Franchise QB

Episode 76: Scott Breimhorst, VP of Franchise Development- Discover Strength

• Mike Halpern • Season 1 • Episode 76

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In this episode of the Franchise QB podcast hosted Mike Halpern, Scott Breimhorst, VP of Franchise Development at Discover Strength, shares insights into the unique business model of Discover Strength, a personal training franchise that focuses on delivering efficient and effective strength training workouts.

He discusses the company's growth strategy, the support provided to franchise owners, and the attributes of ideal candidates for franchise ownership. Scott also highlights the importance of professional training staff and the financial performance metrics of the franchise, emphasizing the company's commitment to impacting lives through evidence-based exercise.

Takeaways

-Discover Strength offers world-class workouts in just 30 minutes, twice a week.
-The franchise model focuses on hiring professionals with degrees in exercise science.
-Owner involvement is crucial, but many owners maintain full-time jobs.
-The company has a dual growth strategy with both corporate and franchise locations.
-Franchise support includes dedicated project managers and business coaches.
-Core values guide the selection of franchise owners.
-Financial capacity is essential for potential franchisees.
-The average annual unit volume (AUV) is around a million dollars.
-Locations are designed to maximize revenue per square foot.

Chapters

00:00 Introduction to Franchise Ownership
03:07 Discovering Discover Strength
05:59 The Unique Business Model of Discover Strength
08:54 Franchisee Support and Growth Strategy
11:47 The Role of Leadership in Franchising
15:06 Ideal Franchise Owner Attributes
17:54 Financial Considerations and Performance Metrics
20:46 Future Growth and Expansion Opportunities

https://discoverstrengthfranchise.com/

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Mike Halpern, CAFC
mike@franchiseqb.com

