:01,920 --> 00:32:03,080
Speaker 2: six months, whatever the case may be.

593
00:32:03,320 --> 00:32:06,520
Speaker 1: Yeah, if there are I think our average customer stays

594
00:32:06,520 --> 00:32:09,760
Speaker 1: it strong for about fourteen months. It sounds pretty long.

595
00:32:10,080 --> 00:32:13,120
Speaker 1: That is longer. Industry average I think is much lower.

596
00:32:13,720 --> 00:32:17,960
Speaker 1: But how do we increase that? And what marketing campaign

597
00:32:18,720 --> 00:32:22,960
Speaker 1: or maybe it's a programming sort of iteration that we

598
00:32:23,040 --> 00:32:25,400
Speaker 1: do to keep them. Maybe it's you know, some sort

599
00:32:25,440 --> 00:32:27,800
Speaker 1: of you know, we're doing a twenty one day habits

600
00:32:27,840 --> 00:32:31,080
Speaker 1: challenge and it's all built into you know, their app

601
00:32:31,080 --> 00:32:33,160
Speaker 1: where they close the ring, similar to like an Apple

602
00:32:33,160 --> 00:32:36,000
Speaker 1: Watch and all that kind of thing. So it's it's

603
00:32:36,040 --> 00:32:39,840
Speaker 1: more about you know, looking at the overall picture and saying, Okay,

604
00:32:40,440 --> 00:32:42,680
Speaker 1: these are good revenue months, how do we how do

605
00:32:42,720 --> 00:32:46,240
Speaker 1: we keep keep people longer? And then looking at those

606
00:32:46,240 --> 00:32:48,239
Speaker 1: peak periods and saying, all right, well let's capitalize here.

607
00:32:48,320 --> 00:32:49,160
Speaker 1: Let's capitalize here.

608
00:32:49,200 --> 00:32:51,200
Speaker 2: But do you have a preferred platform, like is it

609
00:32:51,240 --> 00:32:52,120
Speaker 2: TikTok or is.

610
00:32:52,120 --> 00:32:55,400
Speaker 1: It mister what we were talking about? You know, yeah,

611
00:32:55,640 --> 00:33:01,520
Speaker 1: it's it's Facebook. It's certainly Instagram Facebook Facebook Still, well

612
00:33:01,880 --> 00:33:06,760
Speaker 1: call it Meta, I mean Meta owns Facebook Instagram. Look,

613
00:33:07,320 --> 00:33:10,840
Speaker 1: most of the most of the return on investment is

614
00:33:10,880 --> 00:33:11,959
Speaker 1: through Instagram marketing.

615
00:33:12,080 --> 00:33:14,800
Speaker 2: Is that because you haven't really got into the TikTok

616
00:33:14,880 --> 00:33:17,320
Speaker 2: yet or is it or you try it just doesn't work.

617
00:33:18,440 --> 00:33:21,920
Speaker 1: There were limitations in Australia with TikTok advertising this you

618
00:33:21,960 --> 00:33:24,280
Speaker 1: can probably do more or you could do more in America.

619
00:33:24,320 --> 00:33:29,120
Speaker 1: I think it's coming back. So for our US launch.

620
00:33:29,160 --> 00:33:34,120
Speaker 1: It's a lot more TikTok focused Australia. Still, Yeah, not

621
00:33:34,280 --> 00:33:38,160
Speaker 1: that big a drive or necessity. But I would say,

622
00:33:38,520 --> 00:33:42,000
Speaker 1: you know, majority of our leads come from digital marketing

623
00:33:42,040 --> 00:33:45,320
Speaker 1: through Instagram and Facebook. And how much do you rely

624
00:33:45,480 --> 00:33:46,760
Speaker 1: on micro influencers?

625
00:33:46,800 --> 00:33:49,320
Speaker 2: I mean do you plug it into that sort of category?

626
00:33:49,760 --> 00:33:53,360
Speaker 1: Yeah, influencers is a really interesting one.

627
00:33:53,560 --> 00:33:56,000
Speaker 2: Can we just break it up between influencers and micro

628
00:33:56,080 --> 00:34:01,240
Speaker 2: influencers and specific influencers and other words sports training influences

629
00:34:01,680 --> 00:34:02,640
Speaker 2: micro influencers.

630
00:34:02,760 --> 00:34:06,880
Speaker 1: I feel other way to go highly localized, highly targeted.

631
00:34:06,520 --> 00:34:09,759
Speaker 2: Right, so micro let's define that though. Micro influencers might

632
00:34:09,760 --> 00:34:12,719
Speaker 2: be a person who's a bond die, person who is

633
00:34:12,880 --> 00:34:14,480
Speaker 2: known to go to try it all the gyms and

634
00:34:14,480 --> 00:34:16,880
Speaker 2: recons strong Blood is the best?

635
00:34:17,239 --> 00:34:19,759
Speaker 1: Is that what we're talking about. Yeah, Similarly, it's not

636
00:34:19,840 --> 00:34:23,560
Speaker 1: so much the Jim junkie. We like the local heroes.

637
00:34:23,600 --> 00:34:26,040
Speaker 1: So you know the owner of the coffee shop, he

638
00:34:26,120 --> 00:34:27,480
Speaker 1: might have five thousand followers.

639
00:34:27,520 --> 00:34:27,759
Speaker 2: Yeah.

640
00:34:28,520 --> 00:34:31,960
Speaker 1: The hairdressers are great, they talk all day. Yeah, so

641
00:34:32,480 --> 00:34:34,160
Speaker 1: they're the micros that we like.

642
00:34:34,440 --> 00:34:36,480
Speaker 2: You do you knock on their door or has the

643
00:34:36,520 --> 00:34:38,160
Speaker 2: work or do you go through a third party who

644
00:34:38,160 --> 00:34:38,759
Speaker 2: hooks you up.

645
00:34:39,280 --> 00:34:42,200
Speaker 1: We generally knock on their door, so all the franchise

646
00:34:42,239 --> 00:34:45,200
Speaker 1: e does and when they're on boarded through our induction process,

647
00:34:45,239 --> 00:34:48,160
Speaker 1: it taught all these things before launch. Try and get

648
00:34:48,239 --> 00:34:50,600
Speaker 1: you ten local heroes involved.

649
00:34:51,920 --> 00:34:54,800
Speaker 2: So so, Michael, I'm sorry to keep you revenue, but

650
00:34:55,400 --> 00:34:59,239
Speaker 2: is it when you when you're inducting your franchise into well,

651
00:34:59,239 --> 00:34:59,920
Speaker 2: just keep amusing by.

652
00:35:00,960 --> 00:35:01,880
Speaker 1: It's close by.

653
00:35:01,960 --> 00:35:05,480
Speaker 2: But when you're when you're inducting your Bondai franchise, your

654
00:35:05,560 --> 00:35:08,799
Speaker 2: team says to him, look, here's here's a way of

655
00:35:08,960 --> 00:35:12,440
Speaker 2: getting influences. You actually induct them in in a like

656
00:35:12,480 --> 00:35:15,239
Speaker 2: an education process. These are the sort of people we

657
00:35:15,320 --> 00:35:17,880
Speaker 2: need to talk to. For example, with your local headresser

658
00:35:17,960 --> 00:35:22,120
Speaker 2: and barber and this do you also go to this

659
00:35:22,440 --> 00:35:23,920
Speaker 2: saying and this is the conversation you have with them.

660
00:35:23,920 --> 00:35:26,239
Speaker 2: You're going to get your haircut or you go and

661
00:35:26,280 --> 00:35:29,600
Speaker 2: get your beard shaved, and you say, you know, would

662
00:35:29,600 --> 00:35:30,240
Speaker 2: you be interested?

663
00:35:31,160 --> 00:35:36,000
Speaker 1: And do you pay them? The micro influencers, it's generally

664
00:35:36,600 --> 00:35:41,480
Speaker 1: for someone with a with a smallish following. It's more

665
00:35:42,680 --> 00:35:47,120
Speaker 1: a free membership or a free tempe tempas three contradeal

666
00:35:48,360 --> 00:35:52,720
Speaker 1: and it's it's more about building and communities like probably

667
00:35:52,800 --> 00:35:55,880
Speaker 1: the number one success factor for for a boutique fitness.

668
00:35:56,239 --> 00:35:59,319
Speaker 1: It's about building that community. And you can't be too

669
00:35:59,520 --> 00:36:02,359
Speaker 1: sales or or trying to press someone to do something

670
00:36:02,400 --> 00:36:05,440
Speaker 1: they don't want to do. But yeah, it's all about

671
00:36:05,480 --> 00:36:08,880
Speaker 1: how it's approached, working together, Like you can't just be

672
00:36:09,040 --> 00:36:11,239
Speaker 1: here coming in and flaw my business and needs to

673
00:36:11,280 --> 00:36:13,960
Speaker 1: be some reciprocal stuff. I even like to go pay

674
00:36:14,040 --> 00:36:16,840
Speaker 1: for a session at all. You know, the franchises around you,

675
00:36:17,080 --> 00:36:20,120
Speaker 1: you need to pay and look after each other. I

676
00:36:20,200 --> 00:36:23,000
Speaker 1: think with small business, I think it is super important.

