20 questions with Planet Fitness

Founded in 1992 in Dover, N.H., Planet Fitness (PH) (NYSE: PLNT) is one of the largest and fastest-growing franchisors and operators of fitness centers in the United States. PF’s mission is to enhance people’s lives by providing a high-quality fitness experience in a welcoming, non-intimidating environment. More than 90 percent of PF stores are owned and operated by independent businessmen and women.

Pete Hopkins, co-owner of PF Michigan Group, recently took a few minutes to talk to us about PF’s “Lunk™ Alarm,” lack of “Gymtimidation,” and the future of the franchise that he and his business partners have built.

1. Describe your franchise.
   The PF Michigan Group is one of the largest franchise groups in the chain with 24 operating gyms and two locations under construction. We have 19 gyms in the greater Detroit market, four in the Toledo area, and three in the Grand Rapids market. We plan to open 15–18 more units over the next three years.
2. Where are other PF franchises?
   PF has more than 1,000 units in 47 states, the District of Columbia, Puerto Rico, Canada, and the Dominican Republic.
3. Why did you invest in a PF franchise?
   Living and working in New Hampshire, the birthplace of PF, I witnessed the meteoric growth of the brand from four corporately-owned stores in 2002. When my partners, Bryan and Laura Rief, presented me with a business plan in 2007, the entrepreneur in me jumped on the opportunity.
4. Have you owned other businesses?
   My prior business experience involved commodity trading, which is all about scale and volume. That’s probably why tackling a 41-club area development agreement didn’t scare me when we first started franchising with PF. Both businesses are capital intensive.
5. Tell us about PF’s “Judgement Free Zone®.”
   Planet Fitness is known for its non-intimidating Judgement Free Zone®, and we stand apart from other health clubs by providing a relaxed, non-intimidating atmosphere where anyone — regardless of their fitness level — can feel comfortable.
6. And that philosophy actually includes a “Lunk™ Alarm,” correct?
   Yes. Our Lunk™ Alarm, which is an actual beacon light and siren, is intended to deter members from the hard-core, look-at-me behavior found in too many gyms.
7. What’s the forecast for the growth of the health and fitness industry?
   The International Health, Racquet, & Sportsclub Association reports that 53 million people in the United States have active gym memberships. With a population of more than 320 million (more than 75 percent of them adults), there’s still tremendous growth potential for gyms.
8. Who are your biggest competitors?
   I would say that we truly believe that what PF offers — a high quality gym experience, in a Judgement Free Zone® for only $10 a month, isn’t something that any other fitness concept can match.
9. Describe the PF culture in five words or less.
   Non–intimidating, friendly staff, and clean.
10. What traits do you look for in your staff?
    Friendly, energetic, and passion for life. Our customer service goal is to create “raving fans,” turning our members into our best form of advertisement.
11. How else do you create loyalty?
    Beyond providing exceptional customer service, PF has launched Planet of Triumphs®, an online community that allows members to share success stories and goals, no matter how big or small, and encourage each other. They’re really inspiring, and you can view them here: www.planetoftriumphs.com.
12. How do you stay involved in the community?
    Locally, we are the lead sponsor for Walk-for-Wishes, a walkathon that helps raise money for the Michigan Make-a-Wish Foundation. In addition, we’ve volunteered at Gleaner’s Food Bank in downtown Detroit.
13. What’s your greatest success with this franchise?
    Our investment in the Detroit market coincided with the most challenging economic downturn of recent history. Developing the PF model through this period forced us to be creative with our financing and disciplined with our tax planning.
14. What’s your greatest challenge?
    We set the bar very high when it comes to how we operate our stores. Maintaining that level of exceptional customer service, while offering a clean, friendly, non-intimidating atmosphere day in and day out requires that we have a strong operations team.
15. How important is location, location, location?
    Critical. Despite the fact that we are in many ways a “destination,” finding high-traffic locations with excellent visibility and ample parking is important. We’re also the leading full-size, low-cost gym provider, so we need larger spaces in the 25,000–30,000 sq.-ft. range. That size is important because we try to reduce waiting times for equipment, which requires us to have a large number and variety of machines. That’s what differentiates us from other low-cost gyms, which typically are much smaller.
16. How important is fitness in your life?
    Daily exercise is my 2016 resolution. I have no excuse either as I built a gym in our corporate office in New Hampshire.
17. What do you like to do in your spare time?
    I try to spend as much time as possible with my wife and three children. We’re uncomfortably close to being empty nesters, and I don’t want to regret lost time.
18. Who are your business role models?
    My great, great-grandfather, Carl Schlegel, was an impressive entrepreneur, who built a business empire as an emigrant from Germany. I have always attributed my entrepreneurial nature to his gene line.
19. Who are your personal role models?
    My mother and father have always been my moral compass. They both supported me at every critical step in life and made significant sacrifices to send me to college.
20. What do you want your business to look like in five years?
    Our ownership team wants to build a competent, highly effective management team for the long term. This is critical to our continued growth and will position us to become one of the largest PF franchisees in the Great Lakes Region.