This is the Franchise QB Podcast, where we empower entrepreneurs to win big in franchising. We huddle up weekly to educate our audience about the most successful small business model ever created. Franchise it! Welcome to the Franchise QB podcast. I'm your host, Mike Halpern, a 20 year industry veteran and entrepreneur. My mission is for listeners to achieve their American dreams of creating wealth and independence through franchise ownership. Every week we speak with franchisees, franchisors or vendors that support the industry. Thank you for joining us and let's get started. Joining us in the huddle today is Scott Breimhorst, VP of Franchise Development with Discover Strength. Welcome to the show, Scott. Hey, thanks. Appreciate the opportunity, Yeah, it's great to have you here. So Discover Strength, I discovered your concept in quite an unusual way. One of my best friends from my childhood named Rick, he splits his time between Manhattan. He's lived there for 20 years and recently kind of post-COVID in South Florida. His nephew Ari is a personal trainer at one of your corporate shops in Minnesota. Ari is a huge fan of the concept, loves working there, loves the culture, thinks it's a really interesting model. So he told his Uncle Rick, hey, you know, let's look into this as potentially kind of investing. So Discover Strength quickly jumped on my radar after that kind of interaction. So Scott, you're an athlete. You play in an adult baseball league. I know you're really passionate about the sport. Tell us a little bit about your background and how you discovered Discover Strength. Yeah, so the baseball passion goes way back for me. But the running part of baseball was like go 90 feet, call time out, catch your breath. And then about 12 years ago, I decided, there's a whole story with that, but I decided I wanted to be a runner. Okay. You know, played a little bit of college baseball. I'm an athlete. I should be a runner. All the people around me are running marathons and I couldn't run a mile. I just snapped. one of those stories where they sign up for a marathon like that night, six months later, and then I started getting hurt. Shin splints and just all kinds of stuff and through a Discover Strength client who started working with me on that, I was introduced to Discover Strength where I became a client for about, it's over a decade now. And at that time I was working in Catholic education of all things. mainly leadership, fund developments, major gifts, fundraising, things like that. Enrollment management and Discover Strength decided to start franchising. Had gotten a start, COVID hit. We came out of COVID, they wanted to get rolling, so they hired for my seat and decided that I could be a good fit for what we're trying to do. Interestingly enough, like working with donors and working with franchise candidates is the exact same kind of relationship building arc. And so it was a really good fit. So I've been here for exactly three years and have been a big part of, think, our latest growth and development. And just a quick note, I want to clarify, Ari is a trainer, exercise physiologist at our first franchise location. wow. Okay. So it's not a corporate store. is a franchise. Franchisee number one. that's really cool. That's awesome. Well, thanks for that clarification. Yeah, you That's really, that's neat that you, you know, started as a member and then that evolved into a full-time, you know, occupation with helping grow the brand through franchise development. So I appreciate the context there. So for those that are listening that are unfamiliar with the Discover Strength concept, tell us a little bit about the brand. Well, so you know how you are a super busy professional and you just have zero time to waste on anything that doesn't work, especially like exercise. Right. Okay. So we've solved that. We deliver world-class, literally world-class workouts twice a week for 30 minutes. And we have a brand promise of really helping our clients look and feel their best in a fraction of the time. So it's purely strength training, which as you know, in fitness in general right now, nothing is hotter than strength training. Right. We've just been fortunate enough to be doing it for 19 years. And the way we do it, we hire people like Ari. Ari has a degree in exercise science or kinesiology. Ari wants to make this a career, so we hire professionals to do an absolutely professional job. It's very different than kind of where you can just get a weekend certification to do the workouts. Here you need a four-year degree in exercise science and then a lot of onboarding and development through our company. kind of think of it like a professional services model, know, like a financial institution looking for the hot new finance grad coming out of college and they want to mold them in their system. We're looking for Ari and we want Ari to have a really, really well-paying career that he could do for the rest of his life. Inside of all that really is, that's where the strike training comes in. And it's almost like trying to tell somebody what chocolate tastes like. You have to come and do a workout before you really understand it. It's super intense, but very, very safe. And we attract a great type of client because of that. And it's exclusively one-on-one personal training for the most part? Yeah, we do have a two or three person group option that will generally be maybe 12 to 15% of the volume in any one studio. But almost every single client we have trains one-on-one. Correct. Okay. Very cool. Yeah, that's really unique. mean, And I like the idea of like taking that white collar person and they have a path. They have a plan because they just want to know, like, if you show up or you're to make good use of that time. And it sounds like that problem has been solved. You've got to show up and do the work, obviously. So let's talk about at the unit level, like how, how often do members come in and visit the location for a personal training session? Is it once a week? Is it twice a week? Is it more frequently than that? It's twice a week and we don't want them any more than that. Again, if you experience the workout, you know how important the recovery from something like that really is. the sort of diminishing health benefits that happen when you just over train and strength training. So the resistance exercise workout that we do takes you to muscle failure in basically all the muscle groups in 30 minutes. is working with the best strength training machines that are available. the highest end stuff. feels almost clinical when you walk in. Surgically clean floor, low music, just beautiful. And so our clients