677
00:36:24,000 --> 00:36:27,720
Speaker 1: But yeah, it's for a lot of franchisees who generally

678
00:36:27,800 --> 00:36:31,200
Speaker 1: open in their hometown where they live. They're already the

679
00:36:31,320 --> 00:36:34,719
Speaker 1: local hero. You know, they've got everyone there. We've got

680
00:36:34,800 --> 00:36:38,240
Speaker 1: a We've just brought on a tech like a software

681
00:36:38,360 --> 00:36:41,799
Speaker 1: subscription where you can analyze the area. You can get

682
00:36:41,960 --> 00:36:46,279
Speaker 1: all the data of the influencers that live there, where

683
00:36:46,320 --> 00:36:49,920
Speaker 1: their following is, which is also very very important as well.

684
00:36:51,719 --> 00:36:55,960
Speaker 1: And we can actually give our franchiseesy a list of twenty.

685
00:36:56,560 --> 00:36:59,120
Speaker 1: But ideally the best way this happens and I'll use

686
00:36:59,160 --> 00:37:03,600
Speaker 1: the Bay and Bay case st again. You know, it's

687
00:37:03,840 --> 00:37:06,880
Speaker 1: all about getting in your community and that those girls

688
00:37:07,239 --> 00:37:09,680
Speaker 1: in Byron have been in their community. They own a

689
00:37:09,760 --> 00:37:12,840
Speaker 1: pt studio, they know every single person. It was just

690
00:37:13,040 --> 00:37:17,600
Speaker 1: for them. It was very organic. So yeah, it's it's

691
00:37:17,680 --> 00:37:22,800
Speaker 1: the challenge of I guess enfranchising. You have the franch

692
00:37:22,920 --> 00:37:24,680
Speaker 1: you have a franchise model where you can have sort

693
00:37:24,719 --> 00:37:26,800
Speaker 1: of the mum and dad operator, or you can have

694
00:37:27,160 --> 00:37:30,640
Speaker 1: the investor model where and in the US we've had

695
00:37:30,680 --> 00:37:33,800
Speaker 1: one guy by forty seven locations on his own, and

696
00:37:34,680 --> 00:37:37,480
Speaker 1: the investor model is less connected to the community. So

697
00:37:37,760 --> 00:37:41,879
Speaker 1: it's about how do we solve that problem there? Yeah,

698
00:37:42,080 --> 00:37:42,960
Speaker 1: really interesting.

699
00:37:42,880 --> 00:37:45,520
Speaker 2: Stevie ol has got one in Cooji or his wife

700
00:37:45,600 --> 00:37:48,920
Speaker 2: has partner. He's got one in Couljie next door to

701
00:37:49,040 --> 00:37:54,840
Speaker 2: his recovery outlet, which recovery being one of those pleaching

702
00:37:55,000 --> 00:37:58,120
Speaker 2: I get a in friends Horner, you get in the

703
00:37:58,160 --> 00:38:01,319
Speaker 2: cole bath. You know, they've got of lots of other

704
00:38:01,400 --> 00:38:04,600
Speaker 2: sort of contraptions that help you recover and be better.

705
00:38:05,560 --> 00:38:08,000
Speaker 2: But he's put a strong pilarities right next door. I

706
00:38:08,040 --> 00:38:09,640
Speaker 2: think he's got another one to it's he got one

707
00:38:09,880 --> 00:38:13,440
Speaker 2: or two. He's looking in Bondai BONDEI okay, so he's

708
00:38:13,440 --> 00:38:17,000
Speaker 2: got that one and that sort of like feeds feeds

709
00:38:17,120 --> 00:38:19,399
Speaker 2: the recovery business because people will come over and maybe

710
00:38:19,440 --> 00:38:21,440
Speaker 2: you feel a bit sore or you know, I just

711
00:38:21,680 --> 00:38:23,680
Speaker 2: want to continue on their health program.

712
00:38:24,360 --> 00:38:25,040
Speaker 1: That's quite clever.

713
00:38:27,239 --> 00:38:29,680
Speaker 2: He would be a good example of a because you know,

714
00:38:29,880 --> 00:38:33,480
Speaker 2: he's the ramp, was the ram with rugby union coach.

715
00:38:34,640 --> 00:38:37,120
Speaker 2: So he's a good example of an influencer in an area.

716
00:38:37,680 --> 00:38:39,239
Speaker 2: I mean, does that Is that the sort of thing

717
00:38:39,320 --> 00:38:40,000
Speaker 2: you like to see?

718
00:38:40,320 --> 00:38:43,560
Speaker 1: Yeah, and we love to see that. And it didn't

719
00:38:43,560 --> 00:38:46,440
Speaker 1: take long for that studio to just take off, take off.

720
00:38:46,520 --> 00:38:49,560
Speaker 1: I mean I was just literally before before this, we

721
00:38:49,640 --> 00:38:52,160
Speaker 1: had a performance meeting and I was looking at the

722
00:38:52,920 --> 00:38:54,879
Speaker 1: amount of new trials going through the door and could

723
00:38:54,920 --> 00:38:57,360
Speaker 1: you and they're doing such a good job new trials

724
00:38:57,440 --> 00:38:59,960
Speaker 1: being members that we've got a trial off of four

725
00:39:00,160 --> 00:39:03,359
Speaker 1: sessions for forty It gets people in refer a mate, Yeah,

726
00:39:03,480 --> 00:39:05,239
Speaker 1: all that sort of stuff. You know, you like to

727
00:39:05,320 --> 00:39:07,120
Speaker 1: run promotions a couple of times a year, not all

728
00:39:07,200 --> 00:39:09,440
Speaker 1: the time because it kind of it's not good for

729
00:39:09,520 --> 00:39:13,080
Speaker 1: your brand to always be on discount. But yeah, so

730
00:39:13,280 --> 00:39:14,440
Speaker 1: they're doing really really well.

731
00:39:14,760 --> 00:39:17,240
Speaker 2: That's an example of a let's call it a local

732
00:39:17,320 --> 00:39:22,879
Speaker 2: influencer exactly. You know, play for Australia coach Ramwick. It's

733
00:39:22,920 --> 00:39:26,880
Speaker 2: a pretty prochal area everybody. And Ranwick Rugby Club is

734
00:39:27,000 --> 00:39:29,560
Speaker 2: just down the bottom of couldi oval there, it's just

735
00:39:29,640 --> 00:39:32,799
Speaker 2: near the oval, so like, and it would be known

736
00:39:32,840 --> 00:39:34,120
Speaker 2: in the local Area's a local kid.

737
00:39:34,200 --> 00:39:34,520
Speaker 1: He grew up.

738
00:39:34,600 --> 00:39:36,880
Speaker 2: He went to school of Waverleys. As a recall, he

739
00:39:36,920 --> 00:39:38,120
Speaker 2: played footed one of my son's.

740
00:39:38,480 --> 00:39:41,320
Speaker 1: So yeah, like I get I get that.

741
00:39:41,400 --> 00:39:43,520
Speaker 2: That makes sense to me, A lot of sense to

742
00:39:43,640 --> 00:39:48,239
Speaker 2: me if I could just move across, if you don't mind,

743
00:39:48,280 --> 00:39:50,080
Speaker 2: I like to just look at Singapore for a moment.

744
00:39:51,320 --> 00:39:55,359
Speaker 2: I'm intrigued with Singapore. See if it's a funny place,

745
00:39:55,840 --> 00:39:59,560
Speaker 2: you know, like maybe I was going out there for

746
00:39:59,640 --> 00:40:02,000
Speaker 2: work about ten years ago. He used to go there

747
00:40:02,000 --> 00:40:04,600
Speaker 2: every month. At that point you couldn't even get a

748
00:40:04,640 --> 00:40:07,880
Speaker 2: decent coffee. But it was a very Starbucky type style,

749
00:40:08,080 --> 00:40:10,080
Speaker 2: you know, that's the But then they started a morph

750
00:40:10,160 --> 00:40:13,680
Speaker 2: into sort of coffee getting here, like a high quality coffee,

751
00:40:13,760 --> 00:40:16,680
Speaker 2: like a proper coffee, not a Starbucks style coffee. And

752
00:40:17,239 --> 00:40:19,320
Speaker 2: I haven't been there much lately, but it seems to

753
00:40:19,440 --> 00:40:23,400
Speaker 2: be adopting a lot of stuff that Australia does, but

754
00:40:23,480 --> 00:40:27,760
Speaker 2: a lot of money everyone's got two in the family.

755
00:40:27,960 --> 00:40:33,120
Speaker 2: Both work usually stable jobs, good income places at rich joint.

756
00:40:33,719 --> 00:40:36,680
Speaker 2: You know, it's just it's a wealthy place. I actually

757
00:40:36,719 --> 00:40:39,279
Speaker 2: love Singapore. I don't not necessarily, I wouldn't want to

758
00:40:39,280 --> 00:40:44,040
Speaker 2: live there, but it's great tax haven. But I love

759
00:40:44,120 --> 00:40:47,680
Speaker 2: the place because of if I look at the system there,

760
00:40:47,760 --> 00:40:51,400
Speaker 2: the way they've sort of built that country with like

761
00:40:51,520 --> 00:40:55,200
Speaker 2: a pretty much an autocracy, and how they've sort of

762
00:40:56,120 --> 00:40:59,240
Speaker 2: small it's got no resources, yet it's very wealthy. It's amazing.

763
00:41:00,520 --> 00:41:03,200
Speaker 2: Why did you guys decide to happen up with Singapool?

764
00:41:04,719 --> 00:41:10,080
Speaker 1: It's certainly the most engaged fitness community in Asia really

765
00:41:10,640 --> 00:41:13,160
Speaker 1: by a mile. In otherwise, what do you mean by that?

