Fernwood Women’s Health Clubs is currently in its 16th year in the health and fitness industry, after being established as a single club in Bendigo, Victoria in 1989. With the first franchise opening in 1994, there are now 65 franchisees across Australia with a further 23 clubs due to open by June 2006.
Today, with national reach, Fernwood is the largest organisation of its kind in Australia, with more than 80,000 members, 2275 employees, an annual turnover in excess of $75 million, and according to a study conducted by Sweeney Research in 2004, 89 percent unprompted brand name recall.
As a result, founder and executive chairman, Diana Williams, was recently nominated for the 2005 Telstra Business Women’s Award and the Ernst & Young Entrepreneur of the Year Award, while Fernwood is a finalist in the Franchise Council of Australia’s Franchisor of the Year Award.
Williams was also inducted into the Australian Women’s Hall of Fame in 1999, then went on to publish her first book in 2000, titled The Women’s Club. In 2001 she was honoured by the Department of Industry, Science and Resources for her contribution to Australian business and commerce.
For the very few that would be unfamiliar with the concept, Fernwood Women’s Health Clubs is a chain of health clubs designed specifically for women, offering a wide range of programs, services and fitness options for everyone, regardless of their age or level of fitness. Focusing on the core philosophy of ‘empowering women to shine’, Fernwood takes a holistic and wellness approach and believes that a woman’s wellbeing is about more than just fitness.
According to Williams, women can enjoy physical activity, learn about the importance of good nutrition and embark on weight management support through the organisation’s ‘Slimplicity’ program, while improving their self-confidence, health and wellbeing, in a sociable, comfortable and supportive environment. Indeed, Williams herself attends the club on a regular basis, firmly believing that staying fit and healthy is paramount for every busy person to maintain the energy needed to perform well and lead a balanced life.
Williams’ long-term vision is to build Fernwood into an international brand recognised and respected around the world, and in 2006-07 the franchise will expand into the West Australian, New Zealand and South African markets. A float on the stock exchange is also a real possibility, while come December 2008 Williams is adamant there will be 150 profitable Fernwood Women’s Health Clubs in Australia.
Her recent switch from managing director to what she now describes as an “advisory role” within the organisation has freed her to more proactively explore strategic growth issues such as offshore expansion. No longer burdened with having to put out fires, she still plays a role in decisions made at an operational level, even though she no longer actually manages those operations.
Much of her time these days is spent speaking at various forums, sharing her success story with other women, which she hopes may inspire them to realise their potential. Needless to say, with overseas expansion imminent, she is also away a lot.
“Things are ticking along quite nicely in both South Africa and New Zealand for our opening, and Western Australia is coming together as well. Once all that is bedded down we will move on to other areas, but we chose South Africa and New Zealand as our first overseas destinations because they are culturally similar. There is basically the same Westminster system, the laws are the same, they drive on the same side of the road and speak the same language,” Williams says.
This is not to suggest that the system will not be tweaked to fully accommodate the individual nuances of the respective markets, but as Williams points out: “We have learned from mistakes we made in Australia, and with regard to another country we will probably also make mistakes, but they will be fewer than if we go to a country we don’t understand.”
The export strategy will in many ways be similar to that used successfully in the domestic market – with the exception that instead of moving from Bendigo to another regional centre in Ballarat, the program will be geared around major cities.
“Most probably we will go to Johannesburg first, cluster in Johannesburg, and then set up another cluster in either Cape Town or Durban. It will be a similar approach to that which we adopted in Australia, where subsequent to regional Victoria we clustered in Melbourne, then Brisbane, and finally Sydney,” Williams notes.
Despite the competitiveness of the environments, she also sees the UK and US as likely targets for expansion.
“Rents are high,” she acknowledges, “but we have a unique concept. Not in being women only – anyone can do that – but in the way we do what we do.”
Rents, of course, are also high in parts of Australia, and Williams identifies this as one of the most significant challenges confronting the franchising sector.
“It will, I’m sure, sort itself out in time. Like the stockmarket, the property market is cyclical. Certainly at the moment, however, there are many businesses that are not sustainable simply because of the rents they have to pay. In the case of Fernwood, we need very large amounts of space, so finding a property with a reasonable rental, particularly in New South Wales, can be quite difficult. Still, I firmly believe that in the future this will settle down.”
Regardless of what some describe as the rental crisis facing franchising, Williams is in no doubt that the benefits inherent in franchising as a business model vastly outweigh the current issue of leasing overheads which, after all, impacts all retailers.
“If I could do anything, it would be to make more people aware of the benefits of franchising,” she says. “You see so many people go out and open a business, which is not a franchise, and then they shut their doors about 12 months later. In so many ways, franchising is like a safety net – and you wouldn’t learn to walk a tightrope without a safety net, would you? And yet there are people opening businesses doing just that – they may be passionate about what they’re doing, but they are not businesspeople.
“More people would get a lot more return on their toil and investment if they went into a franchise instead of trying to open a totally new business. I have seen many franchisees that would not do well if there was not a franchisor there to guide them. As such, more people could be saved from the angst of their business failing if only they realised the benefits of franchising.”
