Meet Anthony Geisler, the CEO of Xponential Fitness. Franchise Ramp Co-Founder and CEO Brian Holmes sits down with Geisler to discuss what it takes to be an outstanding franchisee, Xponential’s aggressive growth mindset, and the future of the brand in 2020.
Xponential Fitness is the largest curator of boutique fitness brands in the world. “Nobody has the doors, the dollars, the people, the brands,” Geisler points out, “we’ve done that in an 18 month period at the Xponential level, 4 years from the very beginning.”
Xponential has 8 of the best brands across every vertical in the boutique fitness space – including Pilates, indoor cycling, stretch, rowing, dance, and yoga.
In just a few days, Xponential will be hosting its second annual convention in Las Vegas. The convention is expected to be 50% larger than last year, with over 2,000 people in attendance. According to Geisler, “This year’s convention is bringing the tribe together. It’s going to be educational, motivational, but also it should show appreciation to the franchisees in celebration of what everyone has accomplished in this last year.”
Earlier this year, Geisler received the Entrepreneur Of The Year® 2019 Award in Orange County. This prestigious award is given to entrepreneurs who are excelling in areas such as innovation, financial performance, and personal commitment to their businesses and communities. So how did Geisler get to where he is now?
Brian Holmes and Erik Van Horn sit down to talk with Geisler about his rise to the top of boutique fitness in an exclusive interview. You can tune in to their entire conversation on The Franchise Story Podcast Episode #26.
Erik Van Horn: Anthony, you have done phenomenal things in the boutique fitness realm. Let’s get started when you first entered franchising.
Anthony Geisler: It was a brand called LA Boxing. It was about 18-19 years ago, and boutique fitness wasn’t a Wikipedia word, and my only competitor was Curves in the space. It was kinda the Wild West back then. Everything that was dominating was 24-hour, 130,000 sq. ft. big-box gyms. We were operating 3,500 sq. ft. little LA Boxing. That was the start. Then, there was the conversion from LA boxing into UFC Gym, and then from UFC to Club Pilates, and from Club Pilates to what is Xponential today.
Erik Van Horn: Can you walk us through the timelines and how you actually go involved and bought Club Pilates?
Anthony Geisler: When I exited, we turned all the LA Boxing into UFC Gyms, and that’s what you see today. Still, 90% of the UFC Gyms you see out there are former LA Boxing, just repainted. When I left UFC gym, a couple of friends of mine that run a family office contacted me and said, “Hey, you’ve been sitting on the couch for 5 months, you’re not a guy that sits on the couch. we’ve got this Pilates business.” I know everybody says this, but nobody ever takes the time to watch grass grow. I was literally getting up every morning, my wife would bring me oatmeal, and I have a grass lawn in the back. It was awesome. Low and behold, [my wife] gets pregnant. I left UFC end of February, my wife was pregnant in April/May and so I looked at that… a lot of dads don’t get to be around for the process, and I want to be around for the process.
And then these guys called me about this whole Pilates deal that hit the market in San Diego: 25 franchise locations, charging a 2% royalty, no marketing fund. The year I bought it, the total royalty collected for the entire year was $7,500. My brain was starting to come out of the clouds a little bit. I was started to get bored. Even if we do 50 locations and it makes $500 a month, that’s fine. That’s like $25,000 a month- that’s great for laying on the couch. Low effort, maybe have 1-2 employees, and just hang. That was the original business plan, by the way.
I think there’s still a legal document out there that says I can’t say the price. My feeling was $6, $600,000, or $6 million [for the deal price] if I can drive a $100 million business, who cares what I paid for it. My goals started to get more aggressive past “I’m just going to hand out and make 500 bucks and keep my brain active.” I think there’s a real market for this, a real niche. What I started to realize, everyone was doing Pilates. There wasn’t the risk factor of, “are people going to do it?” The model I used for that was this: Starbucks. The thought process was Starbucks did not create coffee. People will argue that it’s not even great coffee. They’d argue it’s overpriced, and they didn’t invent the coffee house. People used to have coffee houses in their neighborhood where they went and gathered and drank better coffee for less money. Or people would stop at 7-Eleven and get coffee in the morning. What Starbucks did really well was aggregate all coffee drinkers into one cup. You know you can drive into every major shopping center and there are no less than 2-3 Starbucks. I looked at it the same way with Club Pilates. Look, people are already doing this, I just need to make it accessible. Put one on every street corner and then people will actually go start to do it. That became the business plan. I reassembled my LA Boxing team who was disenchanted where they currently were employed and wanted to come ride lightning again like we’d done in the past with that. I closed on the deal and I’m at IHRSA one year after I had left the industry, back at the next convention.