766
00:41:13,200 --> 00:41:16,359
Speaker 2: People love love their fitness, love their fitness. What about

767
00:41:16,400 --> 00:41:19,799
Speaker 2: health generally? Like is it a health joint? Like people

768
00:41:19,840 --> 00:41:21,319
Speaker 2: thinking about it. I'm going to have this shake, I'm

769
00:41:21,320 --> 00:41:23,240
Speaker 2: going to have that food, I'm going to have that protein.

770
00:41:23,880 --> 00:41:26,640
Speaker 2: Is that something you've passively Really it's full?

771
00:41:27,160 --> 00:41:32,440
Speaker 1: Yeah, it's really. Yeah. It's it's become a real mecha

772
00:41:32,640 --> 00:41:35,960
Speaker 1: in the fitness and wellness space as big on tech

773
00:41:36,040 --> 00:41:40,200
Speaker 1: as well, huge tech, huge on tech. But all the

774
00:41:40,239 --> 00:41:43,600
Speaker 1: big franchise brands like anytime fitness, and I think at

775
00:41:43,840 --> 00:41:45,759
Speaker 1: forty five had at one point had a lot of

776
00:41:45,840 --> 00:41:49,439
Speaker 1: studios at BFT. They're all doing, you know, exceptionally well

777
00:41:49,840 --> 00:41:53,279
Speaker 1: really and I think I don't know what the stat is,

778
00:41:53,320 --> 00:41:56,239
Speaker 1: but for instance, we just launched in Japan and only

779
00:41:56,320 --> 00:41:59,160
Speaker 1: four percent of the population have a gym membership in Japan,

780
00:41:59,760 --> 00:42:02,680
Speaker 1: so we had to and there's some of the challenges

781
00:42:02,719 --> 00:42:05,640
Speaker 1: of launching overseas in different markets. You know, we had

782
00:42:05,680 --> 00:42:08,040
Speaker 1: to alter the programming to be more entry level, which

783
00:42:08,080 --> 00:42:11,440
Speaker 1: is totally fine. There's lots of long term opportunity there.

784
00:42:11,840 --> 00:42:14,480
Speaker 1: Australia there's thirty two percent of the population with a

785
00:42:14,560 --> 00:42:17,719
Speaker 1: gym membership, which is actually I think quite high, but

786
00:42:17,840 --> 00:42:19,880
Speaker 1: there's still a lot of room to grow as a

787
00:42:20,000 --> 00:42:22,080
Speaker 1: as a country. Have a Singapore there, I don't know,

788
00:42:22,320 --> 00:42:23,800
Speaker 1: and that's sort of where I was getting at. I

789
00:42:23,880 --> 00:42:27,720
Speaker 1: would I would assume based off their population it's probably

790
00:42:28,120 --> 00:42:31,440
Speaker 1: much higher than that. So for whatever reason, there's.

791
00:42:31,440 --> 00:42:33,400
Speaker 2: Only a small population, there's only like I don't know,

792
00:42:33,960 --> 00:42:36,719
Speaker 2: it's only seven miles long, and I don't know, something

793
00:42:36,760 --> 00:42:38,600
Speaker 2: like four miles wise isn't really big because I think

794
00:42:38,600 --> 00:42:39,680
Speaker 2: it's like eight million people in here.

795
00:42:39,760 --> 00:42:41,759
Speaker 1: Yeah, I think it's something like that as well. But

796
00:42:42,000 --> 00:42:44,360
Speaker 1: it must, it might. They must just be very highly

797
00:42:44,440 --> 00:42:49,440
Speaker 1: engaged communities of people that love fitness culture. There's so

798
00:42:49,560 --> 00:42:49,880
Speaker 1: much to do.

799
00:42:50,040 --> 00:42:51,840
Speaker 2: I mean, it's a greatespeak simple. I mean, it's not

800
00:42:51,920 --> 00:42:53,239
Speaker 2: like you can go down a bonder for a serf.

801
00:42:54,960 --> 00:42:56,759
Speaker 2: You can't go to the mountains and you know, in

802
00:42:56,800 --> 00:42:59,080
Speaker 2: the middle of winter and experienced snow, we'll go down

803
00:42:59,120 --> 00:43:01,759
Speaker 2: the snow. You can't fly to Melbourne or Brisbane or

804
00:43:01,840 --> 00:43:05,120
Speaker 2: Gold Coast or Daintrey Forest, Singapore, Singapore.

805
00:43:05,200 --> 00:43:06,880
Speaker 1: There's nowhere to go. Like you're in the joint. You're

806
00:43:06,880 --> 00:43:09,319
Speaker 1: in the joint. There's nothing that way or nothing that way.

807
00:43:09,400 --> 00:43:09,840
Speaker 1: They've got a.

808
00:43:09,840 --> 00:43:12,440
Speaker 2: Little down at Sinosa. They've got a little bit of

809
00:43:12,480 --> 00:43:14,680
Speaker 2: a sort of a semi type thing going on. But

810
00:43:14,960 --> 00:43:18,279
Speaker 2: it's not a you know, a greatest respect. It's not

811
00:43:18,280 --> 00:43:20,160
Speaker 2: that much to do, so training would be a big part.

812
00:43:20,280 --> 00:43:22,839
Speaker 2: Work is a big deal. Everyone works there six days

813
00:43:22,920 --> 00:43:24,719
Speaker 2: or six and five and a half days at least

814
00:43:24,760 --> 00:43:28,720
Speaker 2: a week, they worked long hours. Maybe it's the sweet

815
00:43:28,760 --> 00:43:33,000
Speaker 2: spot is exercise and looking good and feeling good and

816
00:43:33,960 --> 00:43:36,120
Speaker 2: taking it to the next level. I'm not surprised it's

817
00:43:36,120 --> 00:43:39,480
Speaker 2: done well. I'm just curious as to why you guys

818
00:43:39,640 --> 00:43:39,960
Speaker 2: chose it.

819
00:43:40,560 --> 00:43:44,560
Speaker 1: We went and did a conference about two years ago,

820
00:43:45,800 --> 00:43:49,960
Speaker 1: and there was a group that owned I think ten

821
00:43:50,640 --> 00:43:52,839
Speaker 1: yoga studios over there that were doing very very well,

822
00:43:53,480 --> 00:43:59,080
Speaker 1: and Singaporean group. Singaporean group. Ozzie guy married Singaporean that

823
00:43:59,239 --> 00:44:02,920
Speaker 1: he now lives there, right, and he ended up purchasing

824
00:44:03,640 --> 00:44:08,120
Speaker 1: ten studios with a development schedule over three and a

825
00:44:08,160 --> 00:44:11,040
Speaker 1: half years or something. So it wasn't so much us

826
00:44:11,920 --> 00:44:14,520
Speaker 1: identifying Singapore. We knew it was a good market, we'd heard,

827
00:44:14,560 --> 00:44:16,719
Speaker 1: we'd looked at data things like that, but it was

828
00:44:16,800 --> 00:44:18,919
Speaker 1: more finding the right partner, and then when we found

829
00:44:18,960 --> 00:44:23,080
Speaker 1: the right partner, we gave him exclusivity or them a

830
00:44:23,160 --> 00:44:26,600
Speaker 1: master franchise sort of thing similar, but they own every studio.

831
00:44:26,840 --> 00:44:30,920
Speaker 1: They're not franchising, right right. Master franchises are good in

832
00:44:31,000 --> 00:44:34,239
Speaker 1: some circumstances and not in others. I would say you

833
00:44:34,360 --> 00:44:37,160
Speaker 1: need a population of at least thirty to fifty million

834
00:44:37,560 --> 00:44:41,920
Speaker 1: in a country to master franchise, right, Yeah, Because so.

835
00:44:42,080 --> 00:44:44,520
Speaker 2: This individual owns all studios, all of the.

836
00:44:44,480 --> 00:44:47,120
Speaker 1: Studios, that's right, They've got all ten. And what's the

837
00:44:47,160 --> 00:44:47,960
Speaker 1: mode look like? Michael?

838
00:44:48,000 --> 00:44:50,920
Speaker 2: So you you tam miss say, look, mate, Singapore jaws

839
00:44:51,560 --> 00:44:55,160
Speaker 2: at fifty what would you take a percentage of revenue?

840
00:44:55,200 --> 00:44:57,680
Speaker 1: How's it was like a royalty? Yeah, we take eight

841
00:44:57,719 --> 00:45:00,839
Speaker 1: percent of revenue and a two marketing levy.

842
00:45:01,120 --> 00:45:04,640
Speaker 2: So yeah, so you see your and so that means

843
00:45:04,680 --> 00:45:08,399
Speaker 2: and then therefore your responsibility is to spend your money

844
00:45:09,360 --> 00:45:13,320
Speaker 2: marketing his business in Singapore, for example, And there's a

845
00:45:13,480 --> 00:45:15,360
Speaker 2: greed schedule, I guess. I mean, we come up with

846
00:45:15,480 --> 00:45:20,560
Speaker 2: a great schedule and then whatever his take is, he

847
00:45:20,719 --> 00:45:21,719
Speaker 2: pays your percentage of that.

