Luke Guanlao, Anytime Fitness multi-site owner, lawyer and all-round trailblazer, recently purchased multiple gyms across eight countries in collaboration with business partners and investors.
Guanlao spoke to Inside Franchise Business Executive about the challenges of taking-over a multi-national business in a pandemic and shared some tips for international start-ups.
The recent eight-country deal includes the Anytime Fitness master license for Singapore, Malaysia, Philippines, Indonesia, Thailand, Taiwan, Vietnam, Hong Kong and Macau.
For the 2019 financial year, Anytime Fitness Asia’s system wide revenue across the eight regions it operates in was about $437m.
Guanlao is Inspire Brands Asia Group CEO and Anytime Fitness Asia COO.
“Is a pandemic the best time to take over a multimillion dollar business? Probably not. But I’ve been in business as a sub master franchisee in Asia for five years and I was emotionally committed. I want to guide and coach franchisees on my one experience, I really want to just help. What better time?” he says.
As the master franchisee for Anytime Fitness Asia, Guanlao is now responsible for directing how more than 250 gyms will operate post-Covid-19.
The majority of markets are already reopen except the Philippines, and while Hong Kong consumers are facing a second wave of lockdown gym usage is very high, Guanlao reports.
Multi-nationally, pre-and post-opening procedures are fairly prescriptive internally and government mandated and both franchisees and consumers are keen to get back to a new normal, he says.
“Franchisees need the right tools and guidance to manage operational expenditure but it’s critical to open the doors in the first place. There are varying level of acumen among the franchisees so getting tools to them was critical. Some were sailing close to the wind and we’re not out of it yet.”
Last week a Fitness Australia survey sounded the alarm about the number of gyms and personal trainers in Australia dependent on JobKeeper for short-term survival.
Guanlao says surviving now has a lot to do with business structure.
“It really depends on the capital structure of the business, how it is funded, and how quickly and frequently it is paying dividends.”
It’s good news if you’re cautious, and had a cash reserve leading into the pandemic, he suggests. It’s a much more difficult situation if the business is profitable but dividends are paid monthly, he says.
“You need to have conversations with your bank, landlord, any supplier with a fixed term contract.
“If I’m forced to hibernate, what am I going to do? Pick up last month’s P&L, last month’s operational loans, and look for 100 per cent relief or deferment. Landlords have to come to the table.”
5 steps to setting up an overseas business in multiple countries
Understanding cultures is key, says Guanlao.
- The political and regulatory landscape is really important to understand – tax, the inflow outflow of money, labour laws – so engaging external legal counsel is essential because an overarching issue may shut business down almost before it’s begun.
- Ensure there is a national appetite for franchising. If entering Myanmar for example, it is slowly getting to the first stage of being politically and regulatory ready. But no-one is ready for franchising. The Philippines and Malaysia love franchising, the latter even has a code of conduct.
- If you are operating as a new business, you need to know how many units it takes to break even, that number is really important, how many head count of staff to support level of growth and clubs. It’s a shoestring operation, go in with a strong accountant, and front office, and someone with a track record in supporting franchisees. You need the right people – local and expat – particularly if English is not the country’s first or second language.
- Geographic diversification is important in a pandemic, but in the same asset class so there’s an element of comfort.
- On the emotional side you need grit and tenacity. It helps to have a nexus, a connection with the region.
The business is already preparing to open its first gym in Vietnam.
“We can work from our existing structure – legal, marketing, shared services, a quasi decentralised model – to deploy staff from established areas,” says Guanlao.
Within the next three to four years in Asia, Guanlao plans to expand to more than 500 clubs open across the region, including Indonesia.
