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This Fitness CEO is Revolutionizing the Franchise Industry Just By Caring More

This article is more than 6 years old.

Bedros Keuillian

Is starting a franchise business a wise move? Let’s look at the facts: More than 1 in 10 businesses in the U.S. is a franchise. All together franchises provide more than 6.3 million jobs and generate more than $1 trillion in sales every year. Still, franchises don’t always have the best reputation. Quiznos is a famous example. The company peaked at more than 5,000 locations just 10 years ago, and yet there are fewer than 1,000 today after multiple lawsuits from franchisees and reports of less than 40% of locations breaking even.

I recently had the opportunity to talk the founder and CEO of one of the fastest growing franchises in America, Fit Body Boot Camp. His name is Bedros Keuilian and he’s made it his mission to transform the franchise industry and make both parties — the franchiser and the franchisees — winners. Here are some of the highlights of our conversation:

Garrett Gunderson: What value is your business delivering to the world right now?

Bedros Keuilian: We're revolutionizing two industries at once. Both the franchising industry and the fitness industry. I knew for a long time the fitness industry was stale and I decided to shake it up. But I was blown away to see how archaic the franchising industry was.

Gunderson: That sounds like a huge undertaking. Tell me how you’re revolutionizing two industries at one time?

Keuilian: You look at both industries, the franchising industry and the fitness industry, and they've both been archaic. I'll talk about the franchise industry first.

Before I made Fit Body Boot Camp into a franchise in 2012, I decided to do the research. We saw Quiznos starting to fail even though they had a better sandwich, used better ingredients, had equal service to Subway and all of that. And we saw Coldstone Creamery was failing even though they have a better product. And what I found was, they're creating an adversarial relationship with their franchisees.

For example, if your business is doing $20,000 a month and I'm charging you 6% royalties, you pay me $1,200 a month. Now if you hustle and get referrals and generate word of mouth, you increase your monthly revenue to $30,000 a month, and with that same 6% you're now paying me $1,500 a month. So, you're paying me, the corporate office, $300 more per month and I've done nothing more to help you.

I don’t like the idea of that. Then you’re also paying an extra 2.5% for marketing fees and, what the franchise industry won't tell you is, they're allowed to keep 15% of the marketing budget as operational costs. So, they're making profits there. And two, the way the corporate offices are doing the marketing is very old school. They didn't adapt to the internet.

Then they make you buy the bread and the meat and the cheese and the sauces from their vendors who have marked it up by as much as 9%.

So, franchisors were really, for a lack of a better term, bleeding the franchisee out. And you see these adversary relationships. Soon a Quiznos would change into Bob's Sandwich Shop or you'd see some vitamin shops like Max Muscle go away and turn into a wholesale nutrition shop.

So I decided if I'm going to start this franchise, I'm not going to charge an arm and a leg to buy-in. I'm going to charge a flat royalty fee so that no matter how much the franchisee makes, they're paying me a flat dollar amount.

Then I'm going to do the marketing for them, on the internet. I'm going to use all of that monthly franchise fee we charge them as marketing dollars to generate myself two thousand dollars a month from each location. We sell a 21-day rapid fat loss program online, so if you're one of our franchisees, this month we might send you 35 people who have purchased the rapid fat loss program for $67. And that’s the biggest thing that we do different than any other franchise on the planet, fitness or non-fitness, we give our franchisees paying leads.

Franchisees are happy they get the leads. We're happy because we're making money hand over fist as well and it's a win-win. So our franchisees look at us as business partners. And they open up more locations.

Gunderson: That’s genius. You also said the fitness industry has been archaic. What do you mean by that?

Keuilian: You can go to a big box gym and pay your $49 or $59 a month and hope that you're doing the right machines and exercises to get the fat loss or muscle toning results that you want. But most people actually end up quitting. Within the first 90 days, the big box gym failure rate is 89%.

As a personal trainer for over 20 years, I help people get results so they don't fall within that 89% failure rate. But when you're training clients one-on-one, it's kind of like having a personal chef. You're talking $600-$1,200 a month for a one-on-one trainer. That becomes very cost prohibitive.

I kept banging my head against the wall, thinking that I've got a full client roster with 40 clients. My time is full and that's all I can train. And that's when I said, “What if we do bootcamp programs? If Superbowl athletes can be coached by one coach on the field — and these are elite level athletes — why can't I take people who have 30 to 50 pounds to lose and train them in a group environment as well?”

Bedros Keuillian

Now we train 30 to 40 clients per workout session. We have one or two trainers on the floor guiding them and the results are just incredible. Best of all, they're paying between $167 and $197 a month instead of $600-$1,200.

Also, no one's got time for one-hour workouts. So I decided we're going to make Fit Body Boot Camp a 30-minute group personal training program that's fun, affordable, convenient, gets fat loss results, challenges your body and we guarantee it. We hold our feet to the fire. It's money-back guaranteed for your first 30 days. Even on day 30, if you decide it's not the right program for you, every one of our locations will give you your money back and shake hands and part ways as friends.

So we've taken out the risk of signing up to a fitness program, which, as you might remember, companies like Bally’s and other fitness centers used to lock you down for three years and then they'd ding your credit the moment you missed a payment.

And we decided we're going the opposite way: full transparency, money-back guarantee, 30-minute workouts, give us three days a week and we'll guarantee results. And the industry is forever changed. Here we are, five years old and we're already on the Inc 5000 list.

Gunderson: That’s amazing.

Keuilian: Yeah, and what blows me away is we're selling an average of 21 franchises per month. We have over 500 locations worldwide. And we've never advertised in the big magazines like other franchises do. We just simply chase our potential franchisees online on Facebook, YouTube, and Google. And instead of buying a full-page ad on Entrepreneur Magazine, which might feel good on my ego, and also might cost 15 to 20 grand for a full page ad, I'll spend that 15 to 20 thousand dollars on social media advertisements. I'll target readers of Forbes magazine, Inc Magazine, Entrepreneur Magazine, and franchising Magazines — who also have an interest in fitness — and I'll send them right to our website where they fill out the application.

So, the way we get our franchisees is different, the way we service our franchisees is different, the way we service our end client is different. And everything is based on full transparency, which is something that the franchise world has never seen.

Gunderson: That’s great. So what is one more critical step that you took to build your business and revolutionize these industries?

Keuilian: I guess another critical step I took is I went all in on coaching our owners. I created a mastermind, like a business coaching and networking group, and we teach them online and then we meet three times a year in person. It's totally voluntary to come, but we'd love all of them to come.

And what's really neat about that is, we teach them how to become entrepreneurs. I found the more that I teach them, the more money they make with me, and the longer they want to stay with me.

So it's actually just the opposite of, “Here, sign this so that you won't go open up another sandwich shop for twelve years if you decide to disconnect.” That's such an old way of thinking. Instead, the more you empower your franchisees, the longer they're going to stay with you.

Gunderson: So where can people find out more about you and where can they look into setting up a Fit Body Boot Camp franchise?

Keuilian: You can go to FBBCFranchise.com to learn more about our franchising and how to get into a franchise. And then, of course, my personal domain, BedrosKeuilian.com.

Check out my website or some of my other work here