848
00:45:22,600 --> 00:45:24,680
Speaker 1: That's that's cool. And have you done? Is it the

849
00:45:24,719 --> 00:45:28,320
Speaker 1: same model in the United States? Same identical model around

850
00:45:28,360 --> 00:45:34,120
Speaker 1: the world. We have mastered in Japan, Korea and Canada,

851
00:45:34,719 --> 00:45:39,200
Speaker 1: big populations. Yeah ye, but yeah, same model all around

852
00:45:39,200 --> 00:45:43,160
Speaker 1: the world. It's you know, enfranchising is tough, Like it's

853
00:45:43,200 --> 00:45:46,280
Speaker 1: the biggest question I get asked. When I have friends

854
00:45:46,320 --> 00:45:49,719
Speaker 1: that own one, two, three studios. You know, they're going, well,

855
00:45:49,760 --> 00:45:52,800
Speaker 1: they're like, should I franchise? And nine times out of

856
00:45:52,880 --> 00:45:57,400
Speaker 1: ten I say no, because if unless you're prepared and

857
00:45:57,520 --> 00:45:59,880
Speaker 1: you have a product or a service offering that can

858
00:46:00,080 --> 00:46:04,640
Speaker 1: probably open one hundred studios, don't franchise, open your own

859
00:46:05,440 --> 00:46:07,680
Speaker 1: or you can do and this is something we're looking

860
00:46:07,680 --> 00:46:09,320
Speaker 1: at now. For the US. You can do like a

861
00:46:10,520 --> 00:46:14,240
Speaker 1: section of say corporate owned, where HQ owns x amount

862
00:46:14,280 --> 00:46:16,839
Speaker 1: of studios, it can franchise x amount just to grow

863
00:46:16,880 --> 00:46:19,600
Speaker 1: the brand and get the brand equity. I guess bills

864
00:46:20,040 --> 00:46:22,680
Speaker 1: in other countries and other areas. But it's a really

865
00:46:22,840 --> 00:46:27,120
Speaker 1: interesting one because I think a lot of people assume

866
00:46:27,239 --> 00:46:30,480
Speaker 1: that franchising is easy to pull the trigger.

867
00:46:31,320 --> 00:46:35,279
Speaker 2: It is tough, tough work, and it's continuous, it doesn't stop. Yeah,

868
00:46:35,320 --> 00:46:39,279
Speaker 2: it's not one transaction. It's a series of transactions with

869
00:46:39,400 --> 00:46:43,040
Speaker 2: lots of twists and turns on the way through. Is

870
00:46:43,120 --> 00:46:46,719
Speaker 2: it expensive? So some people think, oh, I'll do a

871
00:46:46,719 --> 00:46:50,120
Speaker 2: franchise because in terms of building out my distribution of

872
00:46:50,239 --> 00:46:53,839
Speaker 2: the product, there's a lot of capital requirements. So if

873
00:46:53,880 --> 00:46:55,920
Speaker 2: I get someone else to do the take, go on

874
00:46:56,000 --> 00:46:59,759
Speaker 2: the franchise. They can spend their capital and they can run,

875
00:47:00,040 --> 00:47:01,719
Speaker 2: you can have their overheads, and I don't have to

876
00:47:01,760 --> 00:47:02,680
Speaker 2: worry about that sort of stuff.

877
00:47:02,719 --> 00:47:05,359
Speaker 1: I mean, that makes sense. Doesn't mean it's going to work,

878
00:47:05,400 --> 00:47:06,040
Speaker 1: but that makes sense.

879
00:47:07,120 --> 00:47:11,000
Speaker 2: Is your business or your franchise or opening an outlet,

880
00:47:11,160 --> 00:47:12,200
Speaker 2: is it capital intensive?

881
00:47:13,120 --> 00:47:17,160
Speaker 1: Yeah, it's anywhere from four to five hundred k. It's

882
00:47:17,200 --> 00:47:18,040
Speaker 1: opened up a studio.

883
00:47:18,160 --> 00:47:19,640
Speaker 2: Is that is that fit out or is it mostly

884
00:47:19,760 --> 00:47:23,000
Speaker 2: machines and stuff? That's everything, But where where would most

885
00:47:23,040 --> 00:47:23,920
Speaker 2: of the money be dropped?

886
00:47:24,760 --> 00:47:29,680
Speaker 1: Probably thirty percent would be equipment, the rest would be

887
00:47:30,760 --> 00:47:34,280
Speaker 1: fit out. And then also marketing pre sale is super important.

888
00:47:34,320 --> 00:47:37,839
Speaker 1: You need to spend early on I think last year

889
00:47:37,840 --> 00:47:41,720
Speaker 1: our average was two hundred and fifty eight members before opening,

890
00:47:41,800 --> 00:47:44,600
Speaker 1: which means, let's say you break even is one hundred

891
00:47:44,640 --> 00:47:47,040
Speaker 1: to one hundred and fifty members. You're profitable from day one.

892
00:47:48,280 --> 00:47:50,719
Speaker 1: So yeah, it's sort of around i'd say around that

893
00:47:50,760 --> 00:47:54,440
Speaker 1: five hundred k mark now. But it's all about getting

894
00:47:54,440 --> 00:47:58,680
Speaker 1: the business model right. So seventy percent of our franchisees

895
00:47:58,800 --> 00:48:01,000
Speaker 1: own two or more studios, so they're all making money.

896
00:48:01,040 --> 00:48:04,400
Speaker 1: We've never closed the studio in five years. You need

897
00:48:04,440 --> 00:48:07,000
Speaker 1: to get the business model right so your overheads can't

898
00:48:07,000 --> 00:48:08,920
Speaker 1: be too crazy expensive. You want to get a return

899
00:48:08,960 --> 00:48:11,880
Speaker 1: on investment, you know, we try and get EBITDA at

900
00:48:12,000 --> 00:48:16,080
Speaker 1: least around sort of twenty five thirty percent revenue of revenue.

901
00:48:17,160 --> 00:48:21,400
Speaker 1: So I'd say it's less about the capital and more

902
00:48:21,440 --> 00:48:24,719
Speaker 1: about the ROI right, I mean, you can you can

903
00:48:24,800 --> 00:48:27,719
Speaker 1: get you know, machines, finance fit, that's finance, all that

904
00:48:27,800 --> 00:48:30,319
Speaker 1: sort of thing. But I think it's it's all about

905
00:48:30,360 --> 00:48:33,600
Speaker 1: building a really sustainable business model. And you know, the

906
00:48:33,680 --> 00:48:36,320
Speaker 1: clients need to be comfortable with the price, the franchise

907
00:48:36,360 --> 00:48:38,520
Speaker 1: that you need to make money, and the franchise all

908
00:48:38,640 --> 00:48:41,520
Speaker 1: needs to expand and build brand. It all needs to

909
00:48:41,600 --> 00:48:46,000
Speaker 1: work in an ecosystem. And there's so many intricacies. But yeah,

910
00:48:46,160 --> 00:48:48,160
Speaker 1: it's as I was saying before, it's I think it's

911
00:48:48,160 --> 00:48:51,120
Speaker 1: a lot more complex than people think. But Jesus, we've.

912
00:48:51,040 --> 00:48:53,480
Speaker 2: Learned someone who's been running franchise business for thirty years. Man,

913
00:48:53,480 --> 00:48:56,800
Speaker 2: I know how freaking arted this view. But it is complex.

914
00:48:57,480 --> 00:48:59,080
Speaker 1: But I really like your model.

915
00:49:00,600 --> 00:49:03,800
Speaker 2: Do you guys, do you does head office franchise or

916
00:49:04,360 --> 00:49:07,440
Speaker 2: do you sell the equipment to the franchise e or

917
00:49:07,560 --> 00:49:08,320
Speaker 2: is it third party?

918
00:49:09,280 --> 00:49:11,719
Speaker 1: Yes, so the person that we met in the US

919
00:49:11,800 --> 00:49:15,000
Speaker 1: that created the machine, he's now our equipment supplier. So

920
00:49:15,040 --> 00:49:17,920
Speaker 1: it's third party. It still goes through us because it

921
00:49:18,120 --> 00:49:21,400
Speaker 1: just saves a lot of headaches and things like delivery

922
00:49:21,440 --> 00:49:24,160
Speaker 1: of equipment on time, ready for launch or ready.

923
00:49:23,960 --> 00:49:28,080
Speaker 2: For their logistics. Yeah, and and and in terms of

924
00:49:28,120 --> 00:49:32,319
Speaker 2: the logistics, well, in terms of maybe everything. So when

925
00:49:32,680 --> 00:49:34,239
Speaker 2: if I go and to sign up to a strong

926
00:49:34,320 --> 00:49:39,320
Speaker 2: parties in couldji, does that mean does the does my

927
00:49:39,520 --> 00:49:40,160
Speaker 2: sign up money?

928
00:49:40,560 --> 00:49:41,800
Speaker 1: Do you manage all that for me?

929
00:49:41,960 --> 00:49:46,000
Speaker 2: There's a franchise or for oil mean do you is

930
00:49:46,040 --> 00:49:48,799
Speaker 2: that you collect all my money and then send him

931
00:49:48,800 --> 00:49:50,719
Speaker 2: his money take your share? Or does it all the

932
00:49:50,760 --> 00:49:52,520
Speaker 2: money go direct to him and he pays you your share?

933
00:49:52,719 --> 00:49:54,600
Speaker 1: It goes direct to him, then he pays us, he

934
00:49:54,680 --> 00:49:57,239
Speaker 1: pays you. Okay, Now there's there's there's franchise systems out

935
00:49:57,239 --> 00:49:58,560
Speaker 1: there that do it the other way around. Yeah.