train generally twice a week with adequate rest and they're getting what is the best thing they can get for their health. Okay, very cool. So for an owner, how many personal trainers like Ari would you need when you launch your Discover Strength business? Yeah, another unique aspect is you don't have to staff up with a huge team right off the bat because it's all appointment based. And so you generally start with one general manager and you start scaling from there. Our Lantana, Texas location that is just a couple months old is in that growth phase right now, furiously trying to hire their first EP because their general manager schedule is just now packed. And then ultimately, the GM will train less clients. and lead and manage more and there'll be more ARIs. So in Ari's location in Wayzata, I believe they have eight full-time exercise physiologists and a general manager on that staff. Okay. And that's a mature unit. When did that franchise launch? It is four years old. Okay. Very cool. So can this model be semi-absentee or is it best for the owner to be the owner operator in the unit from day one? Great question. So we try to avoid the term absentee. I think a lot of folks are just saying that, know, franchise companies that are telling you, you just don't have to work it. can plant a money tree seed and it grows up. You should just hang up the phone on any of those people. never tell you that. But for all but, I think two of our owners in our entire system, they've all kept their full-time job. And most of them are doing high level professional work. So franchisee number one, is a big time mergers and acquisitions guy for Deloitte to this day. His wife midway through their kind of time as owners, she was a big time marketing person for Digital River and now she doesn't have to anymore and they own a second location. So it's attention to the business and capacity to do what the business needs when it needs it. It's kind of how we frame it. If you brought me a candidate, Mike, one of the slides that they're gonna go through right off the bat has 12 attributes of an amazing, of the best DS owners. And one of them is capacity or no full-time job, one of the two. And we just wanna be very clear that yes, it's technically absentee, and no, you don't have to be on the floor training clients. Like, you know, maybe some food concepts are where you just have to quit your job and get behind the counter and work. But you have to be there to lead, manage, run the meetings. manage the KPIs, pay attention to the balances, all those things. Yeah, it sounds like kind of that sweet spot between an owner operator and a semi absentee. I know you don't like that word. He's like an executive owner. Someone that still has that high six figure white collar office job, but they have the bandwidth to oversee the construction project. They have the bandwidth to kind of hire their initial team to liaise with corporate to make important decisions with the GM about you know, know, marketing, you know, all those kinds of things. So they have the time and they're local, but they don't have to be in the business. You nailed it. You nailed it. Very cool. yeah. I was just going to say color and just the capacity, the time, the scheduling, it's a lot easier when you're doing something that you're very passionate about. So we never want to like gloss over the what we're doing is very important. we're impacting lives here with the best exercise modality that exists. And the science will tell you that. I'm not just being bluster here. And so those owners find their capacity, I think, stretches a little bit more because when you're doing this work as long as we have, it's very likely we've saved a lot of people's lives. We're impacting longevity. And it is about money and a business. And those are really, really important factors, of course. But at end of the day, That big time mergers and acquisitions guy for Deloitte makes time for his business because he's changing lives. Yeah, that's awesome. I appreciate that. So one thing I found interesting when we were talking a couple of weeks back is that not only is Discover Strength offering franchises, but it continues to grow its corporate footprint. I know you're opening one not too far from me in DC. So tell us about that kind of dual prong growth strategy. So when we started 19 years ago, they were only corporate stores. We grew to six of those. We sold one of them to a franchisee. We opened another one in Scottsdale, River North. We're opening in Des Moines and D.C. So for most of those, they're in markets that we really wanted to have a beachhead, basically. So Chicago River North is a huge development for us. There's just a lot of opportunity around it. Whereas Scottsdale is largely sold out. And we have that corporate store there, which is great because then those new locations can send their exercise physiologist in for reps, for training, to learn from some of the best. One of our very best exercise physiologists, as far as closing clients, new clients, is there so they can learn from him and watch the way he does his work. But it isn't our goal to have a 50-50 ratio. We'll continue to do a corporate store here and there. when we wanna hub and spoke in a little bit and then grow the main lane with franchisees. Okay, yeah. So let's focus on franchising. Somebody looks at your model, they really think it's perfect for them, they're excited about the uniqueness, they like the economics. What can a new franchise owner expect from home office and way of support? Right. Yeah, I had a conversation with a consultant the other day and he asked, what is your team? And I named them all off and as I continued to name names and titles and roles, he was like, time out, how many locations do you have? And so we have 16 open franchise locations. And he's like, you have 12 people in the home office. Okay. So we've staffed up ahead of the support that we're going to need. And so after my process with the candidate is over, they get handed to Jake, who's our project manager and who's dedicated to working with them on the steps all the way through to the actual. construction and opening, kind of in the mix there. Bruno jumps in, he's our franchise business coach. Bruno has, for the rest of their time as franchisees, weekly or biweekly calls and kind of connections on that. Internally, our whole leadership team has some kind of role to play in the life of the franchisee. Our founder, Luke Carlson, is still very active and the CEO of our company. We have a VP of Finance. VP of marketing and sales, VP of operations, and then myself on the FranDev side. So we have a great team there who really obsesses