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15.1 - Case Study Example

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Snap Fitness has positioned itself as a neighborhood chain of fitness centers and claims that the majority of its members are within a two-mile drive of the center to which they belong. How big of a competitive advantage do you think this positioning strategy provides Snap…
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Case 15.1
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1. Snap Fitness has positioned itself as a neighborhood chain of fitness centers and claims that the majority of its members are within a two-mile drive of the center to which they belong. How big of a competitive advantage do you think this positioning strategy provides Snap Fitness.
I think that Snap Fitness by positioning itself as a neighborhood chain of fitness centers is a big competitive advantage because it is providing the company unique selling proposition and a much focused target market. Customers patronize with the franchise because it is in their locality and apart from a place to work out it also lets them socialize with local community people, saves time and cost of traveling because if the gym is located far and customers need to drive long to reach the place, they lose motivation for fitness fast. Also that they can use their membership in any of the Snap Fitness centers makes it more convenient for them to work out wherever they are be it office or home or any other place and do not have to skip working out because of location. In today’s stressful society convenience is given utmost priority by customers in choosing a service or product. However I do not think this is the only advantage Snap Fitness is offering its members, its affordable membership and no contracts only monthly membership fees and easy manage franchises also add to its appeal to both members as well as franchisees and give a competitive edge over its rivals.
2. Look at figure 15.1 in the chapter. What type of franchise system makes the most sense for Snap Fitness?
For Snap Fitness the most appropriate Franchise system would be the Business Format Franchise, because it is a service they are selling and Snap Fitness has a unique business model for both its franchisees and its members. In this format Snap Fitness needs to provide Franchisee with its unique business formula, training, advertising, equipment and other assistance. It can use an area franchise agreement that allows the franchisee in a geographical area to own and operate a given number of franchises that is Snap Fitness centers (Barringer and Ireland, 516).
3. What types of characteristics do you think Snap Fitness looks for in its franchisees?
In its franchisees, the characteristics Snap Fitness is looking for are that Franchisees are able to deliver its members its unique business model, must be able to handle billing and collecting processes, Franchisees should be able to maintain the company’s lean business model and have financial net worth of $250, 000 and $500,000 in Liquid assets and that Franchisees are able to deliver on the “must haves” list prepared by Pete Taunton. As the business requires normal working hours and can be managed remotely, it is looking for part time entrepreneurs who can be students, semi-retirees or have other jobs but are committed to the Franchise and are ethical. Apart from that it is also looking for franchisees who can maintain its business model, quality of service and ambience without complicating it and turning it into usual bigger fitness center diluting its uniqueness.
4. What do you think lies ahead for Snap Fitness? What are some of the things that can go right and what are some of the things that can go wrong as this firm continues to sell franchisees and grows.
With a strong start Snap Fitness will continue to be the fastest growing franchise in the 24/7 category and maintain its position by opening more franchises, because of its unique business model and positioning itself as a convenient, affordable and round the clock fitness centre.
The things that can go right for Snap Fitness are rapid expansion of its market in an $18.5 billion industry as more Snap Fitness centers about 20 to 30 a month opening in new locations and entering the UK market.
However as the number of franchises increase there is a possibility that it would lead to cannibalization of other franchises’ market share decreasing the profitability of the franchises and making it less attractive for Franchisees. Also lack of commitment because of absent owners or remote running of the franchises might also impact the service quality. Apart from that lack of add on facilities like locker rooms, child care, juice bars, aerobic classes, racquetball courts or swimming pools limit the market penetration only to niche segment and hinder capturing of large market like women with children or people who also want to use other recreation facilities for fitness. Starting and taking off of business model is easy with unique features however sustaining it in the long run is challenging because of imitation of model by competitors, unable to expand markets to other segments resulting in decrease of profits and losing control over franchisees. There are also chances that Snap Fitness might not be as successful in UK market as in US because it is different.
Works Cited
Barringer. B.R. and Ireland, R.D. Franchise. Chapter 15. Managing and Growing an Entrepreneurial Firm. Part II. Entrepreneurship – Successfully Launching New Ventures. 3rd Ed. 2010.
Barringer, B.R. Snap Fitness: Fast, Convenient and Intriguing Options for Growth. Case 15.1 In Barringer. B.R. and Ireland, R.D. Franchise. Chapter 15. Managing and Growing an Entrepreneurial Firm. Part II. Entrepreneurship – Successfully Launching New Ventures. 3rd Ed. 2010. Read More
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