936
00:49:58,560 --> 00:50:00,680
Speaker 2: Man, my business, I like to collect money and to

937
00:50:00,840 --> 00:50:03,680
Speaker 2: the payment, but which means it always a month behind

938
00:50:03,760 --> 00:50:06,200
Speaker 2: because I have to collect all the money. Then because

939
00:50:06,200 --> 00:50:08,439
Speaker 2: I'm collecting from banks, I have to collecting the money.

940
00:50:08,840 --> 00:50:11,920
Speaker 2: We're collecting three hundred million, so that's a fevit of

941
00:50:11,960 --> 00:50:16,239
Speaker 2: money to collect, you know, and we've got to make

942
00:50:16,239 --> 00:50:18,120
Speaker 2: sure it gets to everybody at the end of every month.

943
00:50:18,160 --> 00:50:21,359
Speaker 2: We're paying at twenty million a month. But like it's

944
00:50:22,239 --> 00:50:23,600
Speaker 2: I would like to do it that way because I

945
00:50:23,640 --> 00:50:25,000
Speaker 2: don't want to be sitting there waiting for someone to

946
00:50:25,040 --> 00:50:28,839
Speaker 2: pay me. And I've been able to manage to get

947
00:50:28,880 --> 00:50:31,719
Speaker 2: them to wait for me to pay them because and

948
00:50:31,840 --> 00:50:33,440
Speaker 2: that's the model in my industry. By the ways, there's

949
00:50:33,440 --> 00:50:36,920
Speaker 2: no one else any different. But so, so you're not

950
00:50:37,040 --> 00:50:39,960
Speaker 2: actually doing administration for them, you're not really running their

951
00:50:40,000 --> 00:50:44,120
Speaker 2: back office. You're doing the marketing, but we're helping the marketing.

952
00:50:44,200 --> 00:50:47,800
Speaker 1: Yeah, we're giving them systems and everything is something is

953
00:50:48,239 --> 00:50:53,200
Speaker 1: what we've set up in software, our own portal. We've

954
00:50:53,239 --> 00:50:56,319
Speaker 1: developed everything's there for them and we teach them how

955
00:50:56,360 --> 00:50:58,040
Speaker 1: to use it. Yeah, but they need to run there,

956
00:50:58,160 --> 00:50:59,920
Speaker 1: but you're not running it for them.

957
00:51:00,040 --> 00:51:02,280
Speaker 2: So because some models, because I'm involved in another business

958
00:51:02,360 --> 00:51:07,000
Speaker 2: called m will used to be called whimp to Warrior.

959
00:51:07,160 --> 00:51:09,160
Speaker 2: We had to change it because we're going to get canceled.

960
00:51:09,280 --> 00:51:11,440
Speaker 2: Is now called train Altar, which we listened on the

961
00:51:11,520 --> 00:51:16,600
Speaker 2: Nastak where we actually provide all the back office to

962
00:51:16,760 --> 00:51:20,279
Speaker 2: MMA gyms. We had eight thousand gyms around around the world.

963
00:51:20,840 --> 00:51:25,040
Speaker 2: And because we do all the marketing, we do all

964
00:51:25,120 --> 00:51:29,680
Speaker 2: their payments, we receive the payments, we pay them mainly

965
00:51:29,680 --> 00:51:33,320
Speaker 2: because MMA gym guys, I'm pretty hopeless at it, you know,

966
00:51:33,440 --> 00:51:36,560
Speaker 2: and they do a market they're very good teachers. They

967
00:51:36,640 --> 00:51:39,239
Speaker 2: love MMA, but they're not very good at anything else.

968
00:51:39,680 --> 00:51:42,920
Speaker 2: So it sounds like to me though, that your franchisees

969
00:51:45,520 --> 00:51:49,120
Speaker 2: all budding entrepreneurs and business owners, proper business owners, not

970
00:51:49,239 --> 00:51:52,560
Speaker 2: necessarily specialists. They may also be a specialist in which

971
00:51:52,640 --> 00:51:55,560
Speaker 2: huge guys do strong plarateies. But it starts off they're

972
00:51:55,560 --> 00:51:57,680
Speaker 2: probably a business owner, want to be a business owner,

973
00:51:57,719 --> 00:51:58,480
Speaker 2: run their own business.

974
00:51:58,920 --> 00:52:02,120
Speaker 1: Is that a fair assumption, I'd say most of them are. Yeah, yeah,

975
00:52:02,320 --> 00:52:05,160
Speaker 1: And it's we're a lot more selective now in who

976
00:52:05,239 --> 00:52:08,400
Speaker 1: we allow to buy into the brand. We're at the

977
00:52:08,520 --> 00:52:12,520
Speaker 1: start speak to markets very very important. So at the

978
00:52:12,600 --> 00:52:15,279
Speaker 1: start it was a little more scatter gun, take what

979
00:52:15,480 --> 00:52:17,680
Speaker 1: you get and you learn, you learn. As I said,

980
00:52:17,719 --> 00:52:23,080
Speaker 1: we still haven't closed the studio. Our average revenue, as

981
00:52:23,120 --> 00:52:25,560
Speaker 1: I said, increases last last year by twenty percent, so

982
00:52:25,840 --> 00:52:28,120
Speaker 1: things things are heading in the right direction. But the

983
00:52:28,239 --> 00:52:33,560
Speaker 1: selection process is now very much. You know, there's a prerequisite.

984
00:52:33,880 --> 00:52:37,319
Speaker 1: They need capital as well. A lot of people want

985
00:52:37,360 --> 00:52:39,120
Speaker 1: to buy strong but don't have the money.

986
00:52:39,320 --> 00:52:41,640
Speaker 2: Yeah, they're buying because they want to make capital. You've

987
00:52:41,680 --> 00:52:44,040
Speaker 2: got to have capitals kick it off exactly. It's a

988
00:52:44,080 --> 00:52:46,720
Speaker 2: bit hungry, yeah, I mean day one it's a bit hungry.

989
00:52:47,040 --> 00:52:50,080
Speaker 2: I mean, you've got to got to have their backing. Yep,

990
00:52:50,960 --> 00:52:53,080
Speaker 2: you can't walk in there sort of broke or.

991
00:52:53,080 --> 00:52:54,960
Speaker 1: An asset that you can you know you can you

992
00:52:55,000 --> 00:52:59,920
Speaker 1: can get lending from. Yeah, but yeah, it's it's it's

993
00:53:00,160 --> 00:53:02,319
Speaker 1: nice to be in the position now where we've got

994
00:53:02,400 --> 00:53:04,640
Speaker 1: the reputation, we've got the data, we've got the runs

995
00:53:04,680 --> 00:53:07,000
Speaker 1: on the board, and we don't need to bring in

996
00:53:07,040 --> 00:53:11,360
Speaker 1: absolutely everyone who applies. Most of the growth is coming internally.

997
00:53:11,560 --> 00:53:13,439
Speaker 1: So there's franchisees now.

998
00:53:13,360 --> 00:53:15,680
Speaker 2: With getting another four studio. Yeah, I've got a friend

999
00:53:15,800 --> 00:53:18,759
Speaker 2: who's got a couple out of the West. Her name

1000
00:53:18,800 --> 00:53:20,440
Speaker 2: is Adriana because she's got a few.

1001
00:53:20,320 --> 00:53:22,000
Speaker 1: Out that west. She's doing well west.

1002
00:53:22,280 --> 00:53:25,480
Speaker 2: Yeah, but she was an early adopter. She went in

1003
00:53:25,560 --> 00:53:29,680
Speaker 2: the years ago like maybe Weather or Park COVID period

1004
00:53:29,680 --> 00:53:34,960
Speaker 2: early COVID perhaps, and a goer, you know, pretty tough,

1005
00:53:36,040 --> 00:53:39,120
Speaker 2: tough at what she does and from all the council

1006
00:53:39,120 --> 00:53:42,440
Speaker 2: doing quite well. So if I could just put two

1007
00:53:42,520 --> 00:53:46,000
Speaker 2: questions onto you now, Michael, just a little slightly different time,

1008
00:53:46,800 --> 00:53:50,160
Speaker 2: given that you've been around this game. You're only young,

1009
00:53:50,200 --> 00:53:51,799
Speaker 2: but you've been around this game for a fair while.

1010
00:53:52,400 --> 00:53:56,640
Speaker 2: It probably feels like a lifetime to you. What would

1011
00:53:56,680 --> 00:54:02,000
Speaker 2: you tell your younger self today, if you were kicking

1012
00:54:02,080 --> 00:54:07,120
Speaker 2: this business off now, don't do this or do that.