over only two things. Like our ego is really only in two things. It's the workout and franchisee profitability, period. Anything outside of that is just like, it's great and important, but those are the two biggest things for us. Yeah, no, it's great to have a very clear vision and those are two great things to care about. You mentioned the founder. Is there anything interesting about how he came to kind of create the concept? Yeah, well, interesting. I've been following him on the Boston Marathon course all morning. If he can keep the pace he's on right now, he's going to break three hours. wow, that's awesome. Good luck. Yeah, if I peek over here, I need to see how he finished. Luke grew up in a town about 10 miles away from where I grew up in kind of south of the metro of the Twin Cities of Minnesota. Okay. And when he was in high school, He loved strength training. He took a class where you might have seen these before with kids where they can like go be an intern for somebody in some industry and that's their half of their day, right? And then they go back to school. So he wrote a letter to the Minnesota Vikings strength and conditioning coach and thought there's no chance the Vikings are going to allow me to come and train professional athletes. And they did. Whenever he wrote in that letter, was compelling enough that He began training professional athletes in high I love to hear that. It's so cool that he just took a shot, you know? Yep, he did. And so that set him on a course towards a career in something to do with muscle. So he hit a spot when he went to college at the University of Minnesota where he was going to decide, okay, do I want to try to be an NFL strength coach or should I get on a professorial track and like teach kinesiology in college? Those were his two like thoughts. And someone in his life, talked to him about the potential to open a business. They said, you just have a business gene in you. You should really think about that. so long story short, he had all the right mentors talking to him about how you would even do this. He graduates college, continues training athletes, and then he opens his first Discover Strength in 2006. In a couple of years, they grew to three locations. And then over another 12 years, we get to today where we're at. So that's Luke's story and he still trains a shift every week at least. He's taking clients. He is obsessed with his own workouts, which is really, really cool. Obviously, if you own a strength training company, it probably should be that, but watching him work out is actually just interesting 30 minutes of your life. It's precise. And the franchisee question of this whole development came to Luke when he read a book about franchising. Luke's got... probably 18 books going in at any given moment. The most well-read human I know, and I'm an English major. And Luke realized that we had all the markers of what a franchise system could have. A repeatable system, like the structure was there, learning management systems, kind of all those things. But the question was, why would we franchise? Because he has no desire to sell this company, to scale it up. But our core purpose is to lead the movement in evidence-based exercise. And that's why we're here. And you can't do that with six corporate locations in the Twin Cities. And the best way to get to that kind of point of that movement is franchising. And so here we are. And we just signed our 51st and 52nd locations last week. Congratulations. Thank you. Yeah, it's been a pretty good. Pretty good. I mean, getting to 50 units in development is really big for an emerging brand. So, and I love his story. Thanks for sharing that with us. It's really cool that you have a leader at the company that's just like, you know, everything about the business seems like his personality, his, you know, work ethic, his dedication to health and wellness. It just sounds like it's all a good confluence of things happening at the top. Absolutely. Very cool. So, You know, obviously like anyone that's looking to get into franchising, they're going to be looking for that kind of leadership. What are you looking for in a franchise owner? I know you touched on a couple of the attributes, but who's an ideal candidate to become a Discover Strength franchise owner? Well, the first is you've got to be a fit for our core values of learning, servant leadership, creating our own future and being science-based. We start with that with every candidate. It's like the third slide in the deck. ask them to just reflect back on me how those core values speak to them. And sometimes they don't. And it's pretty clear. And like I've had concept overviews that last 10 minutes because it's just not gonna work. So the core values guide all of our decisions, behaviors, actions. Capacity we already talked about and financial capacity as well. So we will never err on the side of awarding a franchise to a candidate who isn't well capitalized. We just don't want any closures and failures in our system. that's important. Yeah. It's a big one. I put this lens on. So next week I'm to be in Dallas, Texas at our franchise convention with all of our owners there for our summit. And it's going to be like a reunion. You know, they're all texting me already carve out time for a beer because we need to hang. And even the ones that are struggling a little bit are, are just, you know, they're so like, positive about the work that we're doing and all of those things. So I tell people, I'm going to show you a picture of our franchise convention to answer your question. Nobody gets in that picture who doesn't belong in it. Or if you do, you have the right to come and punch me at the convention. So we're the filter somehow. So we're looking for great human beings. Again, the core values are there. The core purpose speaks to them. And then you got to want to do strength training. That makes sense. You got to be passionate about the workout, your workout. That's why a lot of our clients have become owners. You know, they just see the value in this for their own lives and they want to share that with other people. You've got to be like obsessed with customer service. I'm wearing a tie today. No offense. I didn't get dressed up for you. This is just how we look. Our exercise physiologists show up in a tie every day. That's just not what people expect, right? You expect them to be in kind of like athletic leisure wear and the fact they show up looking professional as a differentiator. Totally, totally. And part of it is that professional kind of feel and fit and finish to a location. And part of it is our core value of servant leadership. I mean, when you