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Taking on a Tough Exercise

Friday, March 1, 2013 - 11:56

When Fernwood founder Diana Williams saw a gap in the market for a women-only gym, she knew she was up for the challenge. By Amy Birchall

It was the mid-1990s and it was only a matter of time before fledgling fitness entrepreneur Diana Williams stepped on some toes with her concept of female-only gyms.

Having started operating in Bendigo in 1989, she was granted an exemption in 1994 from sex discrimination legislation by the Equal Opportunities Board.

However, when she took over a mixed- fitness centre in Melbourne’s western suburbs and told the men they were no longer welcome she was confronted with protesters and soon after national media.

The legal case that followed cost thousands of dollars and became a national focus of interest – reinforced by a large number of shock-jock commentaries, most of them negative.

In 1995, the earlier exemption was upheld and although it was not initially the sort of publicity Williams was seeking, it helped turn her Fernwood Fitness centres into a national brand.

Williams was always convinced women-only gyms were a great idea, but businesses do not survive for more than two decades on a good idea alone.

Williams, despite her previous business experience, soon recognised the level of personal service required to run a fitness centre was only possible by developing intense relationships with staff and clients.

When it was time for expansion, this was the reason she looked to a franchise model as a way to nurture similar relationships nationwide.

“Ideally, we franchise,” Williams says.

“We have quite a high level of service and for us it’s important to be able to have a franchisee there to manage that. It doesn’t work when you’re company owned.”

The health club below Fernwood’s national offices on Flinders Street in Melbourne’s CBD is a testament to the company’s high level of service. Mints, scented candles and fresh flowers take pride of place at the reception desk. If it wasn’t for the exercise equipment, it would more closely resemble a day spa than a gym.

Receptionists and trainers greet clients warmly and during weekday lunch hours, the gym is full. From this it is not difficult to see why many women find Fernwood’s approach to fitness training appealing.

Business relationships aside, it appears Fernwood’s real strengths are its commitment to its founder’s vision and a vital, if understated, focus on leadership.

Today, Fernwood Fitness is the largest franchise network of its kind in Australia, with 70 clubs, more than 70,000 members and 2000 employees.

This success doesn’t surprise Williams, who made the bold decision to open the first Fernwood club in her hometown of Bendigo with no qualifications or previous business experience.

At the time, she was a former stay-at-home mum who hadn’t had a full-time job in 20 years, but says she always knew her business would succeed. Quiet confidence and determination made up for what she lacked in business know-how.

“Things always work, you just have to find a way to make it happen. You keep trying until you do,” she says.

After banks refused to lend her money, she figured out how to create and run a business with very little starting capital.

“There’s no way a bank would have lent me money. If I was a bank I wouldn’t have lent me money either,” she says.

“You know, I could blame the fact that I was from a country town and I was a woman and that probably didn’t go in my favour. But I was opening up a business in the fitness industry, which had a really bad reputation at the time, and it was also a franchise, which also had a bad reputation. There were a lot of reasons for the banks to say no.”

It turned out Williams had a natural flair for business. To attract clients to her first gym – located away from passing foot traffic – she invited the town’s hairdressers to an exclusive event the day before the gym’s official opening to attract clients through word of mouth. She also once spent more than her entire advertising budget at the time on securing former Olympic athlete Lisa Curry-Kenny as Fernwood’s spokesperson.

Williams knew that while she would have to cut costs elsewhere, Curry- Kenny provided what Williams thought the fledgling franchise needed most: credibility.

Williams admits she hadn’t considered how the public would react to a women-only gym. She opened several clubs without incident, but the reaction when she took over the formerly mixed gym in Altona came as a shock.

As police, media and protesting men surrounded the club and talkback programs around the country discussed whether it was appropriate to have a women-only gym, Williams hired a Queen’s Counsel and put her case to the commission, which she won.

Ultimately, Williams says it was “a wonderful PR opportunity”.

“We got so much exposure nationally. Before then, people would say, ‘Oh, what’s Fernwood? Is that a nursery?’ but now everyone knew what Fernwood was,” she says.