1013
00:54:07,440 --> 00:54:12,320
Speaker 1: It could be a bit of both. Great question. I

1014
00:54:12,400 --> 00:54:16,600
Speaker 1: would say, back yourself and go harder and believe in

1015
00:54:16,680 --> 00:54:19,879
Speaker 1: what you're doing. Go harder, go harder, don't be sort

1016
00:54:19,880 --> 00:54:23,800
Speaker 1: of shit like it's it's amazing, Like we are the

1017
00:54:23,840 --> 00:54:26,360
Speaker 1: black sheep of the players industry. So we cop a

1018
00:54:26,480 --> 00:54:30,120
Speaker 1: lot of slack for putting TVs up and running strength

1019
00:54:30,160 --> 00:54:34,080
Speaker 1: components through the reformer and using the purist not at

1020
00:54:34,080 --> 00:54:37,480
Speaker 1: all like we're running our franchise marketing right now is

1021
00:54:38,120 --> 00:54:41,239
Speaker 1: love traditional polarties do not invest in strong like it's

1022
00:54:41,280 --> 00:54:44,279
Speaker 1: a little bit of a catch like we're just trying to,

1023
00:54:44,800 --> 00:54:47,200
Speaker 1: you know, be a little bit disruptive and not not

1024
00:54:47,520 --> 00:54:50,920
Speaker 1: not traditional franchise marketing. But it would be go harder,

1025
00:54:51,080 --> 00:54:54,879
Speaker 1: back yourself, believe in what you're doing, and not think

1026
00:54:55,040 --> 00:54:59,799
Speaker 1: that you know there's limitations or or there's risks, because yeah,

1027
00:54:59,840 --> 00:55:02,200
Speaker 1: I I just I know it feels like we're in

1028
00:55:02,680 --> 00:55:05,360
Speaker 1: a really good growth phase, and in truth, we are.

1029
00:55:05,520 --> 00:55:07,359
Speaker 1: But there are a lot of times in those early

1030
00:55:07,480 --> 00:55:11,160
Speaker 1: days when the criticisms coming in and you know, there's

1031
00:55:11,160 --> 00:55:14,520
Speaker 1: a lot of traditionalists, saying Joseph Plarties would roll over

1032
00:55:14,600 --> 00:55:19,520
Speaker 1: in his grave if you saw this. Fu Yeah, And personally,

1033
00:55:19,600 --> 00:55:21,719
Speaker 1: I wish I'd just not really taken that on board

1034
00:55:21,760 --> 00:55:22,799
Speaker 1: and just stayed the path.

1035
00:55:23,000 --> 00:55:23,200
Speaker 2: Yeah.

1036
00:55:23,560 --> 00:55:27,040
Speaker 1: Every single time we've created an innovation or an edgy

1037
00:55:27,160 --> 00:55:31,400
Speaker 1: marketing campaign or just really dived into what the consumer

1038
00:55:31,480 --> 00:55:35,440
Speaker 1: actually wants and followed the science, it's come off to

1039
00:55:35,560 --> 00:55:40,640
Speaker 1: be brilliant. Every time we've grown, we've Yeah, consumers are

1040
00:55:40,680 --> 00:55:44,000
Speaker 1: getting the results, We're opening more franchises, and I just

1041
00:55:44,080 --> 00:55:48,040
Speaker 1: wish I had that mindset early on. I'm a little

1042
00:55:48,120 --> 00:55:50,279
Speaker 1: more a little more confident in the way I go

1043
00:55:50,320 --> 00:55:52,600
Speaker 1: about things now, but it's taken sort of four or

1044
00:55:52,640 --> 00:55:53,520
Speaker 1: five years to get here.

1045
00:55:53,640 --> 00:55:57,719
Speaker 2: So and well done and fine. The final question for

1046
00:55:57,800 --> 00:56:04,640
Speaker 2: you is always take a view in business. As a

1047
00:56:04,920 --> 00:56:09,920
Speaker 2: business owner, I always know what your exit is day one.

1048
00:56:10,600 --> 00:56:13,359
Speaker 2: I mean, he might not exit, he might stay there forever.

1049
00:56:13,440 --> 00:56:16,799
Speaker 2: But what's what do you think about that? I mean,

1050
00:56:16,840 --> 00:56:20,759
Speaker 2: what's Michael's position. I mean, you're a young guy, but

1051
00:56:22,000 --> 00:56:24,640
Speaker 2: you don't want to be doing this when you're seventy.

1052
00:56:25,840 --> 00:56:26,560
Speaker 1: What do you think?

1053
00:56:26,680 --> 00:56:28,120
Speaker 2: Do you ever think about that stuff? We're just going

1054
00:56:28,160 --> 00:56:29,759
Speaker 2: to I'm just going to go for it at the moment.

1055
00:56:30,080 --> 00:56:32,520
Speaker 1: Yeah, I mean it's it's always in the back of

1056
00:56:32,600 --> 00:56:36,600
Speaker 1: my mind. And it's not like we don't have pe

1057
00:56:36,760 --> 00:56:39,879
Speaker 1: knocking on the door every week, or private equity, private

1058
00:56:39,920 --> 00:56:44,239
Speaker 1: equity family officers like whatever always knocking on the door

1059
00:56:44,360 --> 00:56:47,000
Speaker 1: saying give us a peace, will help you expand all

1060
00:56:47,040 --> 00:56:50,319
Speaker 1: that sort of Yeah, and we'll help control you. Right now,

1061
00:56:50,400 --> 00:56:52,360
Speaker 1: we myself and Mark own one hundred percent of the

1062
00:56:52,400 --> 00:56:56,080
Speaker 1: business were self funded. And the more we can do

1063
00:56:56,200 --> 00:56:58,080
Speaker 1: this and the longer we can we can hold on,

1064
00:56:58,520 --> 00:57:01,239
Speaker 1: the better the result at the end. What's the breaking point?

1065
00:57:02,000 --> 00:57:02,160
Speaker 1: Is it?

1066
00:57:02,719 --> 00:57:05,759
Speaker 2: Okay, So that's a good point as long as you

1067
00:57:05,800 --> 00:57:08,440
Speaker 2: can hold on and that I think that's a function

1068
00:57:08,520 --> 00:57:10,359
Speaker 2: of how ambitious you are.

1069
00:57:11,080 --> 00:57:13,000
Speaker 1: So if you're.

1070
00:57:14,640 --> 00:57:18,840
Speaker 2: Cash flow enables you to open on twenty a month,

1071
00:57:20,640 --> 00:57:22,600
Speaker 2: but ideally like to have forty a month because you

1072
00:57:22,640 --> 00:57:23,320
Speaker 2: might be getting worried.

1073
00:57:23,320 --> 00:57:24,560
Speaker 1: I've got to get out there and get it.

1074
00:57:24,680 --> 00:57:26,840
Speaker 2: Take the real estate straight away, get as much real

1075
00:57:26,920 --> 00:57:30,760
Speaker 2: estate as possible, which is the forty five model, and

1076
00:57:30,920 --> 00:57:35,320
Speaker 2: then do something after that. Okay, if you're not that ambitious,

1077
00:57:35,360 --> 00:57:37,200
Speaker 2: but you're ambitious enough just to take what you can

1078
00:57:37,240 --> 00:57:40,959
Speaker 2: afford to open, then I don't think you need your money.

1079
00:57:42,120 --> 00:57:44,880
Speaker 1: No, and you don't, they will try to get you

1080
00:57:44,920 --> 00:57:49,360
Speaker 1: to do it. They will seduce you. It's so I'm

1081
00:57:49,560 --> 00:57:52,880
Speaker 1: getting really used to the questions and the conversations. I

1082
00:57:53,080 --> 00:57:55,040
Speaker 1: like to still have a chat with them. Yeah, and

1083
00:57:55,160 --> 00:57:58,560
Speaker 1: it's so interesting. They're always like, hey, you being no pressure,

1084
00:57:58,800 --> 00:58:00,440
Speaker 1: you know, no pressure, It's all good. I just want

1085
00:58:00,480 --> 00:58:02,880
Speaker 1: to help you all that kind of thing. But yeah, look,

1086
00:58:03,000 --> 00:58:09,040
Speaker 1: it's it's like we're doing very well from a brand perspective,

1087
00:58:09,080 --> 00:58:11,880
Speaker 1: from a consumer perspective. If we had to answer to

1088
00:58:11,960 --> 00:58:14,360
Speaker 1: a board that was telling us you need to open

1089
00:58:14,440 --> 00:58:16,320
Speaker 1: twenty studios a month, you need to do this, you

1090
00:58:16,400 --> 00:58:19,320
Speaker 1: need to do that, I think we would lose touch

1091
00:58:19,560 --> 00:58:22,080
Speaker 1: of the brand and I probably wouldn't enjoy it as

1092
00:58:22,120 --> 00:58:25,960
Speaker 1: much either. No way, no. So for us, we're going

1093
00:58:26,000 --> 00:58:27,840
Speaker 1: to get to where we want to get to and

1094
00:58:27,960 --> 00:58:31,560
Speaker 1: it's not going to take that long. Franchising is great

1095
00:58:31,720 --> 00:58:34,760
Speaker 1: because it is high cash flow. You've got residual income

1096
00:58:34,960 --> 00:58:38,080
Speaker 1: coming from franchisees. You've got new territories that you sell

1097
00:58:38,120 --> 00:58:41,320
Speaker 1: which are fifty k pop. The money comes in. Were asleep. Yeah,

1098
00:58:42,200 --> 00:58:47,240
Speaker 1: I wouldn't say that much, but it's still it's still it.

1099
00:58:47,320 --> 00:58:51,160
Speaker 2: Is annuity business. Like it's sort of like anuity business.

1100
00:58:51,360 --> 00:58:54,600
Speaker 2: You're getting paid weekly, a month or whatever the cycle is.