come in for a workout someday, Mike, your EP is going to walk up and shake your hand like a professional. They're going to look like a pro. They're going to know all about you. and we got ready for you. It's basically what I'm trying to say. This is for our clients. And they just really appreciate that. people who, back to your original question, people who can see the value in those things and really want to embrace all of that would probably make a good owner. Yeah, I love it. Appreciate that. So you mentioned capitalization. Obviously small businesses, one of the biggest threats to their success is running out of capital. starting to make bad decisions when you get kind of desperate. Let's talk about the item seven. How much will it cost to get into a Discover Strength? I know that that's gonna vary, so you have a range, but give us a ballpark of what it takes to get into kind of a single location. Sure. You know, if I just kind of use an average, you're in that 600-ish range, but the item seven very specifically has a huge build out variance, and it gets noticed every time somebody looks at it. It's specifically because we had two build outs, River North Chicago and our DC build out where the bids were just super high. And you're from there, so you're like, yeah, everything's expensive here. Yeah. And we had some other mechanical things we had to move around and things like that. Typically it's not going to be that high. Also, our tenant improvement allowance is not in this FDD, but there will be a figure for that in our next FDD so you can calculate just more accurately. two biggest items inside that item are the build out. And then the equipment itself is high-end medical grade strength training equipment. The reason we do that is Ari deserves the right to work with the best tools. We want him to be master of the craft in Wayzata where he trains clients. And you can't give him junk to work on and call it medical grade training. That would be a lie. So the equipment itself is expensive, but it's probably going to last forever, which is great. Yeah, no, that's good. It's like build it. put in the effort to build it, like do it right with the right finishings and the right equipment, that all makes sense. And also that higher barrier to entry kind of separates you from people trying to get in the space that just aren't doing it right. So let's talk a little bit about performance. Any item 19 financial performance data that you're willing to share with us? Yep, in the current FDD that we're in renewal, so that'll change here very, very soon, but current FDD has an average AUV of a million dollars at the locations that are listed there. Our item 19, well first of all, this isn't a really difficult pro forma to build. We only sell personal training. So when you know that an average session revenue is somewhere in the neighborhood of 50 bucks, it's more than that for one-on-one, but you do have some group options that kind of bring it down. And you look at a million dollar location, it doesn't take long to figure out how many sessions you need to actually train. the week to be on track for whatever your goals really are as an owner. So we give you the actual top line revenue for applications that have been open for more than a year. We're providing the rent amounts in there, trainer labor percentage, and then a couple of other factors that can help your clients or the candidates who are looking for a Discover Strain to calculate that out well. I think my favorite part of The item 19 is a factor that you'll appreciate, but it's revenue per square foot. These locations aren't very big. We have a 1600 foot location that did $1.3 million in that last FDD. Wow. That's a lot of revenue per square foot. We try not to waste money on things that don't make money. So you're not going to find showers. You don't need them. Huge changing rooms or big meeting spaces, community spaces. We don't have any of that. We put our, like really all of our focus on that training floor. Yeah. And it also maximizes throughput. People come in, they do what they need to do and then they leave. So this has been great, Scott. I really appreciate all the information you've shared with us. Seems like a super exciting concept. Anything else you want to add to the mix today before we wrap up? You know, we're excited to grow. That 50 location number is exciting, but it also means there's a lot of white open space out there in great territories. Where we would put a Discover Strength, I think, is also an important question. We're looking for some of the best real estate out there and the best areas for those to land. We use a system called PinPoint, which is a consumer intelligence system that tells us where our client profiles live in markets. Where you live, we need multiple Discover Strengths right there. And so when your candidates or when people come to us and say, I'd like to maybe think about this. go right to the map and we look at the data and we tell them, it's just not going to be a great fit for where you're at because of these reasons. And then, or it is, and then we have data to back that up. So I know that our current owners absolutely love that, especially as they're growing into their second and third and fourth locations. The Chanhassen, Minnesota owner who also owns Shakopee, Minnesota just signed for two in Naples, Florida. And he, it's a daily report. pulling for him to just pinpoint exactly where that next location ought to go. So we're excited to really be having these tools to help our franchisee succeed. Yeah, that's great. Well, I'm looking forward to the DC location opening. That will be the closest one to me. So that's real exciting. So keep me posted on that. I wish you a ton of luck with your upcoming baseball season. I hope you guys have a great one. And if anyone listening would like to connect with Scott to learn more about becoming a franchise owner with Discover Strength, contact me at franchiseQB.com or on x at QB Franchise QB, I'll get you connected. Thank you, Scott, so much for taking the time to get in the huddle to discuss Discover Strength with us today. Absolutely my pleasure. Thanks, Mike. You got it. Thank you for listening to the Franchise QB podcast where you're at the helm of your future as a franchise owner. If you enjoyed the content, please rate the show and recommend it to anyone that might be interested in franchising. Make sure to visit franchiseQB.com to subscribe to my newsletter and for an actionable playbook to go from walk-on to legend in your new business. Follow us on Twitter @QBFranchiseQB and join us every week for a new episode. See you next time. Thank you for listening.