Williams plays down her role in the company’s success, claiming the key to its longevity is consistency.

“Our culture has stayed the same, our philosophy is the same, our reputation is the same. We’ve always been steady with what we do. People trust us and they trust our brand,” Williams says. “We’re not going anywhere.”

Unlike other health clubs that use fitness fads to attract and retain members, Williams knows women need more than fashionable exercise equipment or access to the newest Zumba moves to keep renewing their memberships.

Fernwood’s key selling point is that it understands women: a trend that hasn’t gone out of style in more than two decades. Williams says this is something few of Fernwood’s competitors have understood.

“I went to [a competitor’s] club a few times and every time I got the same spiel. Nobody wanted to know why I was there or what I was doing; they just wanted me to sign up,” she says. “Then they went broke and that was the end of that.”

These days Fernwood has no direct Australian competitors, but Williams is mindful of the rise of 24-hour gyms and circuit-based women-only fitness centres such as Curves and Contours.

She says while she has lost a few members to “novelties” such as these, most return to Fernwood because they haven’t been able to find the same service elsewhere. For this reason, Williams’ advice to franchisees concerned about new fitness trends is that they must play to their strengths.

“Stay doing what you do. Do better than you’ve done before, but don’t try to match them. Just do what you do, and do it better,” she says.

Fernwood does what it does better than anyone else largely because of a successful franchising model. Of its 70 clubs, 59 are franchised. The other 11 clubs are new gyms that haven’t yet been franchised, or clubs that have been sold back to the company and haven’t yet found new owners. Franchising was the natural choice for Williams, who had been customer-focused from the outset.

“When I operated one club I was totally committed to the business. I’d go in on the weekend and clean the scuff marks off the wall.

“I’d make sure the place was always beautiful and bring in fresh flowers from home and ring up members to make sure they were happy – I’d be devastated when members didn’t renew their memberships.”

She chose to franchise because she knew franchisees would have the same commitment to their businesses as she did. Williams is empathetic and feels a strong sense of responsibility towards her franchisees, but those who lack commitment or perform poorly are advised to sell.

“You feel terrible when someone has invested their life into a business and it hasn’t worked. I felt responsible even though there was nothing I could do. With experience, I know now that you have to deal with it up front and spot the telltale signs that there might be something wrong,” she says.

Williams may have built her business on understanding and strong professional relationships, but she says too much of either can be destructive. She learned this in 2004, when her relationships with franchisees started to negatively affect other parts of the business.

“I was a little too close to [my franchisees] and I was too flexible,” she says.

“I needed someone in the CEO role who could tell the franchisees, ‘No, you’re not being compliant. This is what you have to do’.”

She decided to step down as CEO and appointed then general manager Stephan Herzog as her replacement.

Herzog ran the day-to-day business while Williams took on a more strategic role. While Williams says this arrangement worked well for some time, she moved back into the CEO position in 2010 because of concerns franchisees were unhappy.

“There was no flexibility at all, the franchisees weren’t allowed to have a say and the culture had totally changed. So I stepped back in,” she says.

“We found a flexible medium. Franchisees understood compliance but they also had flexibility. We never got to the point of them not having control, which was good. They appreciated having that voice again.”

She describes her current franchisees as a “very happy lot”.

“I spend time giving them confidence, making sure the culture’s right and they’re given direction but not controlled. Most importantly, I listen to them. It’s their livelihoods that are on the line,” she says.

Since taking back the CEO role, Williams has focused on rebranding Fernwood Fitness and preparing the company for the future.

“We’ve done a lot to revive ourselves because we are over 20 years old. The evolution now is into the digital space, which I know sounds silly because we’re a gym, which is bricks and mortar, but we’re always mindful of what’s out there,” she says.

“Some of our members will soon have fully online services so that if they can’t get to the gym they can still access their workouts and meal plans and personal trainer.

“I’ve always said to my team, ‘Imagine that there are no gyms in 15 years. What would life be like?’ I’m a very forward-thinking person. I don’t ever think about what’s happened in the past. I concentrate on what’s next.”