1101
00:58:55,000 --> 00:58:57,480
Speaker 2: It sort of isn't anuity business. There's not one transaction

1102
00:58:57,560 --> 00:58:59,440
Speaker 2: where they pay you a franchise fee, which probably just

1103
00:58:59,680 --> 00:59:02,280
Speaker 2: you we just break it even on the franchise fee,

1104
00:59:02,880 --> 00:59:05,360
Speaker 2: but the annuity just keeps rolling. And assuming they're an operator,

1105
00:59:05,400 --> 00:59:07,640
Speaker 2: they can then run the business. And assuming got the

1106
00:59:07,720 --> 00:59:09,440
Speaker 2: right product in the right marketing, which seems like you

1107
00:59:09,520 --> 00:59:11,800
Speaker 2: have at the moment, there's still a good innuity business

1108
00:59:12,520 --> 00:59:18,360
Speaker 2: and that'll help fund either an ambitious level of growth,

1109
00:59:19,000 --> 00:59:22,040
Speaker 2: maybe not an overly ambitious level of growth, which we

1110
00:59:22,240 --> 00:59:25,280
Speaker 2: need lots of capital. But the trade off I'm getting

1111
00:59:25,320 --> 00:59:27,520
Speaker 2: lots of capital from it pe is that you sort

1112
00:59:27,560 --> 00:59:29,560
Speaker 2: of lose control a bit because.

1113
00:59:29,280 --> 00:59:30,360
Speaker 1: They usually buy themselves.

1114
00:59:30,360 --> 00:59:33,800
Speaker 2: And I'm not bagging mobs because they're great, but you know,

1115
00:59:34,200 --> 00:59:35,200
Speaker 2: we've had them on the show.

1116
00:59:35,000 --> 00:59:35,400
Speaker 1: Et cetera.

1117
00:59:35,480 --> 00:59:38,080
Speaker 2: But it doesn't sound like you need one because they

1118
00:59:38,200 --> 00:59:40,320
Speaker 2: usually buy themselves. A veto right by the way, so

1119
00:59:40,360 --> 00:59:42,120
Speaker 2: when they're come in, they might only have thirty forty percent,

1120
00:59:42,160 --> 00:59:43,440
Speaker 2: but they say we've got the right to say no,

1121
00:59:44,280 --> 00:59:46,440
Speaker 2: which is the effective really we've got the right to

1122
00:59:46,480 --> 00:59:49,480
Speaker 2: tell you what to do in a different sort of way,

1123
00:59:50,600 --> 00:59:52,840
Speaker 2: and I think people should only go to them if

1124
00:59:52,880 --> 00:59:55,760
Speaker 2: they need to grow really fast for some reason.

1125
00:59:57,520 --> 01:00:01,560
Speaker 1: I completely agree with you. It's we don't need them.

1126
01:00:02,200 --> 01:00:06,360
Speaker 1: And even the even the reporting requirements once you're a

1127
01:00:06,480 --> 01:00:11,560
Speaker 1: place in that game is it's a distraction. As long

1128
01:00:11,600 --> 01:00:14,160
Speaker 1: as we're putting money back into the brand. Like we

1129
01:00:14,240 --> 01:00:17,880
Speaker 1: talked about the marketing fund, we spend sometimes two times

1130
01:00:18,280 --> 01:00:20,160
Speaker 1: what we get in, Like, we're putting it back into

1131
01:00:20,200 --> 01:00:22,680
Speaker 1: the product, back into the marketing. As long as the

1132
01:00:22,800 --> 01:00:26,160
Speaker 1: consumers are enjoying it, the franchises are happy and making money,

1133
01:00:26,720 --> 01:00:29,880
Speaker 1: we're good. And we've got a great pipeline of studios

1134
01:00:29,920 --> 01:00:31,920
Speaker 1: coming up. You know, I think the two hundred on

1135
01:00:32,000 --> 01:00:37,320
Speaker 1: the way at least now. We don't want a thousand studios,

1136
01:00:37,680 --> 01:00:40,200
Speaker 1: you know, that just to me seems crazy. So it's

1137
01:00:40,440 --> 01:00:43,040
Speaker 1: it's very much long story shot. I would say, it's

1138
01:00:43,160 --> 01:00:45,880
Speaker 1: like step by step, you know, And there might be

1139
01:00:45,960 --> 01:00:48,240
Speaker 1: something down the road where maybe we do a raise

1140
01:00:48,400 --> 01:00:51,760
Speaker 1: to really fast track you know, Strong's expansion in the US.

1141
01:00:51,840 --> 01:00:56,200
Speaker 1: Maybe we look at something like that. But yeah, while

1142
01:00:56,320 --> 01:00:59,240
Speaker 1: things are good, we're going to keep keep the path.

1143
01:00:59,440 --> 01:00:59,960
Speaker 1: It's interesting.

1144
01:01:00,600 --> 01:01:02,320
Speaker 2: Just remind me of something in two thousand and four

1145
01:01:02,320 --> 01:01:05,160
Speaker 2: when General Electric bought the Wizard business of me and

1146
01:01:05,280 --> 01:01:09,280
Speaker 2: I stayed on as a chairman, and I remember the

1147
01:01:09,880 --> 01:01:13,680
Speaker 2: marketing department. The marketing department of Wizard had like thirty

1148
01:01:13,760 --> 01:01:16,320
Speaker 2: staff and the accounting department of Wiz it had like

1149
01:01:16,720 --> 01:01:22,160
Speaker 2: six seven And within were two months that was flipped.

1150
01:01:23,480 --> 01:01:27,200
Speaker 2: The accounting department became thirty because they had to report

1151
01:01:27,320 --> 01:01:32,560
Speaker 2: up to people in America, and like the level of reporting,

1152
01:01:32,760 --> 01:01:36,720
Speaker 2: like this metric and that metric and et cetera, just

1153
01:01:36,800 --> 01:01:40,240
Speaker 2: got out of control. And you know, the marketing state

1154
01:01:40,280 --> 01:01:44,080
Speaker 2: of thirty, but like accounting and the extra cost, it

1155
01:01:44,200 --> 01:01:47,960
Speaker 2: became a because you know those people are accountants or whatever.

1156
01:01:48,200 --> 01:01:49,960
Speaker 2: See if I the type people, they're all getting paid

1157
01:01:49,960 --> 01:01:53,080
Speaker 2: one hundred and fifty, two undred and fifty and all

1158
01:01:53,120 --> 01:01:55,840
Speaker 2: they just just churning on reports that every month, based

1159
01:01:55,880 --> 01:01:58,320
Speaker 2: on this, based on that, and it doesn't doesn't increase

1160
01:01:58,360 --> 01:02:00,840
Speaker 2: your P and L, it doesn't increase your revenue, doesn't

1161
01:02:00,880 --> 01:02:03,160
Speaker 2: make the franchisees any happy, it doesn't make the customers

1162
01:02:03,200 --> 01:02:06,000
Speaker 2: any happy. It does nothing for customers. I'm not bagging

1163
01:02:06,040 --> 01:02:08,960
Speaker 2: in these big organizations, but they are typical. They're not

1164
01:02:09,200 --> 01:02:12,080
Speaker 2: a private equy group, but they are a typical investor. Like,

1165
01:02:12,360 --> 01:02:14,760
Speaker 2: we need to know the numbers. And by the way,

1166
01:02:14,760 --> 01:02:16,160
Speaker 2: it's not just you want, Tom, these are the numbers

1167
01:02:16,240 --> 01:02:19,520
Speaker 2: we want. These are the metrics we want. Things you've

1168
01:02:19,560 --> 01:02:22,280
Speaker 2: never even thought about. Made them feel comfortable, make them

1169
01:02:22,280 --> 01:02:25,400
Speaker 2: feel happy. But it's an expensive exercise.

1170
01:02:25,760 --> 01:02:29,080
Speaker 1: Well, they need to answer to there, to their investors

1171
01:02:29,080 --> 01:02:30,800
Speaker 1: as well. They've got, they got, they've got.

1172
01:02:31,760 --> 01:02:36,080
Speaker 2: They have a like a suite of pro former processes

1173
01:02:36,080 --> 01:02:38,920
Speaker 2: which they give to the investors and applies to every investment.

1174
01:02:39,680 --> 01:02:41,280
Speaker 2: So they're not going to say, I don't worry, Michael,

1175
01:02:41,360 --> 01:02:42,400
Speaker 2: you know you've goum pretty good.

1176
01:02:42,440 --> 01:02:42,800
Speaker 1: We're happy.

1177
01:02:42,880 --> 01:02:44,720
Speaker 2: Just give us a number every six months. What would

1178
01:02:44,800 --> 01:02:47,600
Speaker 2: be happy with? They said, no, No, this is our

1179
01:02:48,040 --> 01:02:51,000
Speaker 2: rhythm and we need this every month because we need

1180
01:02:51,080 --> 01:02:53,800
Speaker 2: this every month for all from for from all our investments,

1181
01:02:54,440 --> 01:02:57,920
Speaker 2: because our investees, our people, invest our fund they want

1182
01:02:57,960 --> 01:02:58,240
Speaker 2: to see it.

1183
01:02:59,560 --> 01:03:01,520
Speaker 1: And you're right, So you have to try and.

1184
01:03:01,600 --> 01:03:06,000
Speaker 2: Avoid that whilst you're in this entrepreneurial phase and some

1185
01:03:06,120 --> 01:03:11,200
Speaker 2: stage you get maybe saturated or sort of saturated. Probably

1186
01:03:11,240 --> 01:03:14,080
Speaker 2: not in Japan and Korea and America, says so big markets.

1187
01:03:14,120 --> 01:03:17,320
Speaker 2: But here you probably get some stage which point maybe

1188
01:03:17,480 --> 01:03:20,280
Speaker 2: that's the time to think about these sort of things.