Importantly, entering a franchise agreement – at least one with Fernwood – is not tantamount to surrendering the entrepreneurship that so characterises many successful small businesses, she emphasises.
“The most successful criteria to becoming a successful franchisor is being a good communicator and having a healthy and genuine respect for the franchisees who are investing money in your business. Unfortunately, I think franchisors in some systems do not have that level of respect. Franchisees rely on you to provide them with a quality system and at the same time, of course, they have certain entrepreneurial skills themselves. At Fernwood we are very strong on compliance, but at the same time we actively look for people who are passionate about what they’re doing and who are willing to come up with new ideas and bring them to the group. That is the number-one criteria, as well as excitement and business acumen. And when you find someone with business acumen, excitement and passion, entrepreneurship invariably emerges anyway. We don’t want people reinventing the wheel, but we certainly want people to keep polishing it.”
So, how does a health club with members in wildly disparate locations assimilate feedback from the frontline and somehow integrate this into the ongoing makeup of the overall system? Williams explains:
“As is the case in most systems, our FAC delegates are elected by franchisees and they then meet with the board. We have two-day board meetings, which although sounding a bit much, is actually very energising. There is clear criteria to becoming a FAC member in that we will only allow people who are successful. We retain a veto over anyone we feel does not deserve to be at that level.
“If a franchisee wants to introduce anything new, that is the process they must go through. A business proposal might be requested, which will again be put to the FAC, and then whatever else is required will be developed in our back office or alternatively it might go back to the club which will run with it for a while and then come back with trial results. We will then decide whether to approve it or not.”
Williams herself says that when confronted with having to make an important decision, she has always made it in the context of its direct and bottom line affect on a Fernwood member.
“I think if you always do that – empower the end customer – you will be on track most of the time,” she says.
And so it is that Fernwood sports and fitness franchise has embraced the concept of multi-club ownership, with a current maximum of four owned by one franchisee. The jury is still out, however, on the issue of investor ownership.
“Quite a few of our franchisees our multi-club owners, but once again there is a strict criteria to be met before they are allowed to acquire a second club. Obviously running one business is very different to running two businesses, but I would rather have an excellent franchisee who is already in our system running two businesses than someone outside Fernwood – better the devil you know than the one you don’t,” Williams says.
“That is why I am not 100 percent convinced as far as investor owners go. Fernwood is attractive to an investor because it offers an excellent return on investment, but straight-out investor dollars are not necessarily what we want. As I said, what we really want are people with passion who want to be involved in the business and work on it. We don’t want people who just follow a system – we want people to drive it. However, we are not closed book to anything, because we would look at any proposal, but unless they have a nominated manager who is absolutely perfect we would generally, I think, say no.”
One thing Williams must be eternally thankful for is the fact that despite her relatively high asking price, she did not at the outset say ‘no’ to the fee commanded by former Olympic swimmer and now household name, Lisa Curry-Kenny, to front Fernwood’s embryonic marketing campaign.
“We asked her to be our celebrity spokesperson when we were new and needed credibility,” Williams recalls. “The brand is very closely associated with Lisa, but initially we did not have a lot of money in our marketing fund. Whatever we did have we practically gave to her, but every dollar we spent was good value. If you put an ad in the paper with nobody recognisable on it, it will be lost in the clutter. People take notice of Lisa Curry, and what this does is drive your marketing dollars further. She has been a great role model for our company, our members and our staff – she has a lot of integrity, which suits us, because we do too.”
Of late Williams has also been focused on enhancing the wider social integrity of Fernwood through the establishment of the Fernwood Venus Foundation, which is currently being piloted in two clubs and scheduled for national rollout by January next year.
Fernwood womens franchise, however, is no stranger to corporate philanthropy, each year contributing three percent of its annual profit to charities and causes specifically related to women’s issues. In 2003 it raised $61,000 for breast cancer research, and in 2000 it hosted a series of seminars in Victoria, New South Wales and Queensland to help raise awareness of TIP Deficiency for The Murdoch Research Institute. The Venus Foundation is a logical, if ambitious and expensive expansion of this long-standing commitment to good corporate citizenship.
“It is a 12-week program – 14 weeks with a two-week break in the middle – where we work with welfare organisations in each club’s local community to take eight disadvantaged women and put them through fitness, health, resume writing, job seeking, education and budgeting programs,” Williams explains. “We facilitate everything, even set them up in gym gear, and at the end of the 14 weeks there is a graduation after which we will hopefully get them into either volunteer work, a TAFE course or a job. We aim to take them from feeling pretty low about themselves to turning their life around. Once again, it is all about empowering women to shine.
“The three percent of profit will go into the foundation to help fund these groups. It has cost a lot of money to set up because we have had to build the whole program and write manuals for it, but it is also a very fulfilling thing to do. It’s something that has been at the back of my mind for perhaps around five years, but until now I haven’t had the energy, the resources or the time to get it off the ground. It’s only after being freed from the role of managing director that I’ve been able to get the show on the road. It would not have happened otherwise.”
And at the end of any businessperson’s day, that perhaps is the best any of us can aspire to. As Diana Williams puts it:
“The great thing about being successful is that it is not about making money now, but what you do with that money.”
11-Jan-2006