Erik Van Horn: What in your mind did aggressive growth look like and how is that different from how other franchisors look at it?
Andrew Geisler: I can tell you specifically. I entered that building, I signed for Club Pilates at 9 am for breakfast, and at lunchtime in downtown LA, I walked into an Italian joint that I’d set up and I already had my 8 employees sitting at the table and we had our first meeting. Prior to closing on the deal, I had already hired back everybody from my team. I was CEO, I hired Shawn Grove as President, Richard Feinberg in Real Estate who was my first LA boxing employee, I had Scott who was our controller, I had Claire who was our Ops person, I had everybody already at the table. Allison the former founder was going to be in charge of programming and the product going forward. so Allison and I jumped in an Uber and went down a couple of miles in downtown LA and had our first team meeting. I would say pretty aggressive. 3-4 hours after signing and purchase to having your first staff meeting. From there, we just hit the ground running. FTD was already prepared in advance, St. Gregory had already been brought in and negotiated for and signed for contingent upon the deal closing.
My plans changed from opening 20 or 30 locations a year to 20 or 30 locations a month. The thing became a rocket ship. That’s step one you buy brands. Step two is you version to it, rebrand the brand, commercialize it. Step three, you’ve got to create validation and operations that franchisees can open on time for the dollar amount.
Brian Holmes: At what point did you feel like, hey, this is actually going to happen? When I came on, it was pretty early but you guys already had it really dialed in. I think there was still less than 60 locations at that point, only a handful that was Version 2 open. You could just tell it was starting to get some crazy momentum.
Anthony Geisler: It’s always there on the sales side. When the sales started to plug away, you know that’s the next step. You’ve got to sell ‘em to open ‘em. And then you got to open them and keep them open. That was one thing we did from the beginning. We disqualified franchisees from Day One. Everyone wants to make a sale, we hate when we have to make those calls. But we also would hate to have someone in the network that poisoned the well or didn’t perform for the brand.
Erik Van Horn: How many people have you turned down? What are some of the stories of you turning down people?
Anthony Geisler: We always talk about that in our Discovery Days. I’m a part of every discovery day for every brand. We have quite a conveyor belt of qualifications before coming to Discovery Day. There, we actually disqualify people. It happens nonstop. I want people that are fired up. I’m not here to sell you, you’re here to learn and then sell me on the fact that you’re going to be a great franchisee and steward of my brand. What I don’t need is their complexity. When you get to the numbers we’re at now, 850 sold, 500 open, it’s like inviting 500 people to dinner and assuming nobody’s going to get drunk, nobody is going to break anything. We still have franchisees in the network that we’ve vetting out. They’re more complicated than we thought they would be. That’s why there’s our resale program. Let’s get somebody in there who wants to follow the model.
Erik Van Horn: What’s the balance? What are you looking for? Attitude? Ability to follow the proven system? What is it?
Anthony Geisler: I think it’s those two things combined. it’s the attitude that you’re willing to follow a proven system. I don’t think there’s a franchisee out there who “follows the model” 100%. What we know, is that every market is different. Every space is different. Every franchisee is different. So there is not a 50 state, 1,000 location answer to every question. I also give my franchisee’s autonomy and independence to run their business the way they need to. If what their doing makes sense, and not hurting their neighbor or the brand, we also allow them the leeway. I learned early on with franchisees, if you put them in a really small box, they tend to get claustrophobic and they jump out. If you put them in a big box, they have plenty of room to run around, be independent, and they don’t really realize they’re in a box. But they’re still in a protected zone. And so, you give them the ability to follow the model, mostly. As long as they’re following the main pieces of the model, and have a great attitude, it’s great. It’s not like we don’t like to be challenged. Brian used to write me emails all the time in the beginning. And I welcomed it, because how I look at that is Brian is out in the field he’s looking at stuff in the system, and he’s calling it out.
Brian Holmes: How are you able to retain such talented people on your teams?