1189
01:03:20,320 --> 01:03:23,800
Speaker 1: But you know, investments you probably need to leave. Like

1190
01:03:23,880 --> 01:03:26,400
Speaker 1: any any good exit, you need to leave some meat

1191
01:03:26,480 --> 01:03:28,680
Speaker 1: on the bone as well, so to speak, a little

1192
01:03:28,720 --> 01:03:29,720
Speaker 1: bit less and saturated.

1193
01:03:30,000 --> 01:03:33,520
Speaker 2: Yeah, it's side, but I might explain something about it

1194
01:03:33,640 --> 01:03:36,120
Speaker 2: to the audience, because what's interesting about you just said

1195
01:03:36,760 --> 01:03:40,160
Speaker 2: is that when you come to do the valuation at

1196
01:03:40,240 --> 01:03:43,200
Speaker 2: an exit, let's say in Australia, and let's say you

1197
01:03:43,240 --> 01:03:46,800
Speaker 2: know your map says Australia to take five hundred franchises

1198
01:03:47,960 --> 01:03:49,960
Speaker 2: instead of waiting to five hundred franchises yourself.

1199
01:03:50,120 --> 01:03:52,080
Speaker 1: The reason why you might do it at three.

1200
01:03:52,080 --> 01:03:55,360
Speaker 2: Fifty, for argument's sake, is because when they do the

1201
01:03:55,480 --> 01:03:58,760
Speaker 2: valuation of the business, they will do a forward profit.

1202
01:03:59,000 --> 01:04:00,840
Speaker 1: So look at what is the it for next year.

1203
01:04:01,200 --> 01:04:02,880
Speaker 2: The profit net for next year will be based on

1204
01:04:03,320 --> 01:04:06,440
Speaker 2: not only what you're currently doing, but based on growth

1205
01:04:06,480 --> 01:04:10,360
Speaker 2: of new franchisees and growth of customers within the franchisees.

1206
01:04:10,920 --> 01:04:12,480
Speaker 2: So all of a sudden you can give them a

1207
01:04:12,600 --> 01:04:18,280
Speaker 2: much better forward looking number. The multiple will also change.

1208
01:04:18,480 --> 01:04:21,320
Speaker 2: So you take that profit and then you multiply that

1209
01:04:21,440 --> 01:04:26,280
Speaker 2: by multiple modiple, and that multiple if you are saturated,

1210
01:04:27,160 --> 01:04:30,080
Speaker 2: then that multiple might be five or six times. But

1211
01:04:30,160 --> 01:04:32,720
Speaker 2: if you've got lots of growth potential based on the

1212
01:04:32,960 --> 01:04:35,240
Speaker 2: number of extra franchises you put in, that multiple can

1213
01:04:35,280 --> 01:04:37,800
Speaker 2: go from five times to fifteen.

1214
01:04:37,480 --> 01:04:40,560
Speaker 1: Times twenty five enfranchising there and it can.

1215
01:04:40,560 --> 01:04:44,880
Speaker 2: Be such a much, much bigger increase in valuation. You

1216
01:04:45,000 --> 01:04:47,960
Speaker 2: may never get there, but that's sort of one of

1217
01:04:48,040 --> 01:04:50,640
Speaker 2: the reasons why that's an important point you make, which

1218
01:04:50,680 --> 01:04:52,200
Speaker 2: is why I wanted to explain a little bit more.

1219
01:04:52,120 --> 01:04:52,680
Speaker 1: To the audience.

1220
01:04:53,880 --> 01:04:59,640
Speaker 2: Franchising recurring income upfront new upfronts, they will have multiples

1221
01:04:59,640 --> 01:05:02,160
Speaker 2: apply to them and you leave a little bit more

1222
01:05:02,200 --> 01:05:05,640
Speaker 2: in the tank, and generally speaking you get away with

1223
01:05:05,720 --> 01:05:07,560
Speaker 2: a bit more, depending on the marketplace at the time,

1224
01:05:07,640 --> 01:05:08,880
Speaker 2: depending on the economy, et cetera.

1225
01:05:08,920 --> 01:05:10,280
Speaker 1: But good point.

1226
01:05:11,120 --> 01:05:14,880
Speaker 2: We shouldn't the pea companies, by the way, it's stupid

1227
01:05:15,720 --> 01:05:17,960
Speaker 2: they get all this stuff, but you know, it depends

1228
01:05:18,000 --> 01:05:19,880
Speaker 2: on how desperate they would to invest their money.

1229
01:05:20,760 --> 01:05:23,000
Speaker 1: It's a very different It's not twenty twenty one anymore,

1230
01:05:23,120 --> 01:05:26,560
Speaker 1: is it either, Like where money's cheap, well now, but

1231
01:05:26,920 --> 01:05:28,400
Speaker 1: look mate, it'll come back.

1232
01:05:28,800 --> 01:05:32,320
Speaker 2: It always does, because what will happen is you know,

1233
01:05:32,400 --> 01:05:34,880
Speaker 2: inst rats will start going down. Investors won't be getting

1234
01:05:34,920 --> 01:05:37,160
Speaker 2: six percent in the bank anymore. The beginning three percent.

1235
01:05:38,320 --> 01:05:40,880
Speaker 2: Investors going to say shame shit, like we better start

1236
01:05:40,920 --> 01:05:42,720
Speaker 2: putting some money back with the pe firms. The p

1237
01:05:42,960 --> 01:05:44,680
Speaker 2: firms get a whole you know, get a whole raise

1238
01:05:44,680 --> 01:05:45,080
Speaker 2: a whole.

1239
01:05:44,920 --> 01:05:45,320
Speaker 1: Lot of money.

1240
01:05:45,720 --> 01:05:47,240
Speaker 2: They can't leave the money sitting there in the bankers

1241
01:05:47,240 --> 01:05:48,600
Speaker 2: they're only getting three percent too. They've got it is

1242
01:05:48,640 --> 01:05:50,160
Speaker 2: going to say, we're going to find someone invest in.

1243
01:05:50,800 --> 01:05:52,800
Speaker 2: They go along to mature business like yours with a

1244
01:05:52,880 --> 01:05:57,800
Speaker 2: lot of upside, and they say, mate, you know we've

1245
01:05:57,840 --> 01:06:00,560
Speaker 2: been talking you for two years, but we've always been

1246
01:06:00,600 --> 01:06:02,360
Speaker 2: talking about them multiple of six but but now talking

1247
01:06:02,360 --> 01:06:06,880
Speaker 2: at fifteen, like are you interested? And you start quivering.

1248
01:06:08,200 --> 01:06:10,400
Speaker 2: But and that's a great thing to have to look

1249
01:06:10,480 --> 01:06:12,880
Speaker 2: forward to, because you know, judgments need to be made

1250
01:06:12,920 --> 01:06:15,440
Speaker 2: at the time, and you knows little things like you know,

1251
01:06:15,600 --> 01:06:18,160
Speaker 2: will they rule my brand, and will they affect my

1252
01:06:18,240 --> 01:06:20,800
Speaker 2: franchisees and will they ultimately affect my customers? All those

1253
01:06:20,840 --> 01:06:22,520
Speaker 2: sort of questions you'll go through. That's going to be

1254
01:06:22,600 --> 01:06:23,640
Speaker 2: fun that I love.

1255
01:06:23,600 --> 01:06:27,480
Speaker 1: This running a process. Yeah, it's yeah, yeah, And.

1256
01:06:27,520 --> 01:06:30,320
Speaker 2: You'll have to run through your own mind, but look,

1257
01:06:30,360 --> 01:06:31,120
Speaker 2: good luck to you made it.

1258
01:06:31,240 --> 01:06:32,120
Speaker 1: You're doing a great job.

1259
01:06:33,040 --> 01:06:38,360
Speaker 2: You're doing it a very very staged and very rational

1260
01:06:38,880 --> 01:06:39,920
Speaker 2: about the whole process.

1261
01:06:40,600 --> 01:06:41,360
Speaker 1: I love your product.

1262
01:06:41,840 --> 01:06:43,520
Speaker 2: I'm definitely when I got to Barron next going to

1263
01:06:43,560 --> 01:06:45,320
Speaker 2: go down to the one Barn and have a look

1264
01:06:45,360 --> 01:06:48,320
Speaker 2: at mind him, do a session. I know Jonathan who's

1265
01:06:48,480 --> 01:06:50,360
Speaker 2: join the piece, who's my business partner up there.

1266
01:06:50,720 --> 01:06:52,240
Speaker 1: He loves it and.

1267
01:06:53,760 --> 01:06:56,080
Speaker 2: As an Aussie business, Aussie brand, good luck you ma,

1268
01:06:56,120 --> 01:06:58,560
Speaker 2: it's great to see we're exporting against Americans.

1269
01:06:59,080 --> 01:07:02,360
Speaker 1: It's nice to represent Australia in the US. It's it's

1270
01:07:02,480 --> 01:07:04,919
Speaker 1: really it's pretty cool going over as your brand.

1271
01:07:05,040 --> 01:07:07,840
Speaker 2: I love it totally, totally. Normally it is coming the

1272
01:07:07,880 --> 01:07:10,040
Speaker 2: other way now it's going back that way.

1273
01:07:10,400 --> 01:07:12,320
Speaker 1: Good luck to you, Thanks mate, I appreciate it.

1274
01:07:15,400 --> 01:07:15,440
Speaker 2: H