Anthony Geisler: The part that got harder was as I went to acquire the second brand for CycleBar. That was a tough situation. You had 110 open stores, 75 not doing well. I can’t borrow from Club Pilates into CycleBar because Club Pilates is doing amazing and I don’t want to rock that boat. So I’ve got to go build a team of 15 new people all from the ground up, make them play nice in the sandbox, and then play nice with me as well. Part of that strategy, I don’t know if you’ve ever seen the original Expo headquarters, but it was 900 sq ft. in the corner of the warehouse that we ship all the t-shirts from. We built a little spot, everyone was on top of each other. No better way to get to know each other than to sit on each other’s lap for 10 hours a day!
On the broader picture, since 2001, I’ve been finding boutique fitness founders, passion projects, entrepreneurs and growing it. And so we started to do that. But what I didn’t really believe was if I could go and build the right brand and if could I build the right teams because I just hadn’t done it. I hadn’t done it 8 times over the same time. What I feel super proud of today is there are 160 people now in 370,000 sq ft. We hire 2-3 new people a week at the Expo level, we’ll sell 1,200 deals, open 700 stores this year. Which is just phenomenal. The culture that I had at LA boxing, the culture that I have at Club Pilates, is still sitting in all 8 brands. And everybody really gets it. I think it starts from the day they get hired. I laugh and say this is the best-funded startup in America. Which is perfect!
Brian Holmes: Give [readers] a sense of what you’re doing and what Xponential really is.
Anthony Geisler: People are already stretching, people are already rowing, people are already dancing. Expo is bringing that all together, putting it into shopping centers. Nothing that I’m doing is brand new, you see it happening all around the country. Stride is our newest brand. There’s a dozen running brands across the country. They
might have 2-3 locations max. For us to come out of the gate, we’re already going to have 4-5 open in the first couple of months. With Stride, we’ll be the largest running brand in the United States. Expo is aggregating things people are already doing. We’ll be releasing XPass which will be able to allow people to sign up at any one of our brands and use them all, which we think will be a massive game-changer. The convention is partly bringing the tribe together. The whole idea in Miami this past year was to finally bring all brands under the Xponential family and I feel like we finally did that. That convention cost me 4 million across 2 days. This year, it’ll be 50% larger, over 2,000 people in attendance. Magic Johnson will be the guest speaker. We’ll have 8 acts, and a concert- I’m going to bring back the greatest people of the 80s, the 90s, and the 2000s and reunite them on stage in Las Vegas. We’ve got a lot of cool things planned. We’re taking over all of Encore at Wynn hotels to get that done. It’s going to be educational, motivational, but also it should show appreciation to the franchisees in celebration of what everyone has accomplished in this last year. We’re going to be recapping the entire of 2019 and where we’ll be going in 2020.
Erik VanHorn: You’re one of the fastest franchisors to become a multi-brand franchisor, and I’m seeing more people getting into a second or third brand. Are you seeing that as a trend?
Anthony Geisler: It’s happening under our portfolio. We have tons of Club Pilates owners coming back and buying new brands. StretchLab is selling a lot. It’s an easy to convert box, it’s a small box. The template that we used at Club Pilates has become a toolbox to solve problems in other brands. It’s not that everything that worked at Club Pilates will work at YogaSix or CycleBar. They’re obviously different enough. The POS system is the same, the sales template, the marketing is the same, which allows a lot of economy to sell. There’s not a big learning curve for franchisees wanting to expand to different brands.
Erik Van Horn: Let’s talk about brands that struggled early on that you took on and put under the Xponential portfolio. what do you do to energize that franchisee base?
Anthony Geisler: Everybody only has two responses to getting punched in the face. Take CycleBar for instance- the first brand we turned around. I looked at that as an emergency room situation. I’ve got 75 victims, all from the same catastrophe but in different spaces. The first thing I did was call every franchisee personally and asked them if they were a fight or flight person. What I learned from LA Boxing, when I used to go boxing and get punched in the face, is everybody only has two responses to getting hit in the face. They either punch back regardless of what that looks like or they get in the fetal position and beg you not to hit them again. There are literally two responses. I asked these franchisees who they were now in this situation: are you somebody who gives up? If you are, let’s resell your store to someone who wants to fight. Or are you somebody who wants to fight but you need help? I spent about $180,000-200,000 a month for the first 13-14 months of CycleBar just wiring free money to franchisees. What do you need to break even? We did this just to make sure everyone felt supported while we resold the people out who don’t want to fight. Today I’m happy to say everyone is operating on their own. We closed 0 stores, 0 men and women left behind.